UGI Corporation (NYSE:UGI) Q2 2018 Earnings Conference Call Transcript

May 03, 2018 • 09:00 am ET

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UGI Corporation (NYSE:UGI) Q2 2018 Earnings Conference Call Transcript

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Presentation
Executive
John L. Walsh

excluding the positive tax impact was up almost 15% over Q2 fiscal 2017.

Now that we reported Q2, we're in a good position to update UGI's full year guidance for fiscal 2018. On a year-to-date basis our adjusted EPS is running over 20% above prior year. Based on this very strong performance, we're increasing our guidance to a range of $2.70 to $2.80. The midpoint of the updated guidance is almost 8% above the midpoint of our original fiscal '18 guidance of $2.45 to $2.65 and 20% above our 2017 full year adjusted EPS of $2.29.

In addition to the strong earnings performance in the second quarter, it's important to note the progress we've made on a number of strategic projects and activities. Our teams as always maintain their focus on meeting our critical commitments to customers in the communities we serve, while also ensuring that our new capital projects and acquisitions meet or exceed their performance targets.

Some highlights for the quarter. With our FERC certificate in hand, the PennEast partnership team is now focused on local activities in both Pennsylvania and New Jersey. The partnership is working cooperatively with property owners and has obtained survey permission for 97% of the route in Pennsylvania and 50% of the route in New Jersey. This project will provide critical new pipeline capacity and enhanced access to affordable Marcellus gas to residential customers in eastern Pennsylvania and across the state of New Jersey. We're working closely with governmental agencies in both states, as we move through the detailed processes related to property surveys, land acquisitions and local permitting.

Our LNG facilities were extremely busy in Q2, particularly during the period of severe cold in early January. We made great use of our new Manning liquefaction facility, which came on stream last year. The LNG produced at Manning is being used to service our growing portfolio of peaking contracts and also positions us well to provide incremental LNG services to critical customers in New England.

Demand for LNG is very high. As the combination of increased peak day demand for most gas LDCs and ramping power generation demand, strains the available pipeline capacity for many areas of the mid-Atlantic and all of New England. LNG has become an essential element of the supply portfolio in those regions and our Manning investment was well timed as the sector looks for incremental supply capacity.

We continue to grow our customer base at UGI Utilities, as we add new customers along our mains and extent our mains to reach under-served towns across the commonwealth. We've added over 8,600 new residential heating and commercial customers' year-to-date and demand for gas service continues to be very strong.

UGI Utility now serves almost 650,000 natural gas customers in Pennsylvania, an increase of approximately 50,000 customers over the past five years. We continue to make great progress with our mission to replace and reinforce critical infrastructure across our system. Our infrastructure replacement program for cast iron and bare steel remains