Will Ruthrauff - Director, Investor Relations Hugh Gallagher - Chief Financial Officer, AmeriGas Propane Kirk Oliver - Chief Financial Officer, UGI Corporation Jerry Sheridan - President and Chief Executive Officer, AmeriGas Propane John Walsh - President and Chief Executive Officer, UGI

Gabriel Moreen - Bank of America/Merrill Lynch Sharon Lui - Wells Fargo Chris Sighinolfi - Jefferies

Thanks, Sarah. Good morning, everyone and thank you for joining us.

Joining me today are Hugh Gallagher, CFO of AmeriGas Propane; Kirk Oliver, CFO of UGI Corporation; Jerry Sheridan, President and CEO of AmeriGas Propane; and John Walsh, President and CEO of UGI. Before we begin, let me remind you that our comments today will 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 on Form 10-K 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 in the appendix of our presentation. Now, let me turn the call over to John.

Thanks Will. Good morning and welcome to our call.

I hope that you have all had a chance to review our press releases reporting second quarter results and updated guidance for UGI and AmeriGas. Once again, the weather challenges provided us with an opportunity to demonstrate our ability to perform, while addressing difficult market conditions.

We were pleased with our execution during the quarter as we delivered a strong performance despite weather that was much warmer than normal. In addition to executing well during the quarter, we also achieved several critical milestones on major projects in both the development and execution phases.

Our financial performance in the quarter demonstrates the continued resiliency of our businesses in the face of extremely warm weather. For the second consecutive year, UGI is delivering superior financial performance, notwithstanding weather that is much warmer than normal.

For many years, we have highlighted the benefits of our diversification which has enabled us to deliver strong long-term performance regardless of market conditions. Those benefits were quite visible in Q2 as we saw very strong contributions from UGI International and Midstream & Marketing, which helped offset the headwind of warmer-than-normal weather.

I will comment on our financial performance and key activities in the second quarter. I’ll then turn it over to Kirk, who will provide you with a more detailed review of UGI’s financial performance, Jerry will follow with an overview on AmeriGas, and I’ll then wrap up with an update on our strategic initiatives.

Our Q2 GAAP EPS was $1.24 and our Q2 adjusted EPS of $1.31 was about 6% above last year’s Q2 adjusted EPS of $1.24. Both quarters have been adjusted for the mark-to-market valuations of unsettled hedges and other items that Kirk will cover later.

Our adjusted EPS of $1.31 represents the highest quarterly adjusted EPS in our history despite the less than ideal weather conditions. This performance was enabled by the significant contributions from our major new investments at UGI International and Midstream & Marketing over the past 36 months.

With Q2 now in the books, we are in the position to update our guidance for fiscal ‘17. We expect our full year adjusted EPS for UGI to be at or slightly below the bottom of our fiscal ‘17 guidance of $2.30 to $2.45.

This update is entirely related to the impact of the very warm weather in Q2. Our underlying performance has been very strong in fiscal ‘17, with our year-to-date adjusted EPS running about 18% above year-to-date fiscal ‘16.

In addition to delivering a very strong financial performance in Q2, we made significant progress on a range of strategic projects and activities during the quarter. We completed the construction of our $60 million Manning LNG liquefaction unit and began producing LNG at the facility.

This adds critical liquefaction capacity to our LNG network as demand for both peaking and merchant applications continues to ramp up. Our gas utility had a very busy quarter as we added 3,400 new residential heating and commercial customers, bringing our year-to-date total to just over 8,000.

We are also very busy with regulatory activities following the January filing of our $21.7 million UGI PNG rate case. We expect this process to conclude by the end of our fiscal year with new rates in effect by October.

Our AmeriGas national accounts team continues to expand its customer base, as our geographic reach and service capability positions AmeriGas as a preferred supplier for large regional and national customers. Our national accounts volumes increased 5% in Q2 with total locations now exceeding 43,000.

In addition, our ACE barbecue cylinder program has also shown strong growth adding 3,500 new locations over the last year and now services well over 54,000 locations. UGI International had another strong quarter with adjusted Q2 income before income taxes up over 8% versus prior year.

The integration of the Finagaz business remains on schedule, and we expect to conclude that process within the next 12 months. One final note I’d like to make is to highlight the progress the company has made over the past 5 years.

Our year-to-date adjusted EPS of $2.22 is almost 70% above our fiscal year ‘12 year-to-date adjusted EPS of $1.32. This equates to a compound annual EPS growth of 11% over that 5-year span.

This very strong performance was enabled by a combination of focused execution of our business unit operating strategies and the strategic deployment of growth capital across our businesses. I will return to comment on our strategic initiatives, but I would like to turn it over to Kirk at this point for the financial review.

Kirk?

Thanks, John and good morning to everyone on the call. This table lays out our GAAP and adjusted earnings per share for this quarter compared to the same for Q2 of last year.

As you can see, adjusted results exclude impact of mark-to-market changes in commodity hedging instruments, a loss of $0.02 this quarter versus a gain of $0.12 in the prior year. You can also see the integration expenses associated with the Finagaz acquisition in each quarter, the loss on extinguishment of debt at AmeriGas and unrealized losses of foreign currency hedges in this quarter.

Our adjusted earnings of $1.31 per share for the quarter, is up $0.07 from last year in spite of significantly warmer than normal weather in all of our service territories. As shown on this slide, weather was warmer than the prior year in every segment, except for international.

All of our business units contributed to the increase in earnings this quarter with the exception of AmeriGas where we experienced a very warm January and February, particularly east of the Rocky Mountains where our load is more sensitive to weather. In the international segment, where weather was slightly colder than last year, the earnings contribution was up $0.06 this quarter.

As mentioned, AmeriGas faced very warm winter weather. Volume was down 6% on weather that was 3% warmer than last year, 13% warmer than normal, resulting in adjusted EBITDA of $271 million for the quarter.

This represents a decrease of $24 million versus the second quarter of last year where we experienced weather that was 12% warmer than normal. Jerry will spend some more time on AmeriGas in just a bit.

UGI International contributed $123 million in adjusted income before taxes, a $9 million increase over last year. Weather was 1% colder than last year and retail volumes were up about 13 million gallons or 5%.

Total margin was flat as the increased volume was offset by slightly tighter unit margins due to higher wholesale prices for propane and butane in Europe, where prices were up significantly over last year. Operating and administrative expenses decreased by about $7 million reflecting currency translation effects and lower integration expenses associated with the Finagaz acquisition.

Midstream & Marketing income before taxes is up $7 million to $84 million for the quarter. Total margin was up $5 million, reflecting higher peaking capacity management and gas marketing margin partially offset by lower electric generation and storage margins.

All of these segments were impacted by the extremely warm weather, which held down spreads in capacity management and lower demand for gas and electricity. Higher peaking services activity contributed $7 million of incremental margin versus last year.

Turning to Slide 12, the Utilities segment is reporting income before taxes of $106 million, about flat to last year’s quarter. Utilities experienced weather that was about 3% warmer than last year.

Total margin increased $11 million, reflecting the higher UGI Gas base rates and higher large firm delivery service margin. Partially offsetting increased margin, operating and administrative expenses were up $9 million, primarily driven by one-time cost benefits that occurred in the prior year quarter.

The reduced level of expenses last year included the capitalization of previously incurred IT expenses of $6 million. I would now like to turn your attention to a brief comparison of this fiscal year-to-date to the same period in 2012.

Here we show the earnings performance of the businesses in 2017 versus the comparable period 5 years ago. This chart provides a good indication of how the businesses have grown as all of the businesses experienced weather that was much warmer than normal in both periods.

This demonstrates, as John mentioned earlier, the long-term impact of successful investment and how it’s more than offset the impact of warmer weather. Just stepping through each business unit, at AmeriGas, weather this year and in fiscal ‘12 were both significantly warmer than normal and yet the contribution to UGI earnings per share is up $0.07, reflecting the acquisition of Heritage in January of 2012 and our other growth initiatives, including ACE and national accounts.

At UGI International, earnings over the 5-year period have increased $0.37 per share due to growth through acquisitions since 2012, most notably the acquisition of Finagaz in 2015 as well as our focus on unit margins in the businesses. Our midstream and marketing business has benefited greatly from the expansion of our Marcellus asset network over the past 5 years.

The significant growth and stable asset base margin due to the investments in our midstream business has significantly offset the impacts of extremely warm weather. Adjusted net income was up over $50 million or 167% adding earnings of $0.27 per share to the bottom line.

Finally, at the utility, weather in both periods was warmer than normal. Adjusted earnings per share of $0.14 higher this year than in 2012, reflecting the addition of nearly 60,000 gas customers as well as the new UGI Gas base rate increase.

The rate increase went into effect this year and reflects the success we achieved in the first UGI Gas rate case in 21 years. In total, our net income increased by $170 million or $0.90 per share, almost 70% over the 5-year period.

The resulting compounded annual growth rate is 11%. A primary driver of this growth has been our ability to identify and execute on investment opportunities in the businesses.

Before I turn the call over to Jerry, I would just like to reiterate that as John mentioned earlier, we are expecting earnings for the full fiscal year to come in at or slightly below the bottom of our guidance range of $2.30 to $2.45 per share. Thank you very much.

And I will now turn the call over to Jerry for his report on AmeriGas.

Okay. Thanks Kirk.

And as both John and Kirk mentioned, really extremely warm weather had a significant impact on the demand at AmeriGas again this year. The quarter ended 13% warmer than normal and 3% warmer than last year.

This was the second warmest Q2 on record with only 2012 giving us warmer weather and records have been kept for 122 years. As a result, retail volumes sold in the quarter was 363 million gallons or 6% below last year.

Propane costs at Mt. Belvieu averaged $0.72 for the quarter or 85% above last year.

Despite the rise in cost, we were able to realize unit margins $0.02 above last year for the quarter. Operating expenses were essentially flat, principally due to a 23% increase in the cost of diesel per gallon to run our vehicles and some insurance reserve adjustments offset by solid management of our payroll costs given the warmer weather.

Primarily as a result of the record warm weather experience for the year, we are revising our guidance downward for the full year to $550 million to $580 million in EBITDA Turning to our growth thrust, AmeriGas cylinder exchange saw a modest increase in volume despite the warmer weather. Warm temps do impact the small cylinder business due to portable heat and patio heat use.

The increase in volume came from the rollout of 1,200 new locations year-to-date. That business continues to grow nicely.

Our national accounts program volume was also up 5%, again principally due to new accounts added. Both businesses are very solid.

Year-to-date, we have completed two small scale acquisitions and we anticipate closing on three additional deals in the next few months. On the refinancing front, on February 13, the partnership completed the issuance of $525 million of notes due May 2027 and these notes were priced at 5.75%.

On March 27, the partnership announced the redemption of the remaining $102 million of 7% notes that were due May of 2022. The redemption will be finalized on May 20.

This will mark the completion of a complete refinancing of the partnership’s long-term debt, a nice de-risking event for our balance sheet. As a result of the refinancing activities over the past year, the partnership has no significant debt maturities until 2024 and average interest rates on its long-term debt have been lowered by more than 100 basis points.

On our distribution, we are pleased to report that the Board of Directors supported and approved 1% increase in the distribution to $3.80 annually. This action demonstrates the solid fundamentals of the business despite a total repeat of very warm weather in 2017.

This is the 13th consecutive year that we have raised our distribution. I want to close just with a thank you to our current management team and all of our 8,500 colleagues across the country who have shown great resilience and commitment to what is now two of the warmest winters on record.

I will now turn the call back over to John.

Thanks Jerry. I would now like to spend a few minutes reviewing progress on our strategic investments and programs.

We are continuing to make significant progress on our midstream strategy. We are bringing new assets on-stream and achieving critical milestones on major projects in development.

Our Sunbury Pipeline is providing service to UGI Utilities in Central Pennsylvania and will initiate service to our base load power generation customer in August. UGI and our PennEast partners were delighted to receive a favorable environmental impact statement from the FERC last month.

We hope to receive our FERC certificate once they have a quorum of commissioners. And we are now in a position to ramp up our local PennEast activities in Pennsylvania and New Jersey.

Our target completion date for PennEast remains the end of calendar 2018. We are also busy building out our LNG network as we bring Manning online and proceed with our Steelton, Pennsylvania storage and vaporization project, which will come on-stream by the end of the year.

Our rapidly expanding network of Marcellus based midstream assets is playing a critical role in helping to close the infrastructure gap in our region. The Gas Utility is awaiting the final order confirming the Pennsylvania PUC’s recent vote to approve an increase in the cap for our discharge from 5% to 7.5% for our PNG and CPG units.

This increase would reduce the regulatory lag as we deploy record levels of capital at UGI Utilities in support of our infrastructure replacement and reinforcement programs. Utilities capital investments for growth and infrastructure will exceed $1.1 billion over the next 4 years.

Our teams have done an exceptional job of planning and executing an unprecedented level of project activities. At AmeriGas, our investments in new customer service and logistics tools are enhancing service levels and reducing the cost to serve our broad base of customers.

As Jerry noted, we have also moved proactively to extend maturities on our long-term debt and reduced our interest costs. We are on very solid footing at AmeriGas as we prepare for fiscal ‘18, with the focus on both organic growth and acquisitions.

Our UGI International team continues to perform at a high level. This strong performance is being enabled by the Finagaz integration in France, solid organic growth across the entire region and an effective expense control in the face of a warmer than normal quarter.

We continue to look for opportunities to expand our base of operations in Europe. On a number of occasions in recent years, we have referred to the earnings capacity of UGI’s balanced portfolio of businesses.

That earnings capacity was clearly evident in Q2. In a less than ideal weather environment, our performance demonstrated the benefits of the major capital investment programs in our natural gas businesses and strategic acquisitions in our propane units.

As I have noted several times in recent years, weather patterns come and go, but the underlying strength of our businesses holds the key to our long-term performance. While weather has felt like spring for some time, we are now truly in the homestretch for fiscal ‘17 as we enter the spring and summer period.

This will be a particularly busy time for us as we execute our broad range of capital projects and prepare for fiscal ‘18. We are very encouraged by our strong year-to-date fiscal ‘17 performance and eager to utilize our expanded base of operations to deliver on the growth potential for the company.

Our outlook remains very positive for fiscal ‘18 as we are poised to bring several new projects on stream that will be immediately accretive to earnings. Needless to say, we are excited about the opportunities that lie ahead for us and look forward to keeping you updated on our future calls.

With that, I will turn the call back over to Sarah who will open it up for questions.

Hey, good morning everyone.

Good morning.

I had a couple of questions on – wanted to first ask on the peaking services. I think Kirk mentioned $7 million additional margin year-over-year.

Can you just talk about to what degree all that additional margin I guess is kind of contracted and recurring versus what maybe just opportunistic from market conditions?

Yes, Gabe, in terms of peaking services, the vast majority of that is contracted. Peaking service is basically a contracted provision of supply that’s paid for whether it’s utilized or not and what we are experiencing in the Midstream business is an increased demand for peaking as our utility and other utilities add to their customer base and their sort of calculated peak increases.

So that’s driven by new contracts underpinned by growth in LDC customers.

Thanks, John. And if I can also just turn maybe to PennEast, can you talk about next milestones, I guess at the state level in terms of any remaining regulatory approvals?

And I know that some stake – a stake in PennEast and the project changed hands recently. Can you talk about – I know you can’t speak for the seller or the buyer.

But can you maybe talk about that or any perspective on some of this stake changing hands?

Just in terms of the, yes, the change in the movement of ownership from PSEG to Spectra, obviously, it’s two existing partners with Spectra now increasing their stake to 20%, which is great. I think the critical point on that is that PSE&G remains a contracted capacity holder for PennEast, which is crucial in that we’re basically serving all the utilities in New Jersey with that pipeline, and that transaction doesn’t impact that.

So we feel good about that transaction taking place. Spectra is a great partner and it’s great to have PSE&G sort of in that roster with a significant commitment to take – to utilize that capacity.

The next steps in Pennsylvania and New Jersey involve a series of activities with the TEP around water permits in particular, but a series of permits that – processes that we will go through. And then we can also conclude surveying and begin the process in terms of land acquisition once we clear certain hurdles.

So it’s a lot of on-the-ground activity sort of figuratively and literally in New Jersey and Pennsylvania.

Okay. Thanks, John.

And then last one from me just on the PNG rate case, can you talk about just to what extent – you usually don’t necessarily answer allowed ROEs and requested ROEs. If you can speak to that maybe, but also just anything structural in that rate case beyond just what you are asking for in terms of the increase?

It’s pretty straightforward. What we are seeing, Gabe, is a significant ramp up in capital spend across all the utilities and that’s reflected in this request for the rate increase.

We were pleased that we received for PNG and CPG the increase in the DISC cap from 5% to 7.5%, but nothing unique or special. It’s really just reflective of the significant commitment we have made over the last 6, 7 years, especially to ramp up the capital spend and invest in infrastructure in the PNG service territory.

Thanks, John.

Okay. Thank you, Gabe.

Hi, good morning.

Good morning.

I was wondering if you could just touch on the acquisitions you mentioned at AmeriGas, what’s the total investment of those acquisitions and the regions that you are expanding into?

Yes. So, we have completed two deals so far this year and we expect three more to follow.

Total investment to-date is in the kind of $20 million range and what we think for the year, it will be more like $49 million when we are all done.

Okay, great. And with regards to revised EBITDA guidance, can you maybe talk about, I guess, with the balance of the year, what would be the key drivers going to the high-end of that range versus the low end of that range?

Well, you never know where the weather is going to go take us the rest of the year. So, Q4 can be a big deal for us and September really drives everything.

That’s why the fact that we are a 9/30 year end gives us fits every year. Sometimes you can get good weather in September.

You can get off to great fall start. There is lumpiness with how much gas is in the tank.

Obviously, we have missed a lot of deliveries this year, because customers didn’t need us, but are those tanks draining down and could they need a delivery into the early fall? Those are the kinds of things that would push us to the higher end.

Just – sorry, Jerry. Just to add that one of the nice things about the second half of the year is although September has got weather and April does as well, the majority of consumption in the second half of the year is non-weather sensitive volumes in areas such as national accounts and ACE cylinders and motor fuel and those are all areas where AmeriGas as we touched on earlier is performing extremely well.

Okay, great. Thank you.

Thank you.

Hey, good morning, John.

Good morning, Chris. How are you

I am well. Thanks.

I had a couple of questions. I guess to start, can you just remind us on international, I think if I recall correctly is that Finagaz acquisition was closed almost 2 years ago?

So I think it’s been a longer integration process for that and some of the prior deals you made, like the BP deal in Poland, for example. Can you just walk us through – I think, you had said in prepared remarks, you expected to sort of close the integration process over the next year.

Just may be some of the things that have led to more of a protracted integration there than we have seen with some of the other acquisitions?

Sure. It is a longer integration process although it’s pretty much in line with what we had expected when we closed the deal.

And I think part of the length and duration of the plan relates to scale and the alignment of various sort of entities as we innovate the business in France. So that takes time.

As I said, it wasn’t surprising to us because we are fortunate we have a really good team on the ground in France and a really well-defined plan that made those milestones clear even before we did the deal. So, I think it’s scale and just the organizational complexity.

And the good news is that, as we proceed through these various stages and we are well along now, we will end up with an integrated organization model that is less complex and basically a single sort of entity from an operating model standpoint. So a lot of work, but no surprises in terms of the integration plan itself and well executed by the leadership team in France.

Okay. So it’s the same sort of set list of things that you have been doing with prior deals, this is just the scale of its much, much broader, is that a right way to interpret that?

Okay.

Yes. That’s right.

Yes. And there are specific regulatory steps in France that we are following that drives some of the timing.

But basically, the same model absolutely, same gateway.

Okay. Thanks for the clarity on that.

Switching gears just to touch on AmeriGas, I was just curious, I mean we have kind of talked about this at some of your Investor Days in the past and I am just curious to circle back on it, just given the successive warm winters back to back here in ‘16 and ‘17 and where – what that’s done to sort of AmeriGas profitability and I understand that in a normal weather environment it would be far different, but just curious as it pertains to the current structure, there is a lot of MLPs across sort of the MLP landscape that are addressing some of the structural elements of their integrations, the IDRs in particular, I know you guys pressed it into the 50% splits a couple of years ago. And I am just curious sort of how if anything has – how the discussions if anything has changed, I guess between AmeriGas explored [ph] UGI as the sponsor and what we might look to on a go forward, if let’s say 2018, God forbid is the same sort of weather dynamic we are seen in the last 2 years?

Yes. I think one of the key things to point out that differentiates us as a propane distribution company from many other MLPs is we have a weather sensitive business.

We are not particularly sensitive to commodity movements. And I think a lot of the restructurings – restructuring have taken place around entities that were exposed to the commodity or – and sort of indirectly connected to the commodity, meaning drilling and production levels.

Not to say that what we have is an easy challenge. We have had two very warm winters in a row, which clearly have shown up in terms of the weather sensitivity of the business.

We have addressed that in a number of ways. One, Jerry and his team have done a good job of continuing to work at making more of our cost variable and taking costs out of our business while retaining our ability to serve customers well and serve demand when cold weather returns.

So that’s been a significant series of activities that will be ongoing. The other thing we have done, as you know is adjust the distribution growth rates to reflect the warmer weather of both last year and this year and we will continue with taking those actions.

And then the boards will obviously retain their responsibility and role in terms of oversight. But we don’t feel at all constrained in AmeriGas in terms of – our cash generation is strong, our access to capital markets is there.

So the business is able to execute, but we will certainly have and will continue to step back at both the AmeriGas Board level and UGI Board level and look mid-term to long-term and think about structure. And in fact, that’s the process we go through every summer.

So that process is starting now. So that has been and will continue to be an ongoing dialogue, but we think the actions we have taken have positioned us well moving forward.

And we have no idea what weather will be. Next winter could be warm, could be very cold.

So that’s the balance we need to strike making sure we have got an operating model that positions us to serve demand that can be highly variable and that’s the biggest challenge in the business. But underlying cash flow, underlying performance remains strong.

Okay. I appreciate your updated thoughts on that.

I guess final, final question from me is just, as it pertains to the midstream expansions in Mid-Atlantic and Pennsylvania, do you – you have done a lot John, on the natural gas side obviously, with the gathering pipe expansions with what you are advancing on PennEast, I am just curious on the NGL front, there is a couple of companies that are targeting some large scale NGL transportation projects in the state. Obviously, you have exposure to that through AmeriGas, I was just curious if there was an appetite – it’s not something we really talked about in the past, but just because that’s happening sort of in your neighborhood, wondering what the appetite to potentially participate if there is an opportunity for you to on something like that?

I think we are always open to thinking about how we can kind of push the boundaries of our strategy. And it’s a good point in terms of fundamental changes that are taking place, particularly in the Mid-Atlantic and Northeast U.S.

with respect to availability of NGLs. And obviously, we are most interested in propane and butane.

So we would be interested in looking at opportunities that would enable us to leverage all the demand we serve for propane and butane, both in the Eastern U.S., but also in Europe as well. So that’s something we are open to as long as it’s the type of investment that aligns with the strategic capabilities of our company and how we position ourselves with respect to very limited commodity exposure.

But you are right to point out, there is a lot of change going on in investment. So it’s appropriate for us to be focused on that and thinking about opportunities that could emerge for us as a major distributor of LPG and to think about potential investments.

Okay, I appreciate all thoughts and the time this morning.

Great. Thanks Chris.

Okay. Thank you, Sarah.

Thank you, everybody for your time and attention this morning. We will see some of you at the AGA and we will talk to others on our Q3 call.

Thank you.