UGI CORP PA

Previous wording

The following analyses compare the Company’s results of operations for the 2023 three-month period with the 2022 three-month period. Our analysis of results of operations should be read in conjunction with the segment information included in Note 15 to Condensed Consolidated Financial Statements.

Current wording

The following analyses compare the Company’s results of operations for the 2024 three-month period with the 2023 three-month period and the 2024 six-month period with the 2023 six-month period. Our analysis of results of operations should be read in conjunction with the segment information included in Note 15 to Condensed Consolidated Financial Statements.

Previous wording

In August 2023, the Company announced the commencement of a strategic review, focused on the LPG businesses, intending to unlock and maximize shareholder value. The Company is exploring a full range of options with the goal of reducing UGI’s earnings volatility and strengthening its balance sheet. In conjunction with the strategic review, the Company is also pursuing actions to optimize its cost structure and re-align its capital allocation priorities. The Company continues on its existing plans while the review of strategic alternatives is ongoing.

Current wording

In August 2023, the Company announced the commencement of a strategic review of the LPG businesses, primarily focused on AmeriGas Propane, with the intent to unlock and maximize shareholder value. The Company explored a full range of options with the goal of reducing UGI’s earnings volatility and strengthening its balance sheet. During the review, the Company and its financial advisors evaluated several value creation opportunities including a potential sale, spin, and joint venture of AmeriGas. While the Company conducted due diligence with multiple strategic and financial parties, the Board of Directors decided that in the current market, the Company should focus on a restructuring and operational improvement plan for AmeriGas. The review concluded that disciplined execution of a revised operational strategy and optimization of UGI’s diverse mix of strategically located assets best positions the Company to create long-term shareholder value.

Previous wording

As of December 31, 2023, pursuant to its previously announced decision, the Company has exited substantially all of its European energy marketing business which primarily marketed natural gas and electricity to customers through third-party distribution systems in France, Belgium, the Netherlands, and the United Kingdom.

Current wording

As of the end of the first quarter of Fiscal 2024, pursuant to its previously announced decision, the Company had exited substantially all of its European energy marketing business which primarily marketed natural gas and electricity to customers through third-party distribution systems in France, Belgium, the Netherlands, and the United Kingdom.

Previous wording

France. In October 2023, UGI International, through a wholly-owned subsidiary, sold substantially all of its energy marketing business located in France for a net cash payment to the buyer of $28 million. In conjunction with the sale, during the three months ended December 31, 2023, the Company recorded a pre-tax loss of $28 million, which amount principally represents the net payment to the buyer. The carrying values of the assets and liabilities associated with this business, principally comprising certain commodity derivative instruments, energy certificates and certain working capital, were not material.

Current wording

France. In October 2023, UGI International, through a wholly-owned subsidiary, sold substantially all of its energy marketing business located in France for a net cash payment to the buyer of $28 million. In conjunction with the sale, during the first quarter of Fiscal 2024, the Company recorded a pre-tax loss of $28 million, which amount principally represents the net payment to the buyer. The carrying values of the assets and liabilities associated with this business, principally comprising certain commodity derivative instruments, energy certificates and certain working capital, were not material.

Previous wording

Belgium. In September 2023, UGI International, through a wholly-owned subsidiary, sold its energy marketing business located in Belgium for a net cash payment to the buyer of $3 million. Pursuant to the sale agreement, the Company transferred to the buyer certain assets, principally comprising customer and energy broker contracts. In conjunction with the sale, during the fourth quarter of Fiscal 2023, the Company recorded a pre-tax loss of $6 million which amount includes the net payment to the buyer, the write-off of certain prepaid energy broker payments and associated transaction costs and fees.

Current wording

Belgium. In September 2023, UGI International, through a wholly-owned subsidiary, sold its energy marketing business located in Belgium for a net cash payment to the buyer of $3 million. Pursuant to the sale agreement, the Company transferred to the buyer certain assets, principally comprising customer and energy broker contracts. In conjunction with the sale, during the fourth quarter of Fiscal 2023, the Company recorded a pre-tax loss of $6 million which includes the net payment to the buyer, the write-off of certain prepaid energy broker payments and associated transaction costs and fees.

Previous wording

United Kingdom. In October 2022, UGI International, through a wholly-owned subsidiary, sold its natural gas marketing business located in the U.K. for a net cash payment to the buyer of $19 million which includes certain working capital adjustments. In conjunction with the sale, during the three months ended December 31, 2022, the Company recorded a pre-tax loss of $215 million substantially all of which was due to the non-cash transfer of commodity derivative instruments associated with the business.

Current wording

United Kingdom. In October 2022, UGI International, through a wholly-owned subsidiary, sold its natural gas marketing business located in the U.K. for a net cash payment to the buyer of $19 million which includes certain working capital adjustments. In conjunction with the sale, during the first quarter of Fiscal 2023, the Company recorded a pre-tax loss of $215 million substantially all of which was due to the non-cash transfer of commodity derivative instruments associated with the business.

Previous wording

Netherlands. In September 2023, a substantial number of DVEP’s customers agreed to modify their energy marketing contracts whereby the Company would continue to provide the delivery of electricity and natural gas at fixed prices through December 31, 2023, with the Company’s obligations to provide future services terminated effective January 1, 2024. As consideration for the early termination of such contracts, the Company has agreed to make cash payments to the customers equal to the fair values of specific commodity derivative instruments associated with periods after December 31, 2023. For the three months ended December 31, 2023, the Company settled the commodity derivative instruments for a gain of $46 million, which represents the fair value of the specific commodity derivative instruments associated with periods after December 31, 2023; and reduced its revenues from these customers by $42 million, which represents the pro-rated performance obligation from October 1, 2023 through December 31, 2023.

Current wording

Netherlands. In September 2023, a substantial number of DVEP’s customers agreed to modify their energy marketing contracts whereby the Company would continue to provide the delivery of electricity and natural gas at fixed prices through December 31, 2023, with the Company’s obligations to provide future services terminated effective January 1, 2024. As consideration for the early termination of such contracts, the Company agreed to make cash payments to the customers equal to the fair values of specific commodity derivative instruments associated with periods after December 31, 2023. During the first quarter of Fiscal 2024, the Company settled the commodity derivative instruments for a gain of $46 million, which represented the fair value of the specific commodity derivative instruments associated with periods after December 31, 2023; and reduced its revenues from these customers by $42 million, which represented the pro-rated performance obligation from October 1, 2023 through December 31, 2023.

Previous wording

In conjunction with the wind-down of its European energy marketing business, in December 2023, DVEP completed a sale of a substantial portion of its power purchase agreements to a third party for a total consideration to the buyer of $5 million. In conjunction with the sale, the Company recorded a loss of $5 million.

Current wording

In conjunction with the wind-down of its European energy marketing business, in December 2023, DVEP completed a sale of a substantial portion of its power purchase agreements to a third party for a total consideration to the buyer of $5 million. In conjunction with the sale, the Company recorded a pre-tax loss of $5 million.

Previous wording

During the three months ended December 31, 2022, the Company recorded a $19 million pre-tax impairment charge to reduce the carrying values of certain assets associated with its energy marketing business in the Netherlands, comprising property, plant and equipment and intangible assets.

Current wording

During the first quarter of Fiscal 2023, the Company recorded a $19 million pre-tax impairment charge to reduce the carrying values of certain assets associated with its energy marketing business in the Netherlands, comprising property, plant and equipment and intangible assets.

Previous wording

The following tables reflect the adjustments referred to above and reconcile net income (loss) attributable to UGI Corporation, the most directly comparable GAAP measure, to adjusted net income (loss) attributable to UGI Corporation, and reconcile diluted earnings per share, the most directly comparable GAAP measure, to adjusted diluted earnings per share:

Current wording

The following tables reflect the adjustments referred to above and reconcile net income (loss) attributable to UGI Corporation, the most directly comparable GAAP measure, to adjusted net income attributable to UGI Corporation, and reconcile diluted earnings per share, the most directly comparable GAAP measure, to adjusted diluted earnings per share:

Previous wording

(c)The loss per share for the three months ended December 31, 2022, was determined excluding the effect of 6.43 million dilutive shares as the impact of such shares would have been antidilutive due to the net loss for the period, while the adjusted earnings per share for the three months ended December 31, 2022, was determined based upon fully diluted shares of 216.37 million.

Current wording

(c)The loss per share for the six months ended March 31, 2023, was determined excluding the effect of 6.35 million dilutive shares as the impact of such shares would have been antidilutive due to the net loss for the period. Adjusted earnings per share for the six months ended March 31, 2023, was determined based upon fully diluted shares of 216.25 million.

Previous wording

Discussion. Net income attributable to UGI Corporation for the 2023 three-month period was $94 million (equal to $0.44 per diluted share) compared to net loss attributable to UGI Corporation of $954 million (equal to $4.54 loss per diluted share) for the 2022 three-month period. These results include net losses from changes in unrealized commodity derivative instruments and certain foreign currency derivative instruments of $91 million and $1,028 million during the 2023 and 2022 three-month periods, respectively. The lower losses from changes in commodity derivative instruments during the 2023 three-month period, principally reflects significantly less volatility in commodity energy prices in Europe following unprecedented volatility in such prices during the 2022 three-month period.

Current wording

Discussion. Net income attributable to UGI Corporation for the 2024 three-month period was $496 million (equal to $2.30 per diluted share) compared to $110 million (equal to $0.51 per diluted share) for the 2023 three-month period. These results include net gains (losses) from changes in unrealized commodity derivative instruments and certain foreign currency derivative instruments of $111 million and $(242) million during the 2024 and 2023 three-month periods, respectively. The higher gains from changes in commodity derivative instruments during the 2024 three-month period principally reflects significantly less volatility in commodity energy prices following unprecedented volatility in such prices during the 2023 three-month period and the effects of significantly lower energy marketing activities in Europe resulting from the exit of substantially all of UGI International’s energy marketing business.

Previous wording

Net income attributable to UGI Corporation during the 2023 three-month period also includes (1) $65 million of costs associated with the exit of our UGI International energy marketing business in Europe, principally reflecting wind-down activities in the Netherlands and the loss on the sale of the energy marketing business located in France; (2) external advisory fees of $5 million associated with AmeriGas operations enhancement for growth project; and (3) restructuring costs of $3 million largely attributable to a reduction in workforce and related costs.

Current wording

Net income attributable to UGI Corporation during the 2024 six-month period also includes (1) $66 million of costs associated with the exit of our UGI International energy marketing business in Europe, principally reflecting wind-down activities in the Netherlands and the loss on the sale of the energy marketing business located in France; (2) restructuring costs of $30 million largely attributable to a reduction in workforce and related costs; (3) external advisory fees of $10 million associated with AmeriGas operations enhancement for growth project; and (4) an impairment of assets of $5 million at UGI International.

Previous wording

Net loss attributable to UGI Corporation during the 2022 three-month period also includes (1) $166 million costs associated with exit of our UGI International energy marketing business in Europe, principally reflecting loss on the sale of the energy marketing business located in the U.K. and an impairment of assets; (2) external advisory fees of $5 million associated with AmeriGas operations enhancement for growth project; and (3) business transformation expenses of $1 million associated with corporate support functions.

Current wording

Net loss attributable to UGI Corporation during the 2023 six-month period also includes (1) $170 million costs associated with the exit of our UGI International energy marketing business in Europe, principally reflecting the loss on the sale of the energy marketing business located in the U.K. and an impairment of assets; (2) external advisory fees of $10 million associated with AmeriGas operations enhancement for growth project; and (3) business transformation expenses of $3 million associated with corporate support functions.

Previous wording

Adjusted net income attributable to UGI Corporation for the 2023 three-month period was $258 million (equal to $1.20 per diluted share) compared to $246 million (equal to $1.14 per diluted share) for the 2022 three-month period. The increase in adjusted net income attributable to UGI Corporation for the 2023 three-month period reflects higher earnings contributions from our UGI International, Midstream & Marketing and Utilities segments, partially offset by lower earnings contributions from our AmeriGas Propane segment. During the 2023 three-month period, temperatures in all of our segments, except for our UGI International segment, were significantly warmer than the prior-year period.

Current wording

Adjusted net income attributable to UGI Corporation for the 2024 six-month period was $681 million (equal to $3.16 per diluted share) compared to $609 million (equal to $2.82 per diluted share) for the 2023 six-month period. The increase in adjusted net income attributable to UGI Corporation for the 2024 six-month period reflects higher earnings contributions from the Utilities, Midstream & Marketing and UGI International segments, partially offset by lower earnings contributions from the AmeriGas Propane segment. During the 2024 six-month period, temperatures in all of our segments were warmer than the prior-year period.

Previous wording

Utilities’ adjusted net income attributable to UGI Corporation increased $5 million in the 2023 three-month period notwithstanding the effects of significantly warmer weather. The increase is largely related to the increase in base rates (effective October 1, 2023) and the implementation of the weather normalization adjustments (effective November 1, 2022) for PA Gas Utility.

Current wording

Utilities’ adjusted net income attributable to UGI Corporation increased $17 million in the 2024 six-month period. The increase was largely attributable to higher total margin due in large part to increases in base rates for both PA Gas Utility and Mountaineer during Fiscal 2024 and the implementation of the weather normalization adjustments for PA Gas Utility (effective November 2022).

Previous wording

Midstream & Marketing’s adjusted net income attributable to UGI Corporation increased $15 million in the 2023 three-month period. The increase is primarily attributable to lower income taxes reflecting higher investment tax credits in the 2023 three-month period.

Current wording

Midstream & Marketing’s adjusted net income attributable to UGI Corporation increased $69 million in the 2024 six-month period. The increase is primarily attributable to higher total margin from natural gas marketing activities and lower income taxes reflecting higher investment tax credits in the 2024 six-month period.

Previous wording

AmeriGas Propane’s adjusted net income attributable to UGI Corporation decreased $33 million in the 2023 three-month period. The decrease principally reflects lower total margin largely attributable to lower retail propane volumes sold and, to a much lesser extent, higher operating and administrative expenses, partially offset by the benefit of higher average retail propane unit margins in the 2023 three-month period.

Current wording

AmeriGas Propane’s adjusted net income attributable to UGI Corporation decreased $69 million in the 2024 six-month period. The decrease principally reflects lower total margin largely attributable to lower retail propane volumes sold, partially offset by the benefit of higher average retail propane unit margins in the 2024 six-month period. This decrease is also attributable to higher income taxes reflecting valuation allowance on disallowed interest expense following its goodwill impairment charge in the third quarter of Fiscal 2023.

Previous wording

(a)Total margin represents revenues less cost of sales and revenue-related taxes (i.e., gross receipts and business and occupation taxes) of $7 million each during the 2023 and 2022 three-month periods. For financial statement purposes, revenue-related taxes are included in “Operating and administrative expenses” on the Condensed Consolidated Statements of Income (but are excluded from operating and administrative expenses presented above).

Current wording

(a)Total margin represents revenues less cost of sales and revenue-related taxes (i.e., gross receipts and business and occupation taxes) of $9 million and $10 million during the 2024 and 2023 three-month periods, respectively. For financial statement purposes, revenue-related taxes are included in “Operating and administrative expenses” on the Condensed Consolidated Statements of Income (but are excluded from operating and administrative expenses presented above).

Previous wording

Utilities revenues decreased $99 million in the 2023 three-month period substantially due to lower Gas Utility revenues. The decrease in Gas Utility revenues was largely attributable to lower PGC and PGA rates reflecting lower natural gas costs, the lower core market volumes due to warmer weather and lower off-system sales. These decreases were partially offset by the effects of the increase in base rates (effective October 1, 2023) and weather normalization adjustments (effective November 1, 2022) for PA Gas Utility. Electric Utility revenues were comparable to the prior-year period.

Current wording

Utilities revenues decreased $128 million in the 2024 three-month period substantially due to lower Gas Utility revenues. The decrease in Gas Utility revenues was largely attributable to lower PGC and PGA rates reflecting lower natural gas costs and lower off-system sales. These decreases were partially offset by the effects of increases in base rates for PA Gas Utility (effective October 1, 2023) and Mountaineer (effective January 1, 2024), increase in DSIC revenues and slightly higher core market volumes. Electric Utility revenues were comparable to the prior-year period.

Previous wording

Utilities total margin increased $9 million during the 2023 three-month period primarily attributable to higher Gas Utility total margin ($7 million), notwithstanding the significantly warmer weather, mainly reflecting the effects of the increase in base rates (effective October 1, 2023) and weather normalization adjustments (effective November 1, 2022) for PA Gas Utility, increases in DSIC revenue and, to a much lesser extent, impacts from growth in the core market customers. Electric Utility margin increased by $2 million during the 2023 three-month period mainly reflecting the increase in base rates effective October 1, 2023.

Current wording

Utilities total margin increased $25 million during the 2024 three-month period primarily attributable to higher Gas Utility total margin ($21 million), mainly reflecting the effects of increases in base rates for PA Gas Utility (effective October 1, 2023) and Mountaineer (effective January 1, 2024), increases in DSIC revenue and the impacts from growth in the core market customers. Electric Utility margin increased by $4 million during the 2024 three-month period mainly reflecting the increase in base rates effective October 1, 2023.

Previous wording

Average temperatures across Midstream & Marketing’s energy marketing territory during the 2023 three-month period were 9.4% warmer than normal and 10.5% warmer than the prior-year period.

Current wording

Average temperatures across Midstream & Marketing’s energy marketing territory during the 2024 three-month period were 13.4% warmer than normal and 3.4% colder than the prior-year period.

Previous wording

Midstream & Marketing cost of sales decreased $275 million compared to the prior-year period, primarily reflecting lower natural gas costs ($271 million) related to the previously mentioned natural gas marketing activities and, to a much lesser extent, lower cost of sales related to retail power marketing activities.

Current wording

Midstream & Marketing cost of sales decreased $196 million compared to the prior-year period, primarily reflecting lower natural gas costs ($190 million) related to the previously mentioned natural gas marketing activities and, to a much lesser extent, lower cost of sales related to retail power marketing activities.

Previous wording

Midstream & Marketing total margin during the 2023 three-month period was comparable to the prior-year period as higher margins from natural gas marketing activities, including the effects of peaking and capacity management activities, were largely offset by lower total margin from renewable energy.

Current wording

Midstream & Marketing total margin increased $41 million compared to the prior-year period, primarily reflecting higher margins from natural gas marketing activities ($46 million), primarily reflecting the effects of higher capacity management and peaking activities, partially offset by lower total margin from renewable energy ($2 million).

Previous wording

UGI International base-currency results are translated into USD based upon exchange rates experienced during the reporting periods. The functional currency of a significant portion of our UGI International results is the euro and, to a much lesser extent, the British pound sterling. During the 2023 and 2022 three-month periods, the average unweighted euro-to-USD translation rates were approximately $1.08 and $1.02, respectively, and the average unweighted British pound sterling-to-USD translation rates were approximately $1.24 and $1.17, respectively. Fluctuations in these foreign currency exchange rates can have a significant impact on the individual financial statement components discussed below. The Company uses forward foreign currency exchange contracts entered into over multi-year periods to reduce the volatility in earnings that may result from such changes in foreign currency exchange rates. These forward foreign currency exchange contracts resulted in realized net gains of $4 million and $8 million in the 2023 and 2022 three-month periods, respectively.

Current wording

UGI International base-currency results are translated into USD based upon exchange rates experienced during the reporting periods. The functional currency of a significant portion of our UGI International results is the euro and, to a much lesser extent, the British pound sterling. During the 2024 and 2023 three-month periods, the average unweighted euro-to-USD translation rates were approximately $1.09 and $1.07, respectively, and the average unweighted British pound sterling-to-USD translation rates were approximately $1.27 and $1.22, respectively. Fluctuations in these foreign currency exchange rates can have a significant impact on the individual financial statement components discussed below. The Company uses forward foreign currency exchange contracts entered into over multi-year periods to reduce the volatility in earnings that may result from such changes in foreign currency exchange rates. These forward foreign currency exchange contracts resulted in net realized gains of $6 million and $8 million in the 2024 and 2023 three-month periods, respectively.

Previous wording

UGI International operating income and earnings before interest expense and income taxes increased $57 million and $51 million, respectively, during the 2023 three-month period. The increase in operating income principally reflects the previously mentioned $64 million increase in total margin, partially offset by lower foreign currency transaction gains ($4 million) and higher operating and administrative expenses ($4 million). The higher operating and administrative expenses in the 2023 three-month period primarily reflects the translation effects of the stronger foreign currencies (approximately $9 million) and the effects of inflationary increases, partially offset by, among other things, lower personnel and maintenance expenses. The increase in earnings before interest expense and income taxes in the 2023 three-month period largely reflects the $57 million increase in operating income partially offset by lower realized gains on foreign currency exchange contracts entered into in order to reduce volatility in UGI International earnings resulting from the effects of changes in foreign currency exchange rates ($4 million).

Current wording

UGI International operating income and earnings before interest expense and income taxes increased $4 million and $3 million, respectively, during the 2024 three-month period. The increase in operating income principally reflects lower operating and administrative expenses ($16 million), partially offset by the previously mentioned $10 million decrease in total margin and lower foreign currency transaction gains ($4 million). The lower operating and administrative expenses in the 2024 three-month period primarily reflects lower personnel and maintenance expenses, partially offset by the effects of inflationary increases and the translation effects of the stronger foreign currencies (approximately $3 million). The increase in earnings before interest expense and income taxes in the 2024 three-month period largely reflects the $4 million increase in operating income partially offset by lower realized gains on foreign currency exchange contracts entered into in order to reduce volatility in UGI International earnings resulting from the effects of changes in foreign currency exchange rates ($2 million).

Previous wording

Average temperatures during the 2023 three-month period were 6.4% warmer than normal and 12.0% warmer than the prior-year period. Total retail gallons sold decreased 13% during the 2023 three-month period primarily due to continuing customer attrition and the effects of the significantly warmer weather.

Current wording

Average temperatures during the 2024 three-month period were 8.6% warmer than normal and 3.0% warmer than the prior-year period. Total retail gallons sold decreased 6% during the 2024 three-month period primarily due to continuing customer attrition and the effects of the warmer weather.

Previous wording

Average daily wholesale propane commodity prices during the 2023 three-month period at Mont Belvieu, Texas, one of the major supply points in the U.S., were approximately 17% lower than such prices during the 2022 three-month period. Total revenues decreased $137 million during the 2023 three-month period largely reflecting the lower retail volumes sold ($81 million), lower wholesale revenues ($29 million) and the effects of lower average retail propane selling prices ($21 million).

Current wording

Average daily wholesale propane commodity prices during the 2024 three-month period at Mont Belvieu, Texas, one of the major supply points in the U.S., were approximately 3% higher than such prices during the 2023 three-month period. Total revenues decreased $72 million during the 2024 three-month period largely reflecting the lower retail volumes sold ($49 million), lower wholesale revenues ($16 million) and the effects of lower average retail propane selling prices ($8 million).

Previous wording

Total cost of sales decreased $103 million during the 2023 three-month period largely reflecting the lower retail propane volumes sold ($39 million), lower wholesale cost of sales ($29 million) and the lower retail propane product costs ($27 million).

Current wording

Total cost of sales decreased $68 million during the 2024 three-month period largely reflecting the lower retail propane volumes sold ($24 million), the lower retail propane product costs ($27 million) and the lower wholesale cost of sales ($15 million).

Previous wording

Total margin decreased $34 million in the 2023 three-month period largely attributable to the lower retail propane volumes sold ($41 million), partially offset by higher average retail propane unit margins ($5 million).

Current wording

Total margin decreased $4 million in the 2024 three-month period largely attributable to the lower retail propane volumes sold ($25 million), partially offset by higher average retail propane unit margins ($19 million).

Previous wording

Our consolidated interest expense during the 2023 three-month period was $100 million compared to $92 million during the 2022 three-month period. This increase largely reflects higher credit agreement interest rates and borrowings, higher average interest rates on UGI Corporation long-term debt and higher long-term debt outstanding principally at Utilities and Midstream & Marketing.

Current wording

Our consolidated interest expense during the 2024 three-month period was $100 million compared to $93 million during the 2023 three-month period. This increase largely reflects slightly higher credit agreement interest rates and higher long-term debt outstanding principally at Utilities and Midstream & Marketing, partially offset by lower average debt outstanding at AmeriGas Propane.

Previous wording

Temperatures in Gas Utility’s service territories during the 2023 three-month period were 11.0% warmer than normal and 11.2% warmer than the prior-year period. The decrease in Gas Utility core market volumes during the 2023 three-month period is largely related to the warmer weather partially offset by growth in the core market customers. Total Gas Utility volume increased 11% during the 2023 three-month period, notwithstanding the decrease in core market volumes, reflecting higher large firm delivery service volumes and higher interruptible delivery service volumes. The decrease in Electric Utility distribution sales volumes is primarily attributable to warmer weather during the 2023 three-month period.

Current wording

Temperatures in Gas Utility’s service territories during the 2024 six-month period were 14.2% warmer than normal and 2.6% warmer than the prior-year period. The decrease in Gas Utility core market volumes during the 2024 six-month period is largely related to the warmer weather partially offset by growth in the core market customers. Total Gas Utility volume increased 3% during the 2024 six-month period, notwithstanding the decrease in core market volumes, reflecting higher large firm delivery service volumes and higher interruptible delivery service volumes. The increase in Electric Utility distribution sales volumes is primarily attributable to customer growth during the 2024 six-month period.

Previous wording

Utilities cost of sales decreased $108 million in the 2023 three-month period primarily attributable to Gas Utility ($106 million) mainly reflecting lower PGC and PGA rates, lower core market volumes due to warmer weather and lower cost of sales associated with off-system sales. Electric Utility cost of sales was comparable to the prior-year period.

Current wording

Utilities cost of sales decreased $261 million in the 2024 six-month period primarily attributable to Gas Utility ($254 million) mainly reflecting lower PGC and PGA rates, the lower core market volumes and lower cost of sales associated with off-system sales. Electric Utility cost of sales decreased $7 million during the 2024 six-month period largely reflecting the lower DS rates.

Previous wording

Utilities operating income and earnings before interest expense and income taxes increased $8 million and $7 million, respectively, during the 2023 three-month period. These increases largely reflect the previously mentioned increase in total margin and lower operating and administrative expenses ($3 million) partially offset by higher depreciation expense ($4 million). The slightly lower operating and administrative expenses principally reflect lower contract labor costs and maintenance expenses. The higher depreciation expense compared to the prior-year period reflects the effects of continued distribution system capital expenditure activity.

Current wording

Utilities operating income and earnings before interest expense and income taxes increased $30 million and $28 million, respectively, during the 2024 six-month period. These increases largely reflect the previously mentioned increase in total margin and lower operating and administrative expenses ($3 million), partially offset by higher depreciation expense ($8 million). The slightly lower operating and administrative expenses principally reflect lower uncollectible accounts expenses, contract labor costs and maintenance expenses. The higher depreciation expense compared to the prior-year period reflects the effects of continued distribution system capital expenditure activity.

Previous wording

Midstream & Marketing revenues decreased $275 million compared to the prior-year period, primarily reflecting lower revenues from natural gas marketing activities ($272 million), including the effects of peaking and capacity management activities, that were primarily impacted by lower natural gas prices and lower volumes resulting from the warmer weather.

Current wording

Midstream & Marketing revenues decreased $430 million compared to the prior-year period, primarily reflecting lower revenues from natural gas marketing activities ($426 million), including the effects of peaking and capacity management activities, that were primarily impacted by lower natural gas prices and lower volumes resulting from the warmer weather.

Previous wording

Midstream & Marketing operating income and earnings before interest expense and income taxes during the 2023 three-month period decreased $7 million and $5 million, respectively, compared to the prior-year period. The decrease in operating income is largely attributable to lower other operating income ($4 million) and slightly higher operating and administrative expense ($2 million). The decrease in earnings before interest expense and income taxes principally reflects the decrease in operating income partially offset by slightly higher income from equity investees.

Current wording

Midstream & Marketing operating income and earnings before interest expense and income taxes during the 2024 six-month period increased $41 million and $43 million, respectively, compared to the prior-year period. The increase in operating income is largely attributable to the higher total margin and, to a lesser extent, lower operating and administrative expense ($4 million), partially offset by lower other operating income ($4 million). The increase in earnings before interest expense and income taxes principally reflects the increase in operating income and, to a much lesser extent, slightly higher income from equity investees.

Previous wording

Average temperatures during the 2023 three-month period were 12.0% warmer than normal and 1.5% colder than the prior-year period. Total LPG retail gallons sold during the 2023 three-month period were 4% higher than the prior-year period largely attributable to growth from natural gas conversion to LPG, the slightly colder weather than the prior-year period, and higher crop drying volumes, partially offset by lower cylinder volumes.

Current wording

Average temperatures during the 2024 six-month period were 12.7% warmer than normal and 4.3% warmer than the prior-year period. Notwithstanding the warmer weather, total LPG retail gallons sold during the 2024 six-month period were 2% higher than the prior-year period largely attributable to growth from natural gas conversions to LPG and higher crop drying volumes, partially offset by warmer weather and lower cylinder volumes.

Previous wording

Average wholesale prices for propane and butane during the 2023 three-month period in northwest Europe were approximately 13% and 15% lower, respectively, compared with the prior-year period. UGI International revenues and cost of sales decreased $152 million and $216 million, respectively, during the 2023 three-month period compared to the prior-year period. The decrease in revenues and cost of sales principally reflects significantly lower energy marketing activities during the 2023 three-month period resulting from the sale of substantially all of UGI International’s energy marketing business in Belgium and UGI France in September and October 2023, respectively. The decrease in revenues was partially offset by the translation effects of the stronger foreign currencies (approximately $38 million) and higher LPG retail volumes sold. The decrease in cost of sales was also attributable to lower LPG product costs, partially offset by the translation effects of the stronger foreign currencies (approximately $24 million) and the higher LPG retail volumes sold.

Current wording

Average wholesale prices for propane and butane during the 2024 six-month period in northwest Europe were approximately 14% and 15% lower, respectively, compared with the prior-year period. UGI International revenues and cost of sales decreased $427 million and $481 million, respectively, during the 2024 six-month period compared to the prior-year period. The decrease in revenues and cost of sales principally reflects significantly lower energy marketing activities during the 2024 six-month period resulting from the exit of substantially all of UGI International’s energy marketing business in Belgium, France and the Netherlands in Fiscal 2024. The decrease in revenues from the energy marketing business was partially offset by the translation effects of the stronger foreign currencies (approximately $50 million), LPG price increases across Europe and the higher LPG retail volumes sold. The decrease in cost of sales was also attributable to lower LPG product costs, partially offset by the translation effects of the stronger foreign currencies (approximately $31 million) and the higher LPG retail volumes sold.

Previous wording

UGI International total margin increased $64 million during the 2023 three-month period primarily reflecting higher margin contributions from both our LPG business and our energy marketing activities and the translation effects of the stronger foreign currencies (approximately $15 million). The higher margin from our LPG business reflects the effects of higher average unit margins attributable to strong margin management efforts and the effects of the higher LPG retail volumes sold. The higher margin from our energy marketing activities primarily reflects the absence of losses experienced during the prior-year period, principally associated with electricity energy marketing activities that were not repeated during the 2023 three-month period and the impact of the aforementioned wind-down of the energy marketing business.

Current wording

UGI International total margin increased $54 million during the 2024 six-month period primarily reflecting higher margin contributions primarily from our LPG business, the translation effects of the stronger foreign currencies (approximately $20 million) and, to a much lesser extent, slightly higher margin contributions from our energy marketing activities. The higher margin from our LPG business reflects the effects of higher average unit margins attributable to strong margin management efforts and the effects of the higher LPG retail volumes sold. The slightly higher margin from our energy marketing activities primarily reflects the impact of the aforementioned exit of substantially all of UGI International’s energy marketing business.

Previous wording

Operating income and earnings before interest expense and income taxes each decreased $39 million during the 2023 three-month period primarily reflecting the decrease in total margin ($34 million) and higher operating and administrative expenses ($8 million). The increase in operating and administrative expenses reflects, among other things, higher salaries and benefits expenses and higher vehicle expenses, partially offset by lower advertising expenses.

Current wording

Operating income and earnings before interest expense and income taxes each decreased $39 million during the 2024 six-month period primarily reflecting the decrease in total margin ($38 million) and, to a much lesser extent, slightly higher operating and administrative expenses ($3 million). The increase in operating and administrative expenses reflects, among other things, higher vehicle expenses and salaries and benefits expenses, partially offset by lower advertising expenses.