Good morning, everyone, and thank you for joining our fiscal 2022 second quarter earnings call. With me today are Roger Perreault, President and CEO; Ted Jastrzebski, CFO; and Bob Beard, Executive Vice President, Natural Gas, Global Engineering & Construction and Procurement.

Roger and Ted will provide an overview of our results and the entire team will then be available to answer your questions. Before we begin, let me remind you that our comments today 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 most recent annual report 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 within our presentation. Now, I'm pleased to turn the call over to Roger.

Thank you, Tameka and good morning, everyone. On today's call, we will provide a business update, review our financial results for the quarter and discuss the outlook for the rest of this fiscal year before concluding with a question-and-answer session.

Let's start with an overview of market conditions and UGI's financial results in our fiscal year second quarter. While we continue to operate in a dynamic macroeconomic and geopolitical environment, our business has shown tremendous resiliency and made good strides on several key strategic priorities.

For the fiscal second quarter, UGI reported adjusted EPS of $1.91, and our reportable segments delivered adjusted EBIT of $631 million, which was fairly consistent with the prior fiscal year. We saw strong results from our natural gas businesses largely due to incremental earnings from our recent acquisitions, Mountaineer and Stonehenge.

UGI International reported higher LPG margin as the business worked to recover the significant increases in commodity costs. In addition, we began to realize benefits from the several expense control actions implemented during the quarter.

This performance partially offset the lower delivered volumes at AmeriGas and decline in energy marketing margin at UGI International. For the full fiscal year, we expect adjusted EPS for fiscal 2022 to be within a revised guidance range of $2.90 to $3 inclusive of the effects of margin management and expense control actions implemented in the first quarter, and we expect to see benefits throughout the year.

Ted will expound on these results and the updated guidance in further detail. I would also like to take a few minutes to highlight several key accomplishments.

First, the Utilities segment remains on track to make record capital investments in this fiscal year. We also added approximately 4,000 new residential heating and commercial customers at the utilities demonstrating sustained and attractive customer growth within our service territories.

Our recent acquisition in the regulated utility space, Mountaineer, continues to perform in line with our expectations and delivered robust results in the quarter. Similarly, the integration of Stonehenge is also progressing smoothly, and we are pleased with the incremental accretion from these quality assets that was realized during the quarter.

At UGI International, our LPG business implemented price increases designed to mitigate the impact of higher commodity prices. And our domestic propane business, AmeriGas, continue to experience strong cylinder exchange and national account volumes during the quarter, showing sustained increases in comparison to pre-pandemic volumes.

Turning to our renewables and rebalancing strategy. In February, we announced an agreement with Global Clean Energy Holdings to purchase and distribute renewable LPG to motor fuel and other customers, primarily in California.

The biorefinery that will produce this renewable LPG is expected to be operational in the second half of calendar 2022. In April, we acquired a 33% equity interest in Ag-Grid Energy, a renewable energy producer with projects in the United States.

Ag-Grid is currently engaged in the production of renewable power with 4 operational projects in the Northeast. The company also has a strong pipeline of dairy and food waste digester projects that are expected to produce additional renewable power and renewable natural gas in the U.S.

GHI Energy will be the exclusive offtaker and marketer of RNG for Ag-Grid. Lastly, our previously announced RNG projects remain on track with the first in Idaho expected to be completed and operational in this fiscal year.

And with that, I'll turn the call over to Ted to walk through our financial results. Ted?

Thanks, Roger. UGI delivered adjusted diluted EPS of $1.91 compared to $1.99 in the prior year fiscal quarter.

This table lays out our GAAP and adjusted diluted EPS for the second quarter and the comparable prior period. As you can see, our adjusted diluted earnings exclude adjustments totaling $2.41 that related to a number of items.

First, the impact of mark-to-market changes in commodity hedging instruments, a gain of $2.48 this year versus $0.25 in the prior year which is largely attributable to the increases in commodity prices. Last year, we had a $0.05 gain on foreign currency derivative instruments.

This year, we adjusted out $0.01 of expenses associated with the corporate functions transformation in comparison to $0.07 in the prior year for all the business transformation initiatives. Also, last year, we had a onetime $0.11 gain attributable to a change in the Italian tax law that provided a benefit in fiscal 2021.

Lastly, this year, we adjusted out $0.06 of expenses related to restructuring costs within the global LPG business, mostly at AmeriGas and principally resulting from a reduction in the workforce and related costs. On this slide, we provide additional color on the year-over-year quarterly performance by segment.

As Roger noted, total EBIT from the reportable segments is consistent year-over-year. The $0.08 decline in year-over-year adjusted EPS for quarter 2 is primarily attributable to the incremental shares from the equity units issued in May 2021 in conjunction with the Mountaineer acquisition.

Global LPG experienced higher LPG margins and implemented strong expense control actions, which partially offset net volume loss at AmeriGas and the impact of significant increases in volatility in commodity prices on the UGI International energy marketing business. Our natural gas businesses reported higher contribution in comparison to the prior year, largely due to the incremental margin for Mountaineer and Stonehenge, which offset lower capacity management margin.

Turning to the individual businesses. AmeriGas reported $12 million decrease in EBIT over the prior year.

Retail volume declined 8%, largely due to the continued impact of customer service challenges that occurred in fiscal 2021 and increased price sensitivity in the higher commodity cost environment. As we shared last quarter, we experienced customer service challenges as a part of rolling out our new operating model.

While AmeriGas is the leading propane distribution company in the U.S. The propane market is highly fragmented and competitive in nature, and these service challenges led to increased churn during the quarter.

These issues are largely behind us, and our metrics have significantly improved over last year. In some instances, we've implemented and met more stringent metrics.

We continue to focus on the customer experience, which we recognize is crucial for customer retention and growth. Now for the quarter, AmeriGas reported lower retail volumes, a $33 million impact to margin when compared to the prior year.

This decline was partially offset by higher average retail unit margins as we balance our margin management efforts, customer affordability and the competitive pressures that exist. Operating and administrative expenses increased by $7 million, and this was largely due to the continued impact of rising cost inflation on the business.

Year-over-year, we saw higher general insurance expense, increased vehicle fuel and bad debt reserves. UGI International reported EBIT of $120 million compared to $149 million in the prior year period.

Retail volumes increased 2% despite weather that was almost 5% warmer than the prior year period, largely due to the recovery of certain bulk and auto gas volumes that were negatively affected by the COVID-19 pandemic. The LPG business reported higher average LPG unit margins as the business focused on passing on higher commodity costs incurred during the first and second quarters to customers.

As a result, the year-over-year increase in total LPG margins partially offset lower margins from energy marketing activities as well as the translation effects of weaker foreign currencies. During fiscal Q2, we continued to see significant increases in volatility in natural gas and power prices, which further intensified after Russia's invasion of Ukraine and resulted in increased costs from daily and intraday balancing activities.

The effects of this volatility on customer contracts was magnified by winter volumes and are, therefore, mostly confined to the primary heating season. In addition, a large portion of the decline in energy marketing margin resulted from continued margin shift given backwardation of the forward curve.

We expect that these amounts will be recoverable in future periods of the contract starting from fiscal Q3, which, along with other initiatives, will offset a portion of the margin decline experienced in the first half of the year. Separately, our hedging strategy, which is intended to offset the multiyear impact of foreign currency changes is working as intended and is reducing the volatility associated with U.S.

dollar shifts over time. Next, Midstream & Marketing reported EBIT of $90 million compared to $100 million in prior year period.

The business experienced lower margin from natural gas marketing and capacity management contracts that was negatively impacted by the settlement timing of certain multiyear hedge contracts for stored volume. These impacts were partially offset by improved margin from peaking contracts and incremental margin attributable to the Stonehenge acquisition that was completed toward the end of January 2022.

Our utility segment reported EBIT of $194 million, $52 million higher than the prior year. Core market volume and total volume were both up largely due to the incremental volume for Mountaineer in addition to weather that was roughly 4% colder than the prior year.

Total margin increased by $79 million due to higher volume, the increased base rate at UGI Utilities and benefits of the distribution system improvement charge, or DISC that was implemented in Q3 of fiscal 2021. The increase in operating and administrative expenses as well as depreciation expense were largely a result of the incremental expenses attributable to Mountaineer.

Moving to liquidity. At quarter end, UGI had available liquidity of $1.9 billion in comparison to $1.6 billion in the prior year period.

Our businesses continue to generate attractive cash flow, and our balance sheet remains strong with the capacity to fund active projects and growth investments. Additionally, we're pleased to announce that our Board of Directors increased the quarterly dividend to $0.36 per share, making this the 138th year of consecutively paying dividends and 35th consecutive year of increasing our annual dividend.

With this increase, our 10-year dividend growth rate is 7.2%, far exceeding our long-term target of 4% and demonstrating our commitment to creating value for our shareholders. Now we'll turn to our outlook for this fiscal year.

As Roger mentioned, we expect adjusted EPS for the fiscal 2022 year to be within an updated guidance range of $2.90 to $3, largely due to the impact of warmer than normal weather and the significant increases and volatility on commodity prices particularly within our international energy marketing business in the first half of the year. Year-over-year, we've realized a loss of approximately $80 million in EBIT on a year-to-date basis, from energy marketing at UGI International.

We expect to recover nearly half of the loss by the end of this fiscal year, mainly due to price increases now in place to reflect the heightened commodity price and volatility, margin shift due to price backwardation and cost control actions taken within that business. In addition, seasonal volumes reduce our exposure in the back half of the year, and we've taken additional measures to mitigate the volumetric risk by not signing new contracts.

Furthermore, some fixed price contracts now include volume commitments so that any over consumption is charged to floating prices. Lastly, we've initiated a strategic review of the energy marketing business at UGI International including options to exit the business.

Turning back to our FY '22 guidance. With our revised guidance of $2.90 to $3, please note that we will experience a different earnings profile for this fiscal year when compared to our historical pattern.

We expect a higher-than-normal proportion of annual earnings in the second half of this fiscal year given actions implemented in Q1. Specifically, we are passing on higher cost to customers as soon as possible and controlling expenses and further streamlining operations to enhance efficiencies.

These actions include optimizing seasonal workforce management activity, delaying and deferring current and planned open positions in contracted support, reducing discretionary spending, such as outside professional fees and making a permanent reduction in force to rightsize their employee base to ensure a better alliance with the current business environment. We believe these changes better position UGI for growth and the ability to achieve long-term financial commitments to shareholders.

And with that, I'll turn the call back over to Roger.

Thanks, Ted. As I mentioned earlier, I am pleased with the resiliency that we've shown and how our teams have responded to the dynamic and challenging environment that we're operating in.

During our fiscal second quarter, we saw Russia's invasion of Ukraine, which has had a devastating impact on the people of Ukraine and a significant impact on the European and global energy sector. Globally, this has led to increased commodity prices while demonstrating the need for safe, reliable, affordable and environmentally friendly energy solutions.

It will be interesting to see all the conversations regarding energy dependence progress. Notwithstanding, we are confident that UGI is and will continue to be a part of the solution for customers and governments in the geographies that we serve.

In addition, we are partnering with a global nonprofit organization, World Central Kitchen to assist Ukranian refugees by providing funds for food and food supplies as well as propane to fuel their kitchens. I'm also pleased to announce that we will be publishing our fourth ESG report later this month, and this will highlight some of the key progress that we have made against our commitments.

As we close, I wanted to emphasize that we remain focused on our strategy to deliver reliable earnings growth and to meet our long-term financial commitments of providing 6% to 10% EPS growth and 4% dividend growth. Our business is committed to delivering value to our customers and continually enhancing their experience, creating new efficiencies, cultivating a culture of growth that empowers our employees making a difference in the communities that we serve and adding value for our shareholders.

We thank you for your interest in UGI and your participation in today's call. And with that, we will open the line for your questions.

It's actually Kody Clark on for Julian. First -- so first, can you give a little bit more detail on the confidence in recovering half of that energy marketing loss in Europe here in the back half of '22 and on those fixed-price contracts, was there the same dynamic in the second quarter of customers pulling more than you had hedged for?

And also just to round it out on energy marketing there on the strategic review, curious what the results of the review could entail outside of exiting the business.

Yes. Thanks, Kody, for the question.

So let me start with kind of what we saw in the second quarter. So as you can see, we highlighted that we have year-to-date about $80 million of losses in EBIT attributed to the energy marketing business.

So that was due to backwardation where we didn't see the margins in the quarter, but we certainly -- now start seeing that margin come in, in the third and fourth quarter. We also -- I mean, weather was relatively normal, like you didn't see large, large swings so volumes were going pretty much as expected.

So what we're now looking at going forward is us again, recovering from the backwardation. So we're going to start seeing that come in, in Q3 and Q4.

What we're also expecting going forward is that we did manage contracts as we had talked about after the Q1 where we could, we put in place actions where we could charge customers for the additional volume that is being consumed. We also have put in place price increases where we could so that we can take into account the additional volatility that we had experienced so that we are now going to see better margins as we go forward.

And thirdly, but equally importantly, we have put in place cost control actions where, for example, we did not fill open positions, and we will not be filling open positions, where we are reducing discretionary expenses, et cetera. So when we look at the situation between now and the end of the year, we expect to recover approximately half of the $80 million headwind we've experienced on a year-to-date basis.

So we feel pretty good about that. And I think that's really what has been built into -- not what I think, it's what has been built in into our guidance range of $2.90 to $3.

Now maybe a couple of words on the strategic review. It became very evident to us that the volatility that we experienced in the first quarter is not a good strategic fit for the company.

We talk about our reliable earnings growth. And when it comes to this energy marketing piece, it's not an ideal fit with what we saw.

So we have now -- we are now looking at all the strategic options, which include exiting the business. We're going to continue to provide updates on that as we go through the third quarter and the fourth quarter.

It's a process that has now begun, and I look forward to being able to give you more color on it as we continue to identify what are the options that are best for us and for our shareholders.

Okay. Understood.

That's very helpful. And you mentioned it a little bit just on the expense control efforts.

Wondering how we should think about these costs coming back into the plan as we look out the next couple of years, i.e., how much is onetime levers versus kind of perpetual cost cutting?

Yes. We really have a combination.

So it's something as well that we'll be able to provide more color as we go forward. But we -- for example, there are certain positions that we will not fill.

So those are going to be expected to be cost takeout that will remain. However, we did also exercise some temporary cost reductions that we know we will want to be reintroducing as a company over the next year.

So that is something, as we look at providing guidance for next year, we'll be able to talk very clearly about what it is we're allowing ourselves to be introduced.

I guess, Kody, this is Ted. I would just add that this is an unusual year where we had to find offsets to revenue headwinds because of the energy marketing in international because of the volume churn at AmeriGas.

So we took unusual measures to manage margin and to control costs. As Roger said, there's a portion of that cost management that's permanent.

That will be maintained in the future. I would say on those costs that were deferred or delayed, we would see that normalize at a pace where we're seeing our revenues normalize.

And so we don't expect to see burgeoning costs in the future as we get back into the future years with normalization of revenues.

Got it. Okay.

And then lastly, just a housekeeping item. Just wondering, is the new FY '22 guidance, $2.90 to $3 a new base for the 6% to 10%?

Or should we think about the original guidance as that base for the 6% to 10%?

Yes, when we look at that new guidance of $2.90 to $3 with a midpoint of $2.95, just like to bring to your attention that on a 10-year basis, that will be a 9% growth on a 20-year basis, an 8.3% growth. So again, when we're talking about the 6% to 10% growth rate.

We certainly are always referencing it on a long-term basis and long-term financial commitment. So with that new guidance, we still remain at the top end of our range.

Right. Okay.

But the prior FY '25 guidance that you shared, is that something that you're reiterating, I guess?

Yes. So that's something that we will be updating as we continue to work our way through the remainder of this year and then provide guidance at the end of the year when we talk about guidance for fiscal '23 and beyond.

Okay. Got it.

I'll pass it off there. Thanks for the time, and we'll see you at AGA.

Yes. Thank you, Kody.

Appreciate the questions this morning.

Just one follow-up on the energy marketing business. So wondering if you could share the average remaining contract life for the existing full requirement contracts there.

Appreciate it. It seems like the worst is behind us, but just wondering where your exposure stands today.

Thank you, Marc, for the question. Yes.

So we -- the contracts are typically 2 to 3 years. So we are, again, depending on the strategic review and the outcome of our strategic review, there's some uncertainty as to what that will look like for the following years.

But our contracts, we stopped signing contracts, so we will see if we remain with the contracts between now and the end of their term, it would be until the end of fiscal '25.

Thanks, everyone, for joining us today. I'd like to celebrate today the Cinco de Mayo Day with all of you.

I certainly look forward to speaking with some of you at the AGA conference in a couple of weeks and/or on the next earnings call. So thanks, everyone.