UGI (NYSE:UGI) reported fiscal 2026 first-quarter total reportable segments EBIT of $441 million, an increase of 5% from the prior-year period, as the company pointed to strong performance in its natural gas businesses and disciplined margin and cost management across its global LPG operations.
Management said results were in line with expectations, citing “robust gas demand” and the impact of the 2025 gas base rate case at its Pennsylvania utility. In its global LPG businesses, UGI said favorable weather in certain U.S. regions and margin management more than offset the earnings impact from previously announced divestitures.
First-quarter financial results and EPS comparison
UGI posted adjusted diluted EPS of $1.26, down from $1.37 a year earlier. O’Brien said the anticipated decline reflected the absence of investment tax credits realized last year, higher interest expense, and “lost earnings from the divestitures in Hawaii, Italy, and Austria,” partially offset by strong segment-level performance.
Segment performance: Utilities, Midstream and Marketing, and global LPG
Utilities delivered EBIT of $157 million, up $16 million year over year. O’Brien said temperatures in gas utility service territories were approximately 21% colder than the prior-year period, contributing to a 16% increase in core market volumes. The utility added more than 3,500 residential, commercial, and industrial heating customers during the quarter. Total margin increased $28 million, primarily due to higher gas base rates that took effect in Pennsylvania at the end of October 2025. O’Brien said colder weather provided incremental margin, but the company’s weather normalization mechanism “worked as designed,” mitigating a significant portion of the weather impact and supporting bill stability. Operating and administrative expenses rose $9 million, reflecting higher personnel and maintenance expenses.
Midstream and Marketing reported EBIT of $88 million, compared with $95 million in the prior-year period. Management noted that temperatures were 18% colder year over year, which provided some incremental margin benefit, but this was “largely offset” by pipeline rate increases that the company expects to recover over time starting in fiscal 2026. Operating and administrative expenses increased $6 million primarily due to higher personnel-related expenses and additional plants placed in service at the end of the prior fiscal year. In response to an analyst question, O’Brien characterized the pipeline transportation rate increase as roughly in the $5 million range and said the company expects to recover a significant portion in fiscal 2026, though not necessarily all of it.
UGI International posted EBIT of $124 million, up $14 million year over year, which O’Brien attributed largely to operating efficiencies that offset the impact of divestitures. Retail LPG volumes declined due to reduced crop drying campaigns, the divestiture of the company’s LPG businesses in Italy and Austria, and continued structural conservation. Total margin increased $20 million due to margin management and favorable foreign currency translation, partially offset by lower retail volumes. Operating and administrative expenses were comparable year over year, as divestiture-related benefits and lower distribution and maintenance expenses were offset by unfavorable foreign currency translation.
AmeriGas reported EBIT of $72 million, down $2 million from the prior-year period. Total retail LPG volume increased by 1 million gallons due to colder weather in the East, partially offset by warmer weather in the West and the divestiture of Hawaii operations. O’Brien said the business improved net customer attrition year over year as the operational transformation continued. Total margin increased $2 million as higher unit margins were partially offset by lower fee income, while operating and administrative expenses increased $8 million driven by investment in customer-facing initiatives, including higher personnel-related and advertising expenses.
Operational progress and safety metrics
Chief Executive Officer Bob Flexon emphasized safety and operational execution, saying the company saw year-over-year improvement in safety metrics across the enterprise. At AmeriGas, UGI reported a 45% reduction in recordable incidents and 60% fewer lost time injuries compared with the prior-year period.
Flexon said AmeriGas’ operational transformation is improving key metrics, including reductions in “zero fill rates” and average miles driven to serve customers, alongside “slightly higher retail volumes than last year.” He also cited lower customer service call volumes and improvements in customer satisfaction, noting AmeriGas now carries an A-minus Better Business Bureau ranking and achieved its highest Net Promoter Score since adopting its current methodology in 2023.
In closing remarks, Flexon added that first-quarter call center volumes at AmeriGas were down 17% versus the same period last year and that delivery metrics had improved. During Q&A, he said the company has seen “stress in the system” in certain geographies during extreme weather, driven less by temperatures and more by road conditions that impact deliveries. Flexon said UGI has been able to redeploy resources from the warmer western U.S. to the colder East given the size of its footprint.
UGI also noted a credit-related development: Flexon and O’Brien said Moody’s upgraded AmeriGas’ outlook to positive from negative while affirming the B1 corporate family rating.
Capital allocation, divestitures, rate cases, and strategic initiatives
UGI said it deployed $225 million of capital during the quarter, with 73% going to regulated utilities, primarily for infrastructure replacement and system betterment. The company also said its new Carlisle LNG storage and vaporization facility at UGI Energy Services is now operational and supported by a long-term contract with the utility segment.
On portfolio actions, Flexon said UGI International’s previously announced LPG portfolio rationalization is “substantially complete.” Since fiscal 2025, UGI entered into agreements to divest LPG operations in seven European countries, representing about 5% of UGI International’s prior-year EBIT. Flexon said these divestitures are expected to generate approximately $215 million in cash proceeds to support balance sheet strengthening.
Subsequent to the quarter, UGI filed gas base rate cases for UGI Utilities and Mountaineer Gas Company, requesting overall distribution rate increases of approximately $99 million and $27 million, respectively. Flexon said the rate cases support continued investment in more than $500 million of system and technology upgrades. Responding to a question about the timing of the Pennsylvania filing, Flexon said there was “nothing extraordinary or unusual” in the request and emphasized efforts to manage operating costs and maintain affordability, noting the company has focused on this area since his first day as CEO.
Flexon also highlighted a customer assistance commitment: over the next three years, UGI will contribute $3 million to the UGI Utilities Operation Share Energy Fund to help low- and moderate-income customers with heating bills, noting the funding is a donation and “is not included in the company’s rates.”
Liquidity stood at $1.6 billion at quarter-end, up $100 million from the prior year, including cash and borrowing capacity on revolving credit facilities. O’Brien said management remains focused on reducing leverage toward a long-term target of below 4.5x through a combination of debt reduction and EBIT growth.
During Q&A, Flexon discussed continued engagement on potential incremental natural gas demand in Pennsylvania, saying UGI is in discussions with multiple power providers and data centers and that a small group of opportunities has “moved to the next level.” He said he hopes the company will be able to announce developments during the fiscal year, while noting timing depends on counterparties.
UGI also addressed a leadership move announced alongside earnings: Flexon said the company created a Chief Strategic Officer role and hired “Sid” into the position to help focus on medium- and long-term strategy, including portfolio considerations, potential external opportunities, products, and longer-term environmental and regulatory considerations, while the company continues to prioritize operational execution.
About UGI (NYSE:UGI)
UGI Corporation (NYSE: UGI) is a publicly traded energy distribution company headquartered in King of Prussia, Pennsylvania. Founded in 1882 as the United Gas Improvement Company, UGI has grown into a diversified provider of energy products and services. The company’s operations are organized into three primary segments—AmeriGas Propane, UGI Utilities and UGI International—each focused on the delivery of propane, natural gas and related services to residential, commercial and industrial customers.
AmeriGas Propane, UGI’s largest segment, is the leading retail propane distributor in the United States with a network of dealers serving customers in all 50 states.
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