UGI Corp (UGI) 2012 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the UGI and AmeriGas third quarter fiscal year 2012 earnings conference and live audio webcast. At this time all participants are in a listen-only mode and later we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions)

And, as a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Hugh Gallagher, the Treasurer. Sir, you may begin.

Thanks, Bethany. Good afternoon, everyone, and thank you for joining us. As we begin let me remind you that our comments today will include certain forward-looking statements which the management of UGI and AmeriGas believe to be reasonable as of today's date only. Actual results may differ significantly because of risks and uncertainties that are difficult to predict, and many of which are beyond Management's control. You should read our annual reports on Form 10-K for a more extensive list of factors that could affect results. But, among them are adverse weather conditions, cost volatility and availability of all energy products, increased customer conservation measures, the impact of pending and future legal proceedings, domestic and international political, regulatory and economic conditions, currency exchange rate fluctuations, the timing and development of Marcellus shale gas production, the timing and success of our commercial initiatives and investments to grow our business, and our ability to successfully integrate acquired businesses including Heritage Propane, and achieve anticipated synergies.

UGI and AmeriGas undertake no obligation to release revisions to their forward-looking statements to reflect events or circumstances occurring after today. In addition, our remarks will reference certain non-GAAP financial measures that Management believes provide useful information to investors to more effectively evaluate the year-over-year results of operations of the company. These non-GAAP financial measures are not comparable to measures used by other companies and should be considered in conjunction with other performance measures such as cash flow from operating activities. With me today are John Walsh, President and COO of UGI, Jerry Sheridan, President and CEO of AmeriGas, and your host, Chairman and CEO of UGI Corporation, Lon Greenberg. Lon?

Thank you, Hugh. Let me also welcome all of you to our call. I trust you have had the opportunity to review our press releases reporting our third quarter results. Hugh will provide you with some more detail on our financial results later in his comments. Although UGI's earnings for the quarter, adjusted for acquisition and transition expenses, were improved over the prior year by $0.03 a share, our financial performance was not at levels we are capable of achieving due principally to the very warm spring weather we encountered in our business units. Rolling 12 month records for warmth continue to be set this quarter. In fact, only Michael Phelps has set more records this past year than the winter has. Yet, our earnings improved, as I noted, due to better performance in our overseas and our utilities businesses.

I will add that all of our operating units made strides forward in carrying out their strategic plans during the quarter. Especially noteworthy is the progress AmeriGas made in its Heritage integration process that Jerry will describe later. John will also comment on some of the progress made at our other business units this quarter. Following remarks by Hugh, John, and Jerry, I will return for some closing comments. At this point, I'll turn it over to Hugh.

Thanks, Lon. As Lon mentioned in his opening remarks, we were pleased with the results for the quarter given the warm spring weather. We were also pleased with the progress made in advancing our strategic initiatives across all of our business units. And, John and Jerry will provide more color on this progress in their portion of the presentation. But, first, let me give a quick summary of operations and liquidity for the quarter.

UGI reported a seasonal net loss of $6.3 million, or $0.06 per share, for the quarter ended -- for the quarter compared to a loss of $7.2 million, or $0.06 per share, for the third quarter of 2011. The results for the current quarter include acquisition and transition costs of $3.4 million, or $0.03 per share, related to the Heritage Propane acquisition at AmeriGas and the Shell acquisition at UGI's International Propane business. Excluding these items, the seasonal net loss for the quarter would have been about $2.9 million, or $0.03 per share, a solid improvement over the prior year quarter. Year-to-date June earnings per share was $1.89 on a GAAP basis which includes $0.10 per share from the loss on extinguishment of debt and transition expenses already incurred. We continue to expect to report GAAP earnings in the range of $1.65 to $1.75 per share for the full fiscal year ending September 30, 2012. This means that we expect to incur seasonal loss during the fourth quarter in the range of $0.10 to $0.20 per share, and we also expect to incur an additional $0.04 per share in acquisition and transition costs during the quarter.

Now, turning to each business unit's results for the quarter. AmeriGas' results were significantly impacted by extremely warm weather that persisted from Q2 into April and May. This warm weather, and a greater seasonal loss associated with the Heritage acquisition, were the primary drivers of AmeriGas' lower earnings for the quarter. Propane volumes were 204 million gallons, with Heritage volume of about 69 million gallons and AmeriGas legacy volume of about 135 million gallons. The AmeriGas legacy volume represents a 13% decrease from the prior year quarter on weather that was 23% warmer than last year. We believe that the Heritage volumes on a comparable basis were down about the same percentage from last year's quarter. It is important to note that although we were able to disclose Heritage and AmeriGas volume separately for this quarter, we have been running the business as one integrated operation. And, this is likely the last time we will be able to break these items out separately as fuel blends continue to progress. Jerry will be sharing more details on the integration in his part of the presentation.

Turning to the Gas Utility, earnings before income taxes improved $5.3 million over the prior year quarter despite modestly warmer weather. The primary contributors to this improved result were lower operating expenses and higher core market margins that included the impact of the August 2011 UGI Central Penn Gas rate case. Midstream and Marketing earnings contribution decreased $4.1 million as the benefit of increased total margin from retail power sales and gas gathering activities was more than offset by the impact of warm weather and low gas prices on natural gas marketing business, higher depreciation related to the Hunlock plant and higher interest expenses.

International Propane's seasonal loss narrowed significantly from the prior year quarter, reflecting improved results at our legacy Antargaz business and, to a lesser extent, the beneficial impact of the Shell acquisition. The Shell acquisition added about 40 million gallons and $27 million in total margin. Our legacy Antargaz business also added volume due to cooler weather and improved current -- and improved base currency unit margins partially offset by the weaker euro. According to Platts, propane prices in Northwest Europe were about 8% lower than the prior year quarter and about 22% lower than the quarter ending March 31. This falling cost environment contributed to a stronger base currency unit margins during the quarter at the International Propane business.

One final comment on Europe, our businesses continue to perform well and meet their objectives and we've not seen any significant economic impact on our businesses, despite what you all might be reading about economic conditions in Europe. We provide energy solutions to thousands of homes and small businesses across Europe. And, for the vast majority of our European customers, our product is not a discretionary purchase but a basic need for space heating, agricultural and industrial processes, cooking, and auto fuel. Although our businesses are clearly not immune to cyclical economic downturns, we believe that the characteristics of our businesses make them more resilient to an economic slowdown than one might believe at first blush.

Before turning it over to John, I wanted to make a quick comment on liquidity and cash flow. Our balance sheet is very strong and we remain committed to maintaining a strong balance sheet as a means to support our growth initiatives. At June 30, our consolidated cash position, excluding restricted cash, was $437 million compared to $318 million in the prior year. The current year cash balances were both higher primarily due to higher cash balances associated with the Heritage and Shell acquisitions. AmeriGas had $123 million of cash on hand and $69 million outstanding under its revolving credit facility at June 30, compared with $176 million outstanding under its credit facility at June 30, 2011. It's important to note that as we sit here today, AmeriGas has no outstanding borrowings under its revolving credit facility and is carrying cash on its balance sheet. So, AmeriGas' liquidity position is strong.

A few additional cash flow items worth noting at AmeriGas, during the quarter AmeriGas received approximately $19 million in cash representing excess proceeds from Energy Transfer's sale of HPX, the former cylinder exchange business of Heritage Propane. Also during the quarter, AmeriGas repurchased and retired $19 million in aggregate principal amount of its 7% notes on the open market. Although the amounts involved were similar, these two transactions were unrelated. Looking forward, AmeriGas intends to delever even further this quarter when it's scheduled to repay approximately $17 million in principal due on the Heritage notes that were assumed in the acquisition.

Turning to UGI Utilities, we had no borrowings under the revolving credit facility and approximately $76 million of cash on hand at Utilities on June 30. Utilities has a $40 million medium term note coming due in September and it intends to fund this debt maturity with cash on hand. The Midstream and Marketing business had outstanding balances of $10 million under its accounts receivable facility and $85 million under its revolving credit facility at June 30. Turning to Europe, Antargaz had no borrowings on its revolving credit facility and $68 million of cash on hand. Flaga had $13 million of borrowings and $20 million in guarantees under its two primary revolving credit facilities. Flaga also had EUR11 million cash on hand. AvantiGas, our propane operation in the UK, had cash on hand of approximately GBP14 million at June 30.

Excluding cash held by our operating subsidiaries, UGI had $95 million of cash available for investment in general corporate purposes at June 30, 2012. Finally, on July 1, UGI paid its quarterly dividend of $0.27 per share. Although our quarterly dividend payment is not usually something we comment on, given that we've paid dividends for 128 years, it is noteworthy to point out that this particular dividend payment represented UGI's 25th consecutive year of increasing the common dividend. Which, when coupled with 128 consecutive years of dividend payments, is a track record that we are all very proud of. On that note, I'll turn it over to John for his report on operations. John?

Thanks, Hugh. The third quarter is typically a relatively quiet quarter for us at UGI. However, that was not the case this year. Our teams remain focused on addressing the short-term challenges presented by the continuation of record setting warm weather. We executed the necessary actions to manage our costs in response to reduced demand from our weather sensitive customer segments. We brought the same focus to our strategic activities of acquisition, integration, and capital project execution. I'll comment on both the operational and strategic activities in the quarter since there were significant developments in both areas.

Our core businesses delivered strong results on our organic growth programs and our critical operational initiatives. Our International Propane teams have done an excellent job of identifying and developing attractive market segments that will deliver organic growth. Some examples of these targeted programs are a bulk LPG program in Poland focused on new housing construction, a heating oil to LPG conversion program in our Nordic region, and an enhanced major accounts program across our expanded base of operations in Europe building on our successful key account programs in France and the US.

AmeriGas continues to build its ACE, cylinder exchange program. Year-to-date, our ACE volumes are running 10% above FY '11 driven by a combination of increased same-store sales and penetration of new accounts. Jerry will have more color on this in his remarks. Our Gas Utility team has been exceptionally busy this year as we execute key infrastructure projects and respond to unprecedented demand for conversions to natural gas. Residential and commercial customers across our entire service territory are eager to take advantage of the significant cost savings while upgrading the quality of their energy solution. On a year-to-date basis, residential conversions and upgrades are running about 50% above last year and commercial account additions are up about 25%. Although new residential and commercial construction activity remains weak, we will have the best growth year in our long history at Utilities. Our power marketing segment continues to be a great source of organic growth within our Midstream and Marketing business. We are building our base of small and mid-sized commercial accounts in the mid-Atlantic region. Total megawatt hours billed year-to-date are running more than 20% above FY '11.

As mentioned earlier, this has been an exceptionally busy year for us and the third quarter was no exception. Our leadership team has been focused on the development and execution of a range of strategic investments across our businesses. Many of these opportunities, which include both capital projects and acquisitions, are well into the execution phase. We are pleased with our progress to date and remain highly focused on the successful delivery of these new capital projects and acquisitions. Our teams in Europe and the US have made excellent progress on their acquisition integration programs. We've had almost 10 months to work on the European integration and will have achieved our synergy goals and incurred most of the transition expenses as we close out the fiscal year. Although we are at an earlier stage of the integration program at AmeriGas, the progress is equally impressive. We've made outstanding progress in the first six months post acquisition. We are hitting our critical milestones for synergy delivery, and we are very confident that we'll achieve the operational, service, and growth targets that drove the business case for the investment. Jerry will provide additional details on the integration work during his comments.

We have completed the commissioning and restart of the second gas fired turbine at our Hunlock power generation facility. The unit was operating at its full capacity of 125 megawatts by the end of June. We also officially completed the $120 million expansion of our LNG peaking facility at Temple on August 1. This facility will be fully operational by the end of Q4, just in time for the 2012, 2013 winter peaking system. Finally, our Midstream and Marketing team has two significant pipeline projects under development in the Marcellus region. The Auburn II project, which will extend our existing lines southward to connect with the Transco pipeline, is entering the permitting phase. Two anchor shippers have committed to take a majority of the capacity on the project and field execution is scheduled for 2013.

We conducted a non-binding open season in June for the Commonwealth pipeline project. This proposed 200-mile project is being developed along with Energy Midstream and a subsidiary of WGL Holdings. We are progressing through the marketing stage and have commenced negotiating precedent agreements with target customers that will define the timing, route, and rates for this project. We will keep you apprised of our project on this major opportunity.

Although 2012 has provided us with numerous challenges, I'll conclude by saying how pleased we are with the progress made on these key projects that will shape the future for UGI. I'd now like to turn it over to Jerry who will take you through AmeriGas' performance in Q3. Jerry?

Thank you, John. For AmeriGas, this quarter marked the successful completion of numerous integration activities between the Heritage and AmeriGas operations. During the quarter, we completed the naming of the entire field management team including every store manager. We also named individuals in our new sales force which will be the largest in the industry. Finally, we completed the transition of all headquarter related activities for the Heritage operations in Helena, Montana to the AmeriGas headquarters in Valley Forge. Meeting these significant milestones will allow the organization now to settle in and be ready for the challenges of the next winter season while delivering the full synergies we expected from the deal. We're very pleased with the pace and outcome of the integration efforts.

Now, let me briefly discuss the financial results for the quarter. Weather for the quarter was 24% warmer than normal compared to weather that was essentially normal in the third quarter of 2011. Adjusted EBITDA for the quarter ended June 30 was $16.8 million, excluding $15 million of integration-related transition expense, compared to adjusted EBITDA of $31.1 million in the same quarter last year. As we've seen in the past, significantly warmer weather in the shoulder months of this third quarter can bring an abrupt end to the residential heating season which had little momentum this year anyway. Retail gallons sold in the quarter were 204 million, which was 31% higher than the prior year due to the inclusion of the Heritage business partially offset by the effects of weather that I mentioned.

Retail margins were up 3% as propane costs fell through the quarter. Mont Belvieu prices averaged $0.98 during the third quarter, $0.52 below the prior year and $0.28 below last quarter. ACE, our AmeriGas Cylinder Exchange business, continues to grow through the high-volume summer months of barbecue season. Year-to-date volume is up 10% and same-store sales are up 2% over last year. This continues to be a solid growth thrust for AmeriGas and the added geographic coverage from the Heritage acquisition provides additional opportunities to leverage our nationwide footprint.

As I mentioned on the last call, the warm weather had one bright spot. That being our ability to move much faster with the integration. So, despite the effects of the warmest winter on record, which continued through the spring, much has gone well. We are set to exceed our synergy targets. We've named a new leadership team combining the best talent throughout AmeriGas and Heritage Propane as well.

Based on our year-to-date adjusted EBITDA of $350 million, we are tightening our guidance range for fiscal 2012 to be adjusted EBITDA between $375 million and $385 million, including $15 million of synergy to be realized this year. Further, based on the progress of the Heritage integration and the assumption of a return to normal weather, we are increasing the low boundary of our adjusted EBITDA guidance for fiscal 2013. Our range for next year is now $620 million to $660 million including the impact of over $50 million in net synergies expected to be realized in 2013.

In closing, I want to thank our new management team and the over 9,000 AmeriGas employees who have shown outstanding commitment and great flexibility through the acquisition and the ongoing integration process. So, let me pass the call back to Lon.

Okay, Jerry, thank you. As all of you know, we confirmed guidance of $1.65 to $1.75 at UGI which includes the $0.14 of unusual items referenced in the press release. We also tightened our guidance at AmeriGas as Jerry just described. It is noteworthy that we maintain these levels of guidance despite an extraordinarily warm spring. We continue to work hard this quarter to finish the fiscal year on an up note and to set the stage for a significant improvement in earnings next year.

Despite the record setting warmth of fiscal year 2012, we have strengthened our company greatly during the year and some examples of that are as follows. We will have completed the Heritage and Shell acquisitions and we've put a great deal of the integration process behind us. We will have, next year, the Hunlock generating station at full capacity for an entire year. We also just completed the expansion of our LNG facility that we've been building for several years now. Similarly, we will have a full year of contribution from our Auburn I pipeline project while, as John described, we are making great progress on our other two pipeline project opportunities. As noted earlier by John, heating customer growth continued at record paces in our Gas Utilities. At the same time, and importantly, we have continued our intense focus on operational excellence in our Utilities. In this respect, we've reorganized and strengthened our operating and engineering functions and replaced gas infrastructure at the accelerated pace that we set last year.

Finally, we also completed a great deal of refinancing in fiscal year '12 and we will enter fiscal year '13, as Hugh said, with only a minimal need to access capital markets. All of this progress will bear fruit in the future. But, as Hugh said, that is not to suggest that we don't have our fair share of challenges. The effect of low natural gas prices on our Midstream and Marketing business, that is similar to that that you hear from other companies in this business, as well as overall economic conditions domestically, and importantly, internationally. However, we talk about our diversified business model with you and that model is designed to overcome these types of challenges with overall progress in business units.

Our cash generation is as strong as it's ever been, and we have the financial strength and capacity to take advantage of market opportunities which might become available. As always, we are on the lookout for investment and acquisition opportunities in our core businesses. In addition, we are also being presented with opportunities which are related and complementary to our existing businesses. Examples of these would include further backward integration in the midstream business, such as liquids processing, marketing, and transportation, as well as opportunities in the natural gas exploration and production business. We will only consider these types of opportunities if they meet the following three criteria. First, they are in a geography in which our other business units benefit from the investment. Second, they are of an appropriate scale. And, third, they are at very attractive valuations.

Let me close by reiterating that we are finishing our fiscal year '12 with a focus on execution and with a continuing optimism about our future. As we note in our press release, we look forward to communicating this optimism to you at our Analyst Day in October of this year. At this point, Bethany, I'm ready for questions. So, you can open it up for questions.

Thank you, sir.

(Operator Instructions)

Darren Horowitz, Raymond James.

Thank you. Jerry, at AmeriGas, considering that adjusted EBITDA range of $620 million to $660 million for fiscal '13, can you give us a sense for the assumed retail margin per gallon in volume forecast that is reflected in that estimate?

Yes, I think we typically don't get into that kind of detail in our forecast. We are right in the planning stages now. Wouldn't expect significant margin expansion between what we are seeing this year and next year, however. But, prices have been stable for us. We typically don't talk about the specific volume expectations.

Okay, from a margin perspective, how much do you think the oversupplied propane surplus could possibly help out into the calendar year fourth quarter? It would seem, just looking at where Mont Belvieu prices are, even though they've bounced a bit relative to Q2 levels, things could be setting up if we get some winter weather for some pretty decent retail margin expansion. Is that fair to assume?

It would be if that is the case. Exports continue to grow. So, although we are finding more gas in the US we seem to find a way to ship it out as well. So, we seem to have hit a bit of a plateau here around $0.90. So, optimistic that what you're describing happens. But, no visibility to it and none of that's baked into our numbers.

Okay, and then, last question for me. As it relates to that $15 million in net synergies that you outlined for next fiscal year. Is that going to be effectively linear on a sequential basis or is going to be a bit more back half weighted?

A bit back half weighted. We always said this was an 18 month integration. So, we've got a big chunk of it done. I described the headquarters consolidation and a number of the blends are now done. But, we do have another wave in the spring.

Okay. Thank you, very much.

Chris Sighinolfi, UBS.

Hi, guys.

Hi, Chris.

Just, I wanted to follow up quickly on some of the comments you made. Obviously, saw that the announcement with EQT, to power some of the field operations that they are engaged in, just wondering with the completion of Temple, are there opportunities for further expansion? I mean, there's a lot of drillers operating in Pennsylvania. A lot are talking about moving towards natural gas powered rigs. They're trying to minimize diesel costs in general. What you think the appetite, or opportunity, is like with this being the initial step, maybe.

Sure, Chris, I will give that to John.

Hi, Chris. Yes, there certainly are opportunities for us to take advantage of now quite a significant liquid storage there with LNG to apply it to opportunities for drilling rigs, heavy duty over the road vehicles, et cetera. And, that is one of the focus areas that we have in terms of business development. We have a lot of interest coming from different sectors who are aware that we now got this capacity, storage capacity. And, it's neatly situated in the mid-Atlantic, particularly in terms of servicing opportunities that arise related to Marcellus drillers. So, that, for us, is a nice supplemental source of contribution on Temple. At its core, Temple is a peaking asset, but we can now use it to serve this emerging segment as well.

So, the intention of Temple hasn't changed. This is just an additional use that you guys have fielded?

The primary intention certainly is peaking. However, as this grows, we have other things that could be done at Temple to enhance our ability, to enhance our liquefaction capacity at that site. So, right now we are active and working with potential customers, and we will assess that and if we think the liquid opportunity is such, we will look at those enhancement investments moving forward.

Okay, and then, I think, John, while I have you, rate case action on the Utility. You talked a lot about, and you have been talking all year, about the accelerated pace of conversions when you acquired the assets from PPL back in, I think it was '08, you were talking about a periodic rate case schedule. Does the accelerated pace of conversions change that timeline at all? Or can you just remind us what you're planning on the rate case front?

Yes, just stepping back, and what we are seeing, and it is true for both the PNG acquisition, the PG Energy utility and the PPL gas utility, in both cases what we've seen in the last few years is an acceleration of growth which then defers rate cases. So, we are seeing, for both those utilities, entities, an extension in terms of the duration of time in between rate cases as we grow the business and as we operate efficiently.

Chris, it is Lon. The only thing I would add to what John said is we have significantly stepped up our investment in infrastructure replacement which adds rate base. And, we -- Pennsylvania beginning January 1 has an infrastructure rider ability for our utilities to take advantage of with that infrastructure replacement. We weren't waiting for that, we accelerated last year, our focus on safety has really been enhanced over the last several years, and we will continue to invest that. And so, in a normal environment with normal investment I would say we will be at a rate cases for a while. As we accelerate our investment over time, we will have to evaluate how we can use the DSIC to push that off as well, but there is the counterbalancing of -- growth has been stupendous in the Utility.

Our long-term thesis has been, and it has borne out in our history, that if you have a growing utility and you are investing properly, the growth ought to offset the need for rate cases and the enhanced investment. But, we've really accelerated our investment now, and so we're going to keep looking at that balance, but were not going to slowdown our investment. And, as I said, Pennsylvania has passed that DSIC legislation.

Okay and then, Lon, just one final question for me. When you were talking about the reverse integration into the midstream space, did I hear you correctly, are you saying you are even open to E&P?

Yes, and let me put a little bit of color around that. As you know, we have gas utilities in Pennsylvania who -- and there is a big push to use locally sourced gas. We have Midstream and we desire to enhance our opportunity to grow our Midstream businesses. And, we all know how low gas prices are. And so, it occurs to us, and people have taken the opportunity to put all of that together and say to us, gee, would you guys ever consider Exploration and Production? And, basically, our response has been no in isolation, so we're not going to do exploration production in Texas or Idaho or somewhere. But, under the right circumstances and the right scale of investment where our business units benefited in the aggregate such that one and one didn't equal two it equaled three, we would consider it. But, it would be the type of investment, Chris, that would tie to our other business units pretty tightly, and would really be, have to be, on a good value basis given where things are.

So, theoretically UGI production could back stop some sort of UGI Midstream venture?

It could do that. Remember, we have a big non-regulated retail natural gas business. We've got utility businesses that desire steady sources of supply at low-cost. And, the opportunity to build infrastructure, if you have an affiliation with a producer gives you, obviously, a good insight into the needs and an opportunity to take advantage of that infrastructure need. So, that, together with gas prices at $2.50 as opposed to $6.00, it's conceivable that a combination of all those things together would create a one and one equals three. But, we are mindful of scale in something like that because we don't intend to be an E&P company.

But, we are also mindful that we have, for example, some electric production of not great scale that is very complementary to our other businesses also. So, we don't want to close the door on something that creates great value for our shareholders. But, I'm not suggesting that we're going to go out there and buy an E&P company and start drilling in Texas and North Dakota and Oklahoma.

Okay, understood. Thanks for the color. I'll see you guys in October.

Yes, thanks. Look forward to it, Chris.

(Operator Instructions)

Carl Kirst, BMO Capital Markets.

Hi, guys, this is Danilo filling in for Carl.

Hi, Danilo.

How are you today?

Good.

First question is for Jerry at APU. With the 13% decline in legacy APU volumes, was that strictly weather or was there some sort of a marketshare issue as well?

No, it was a weather issue. The weather was 24% off for the spring. It is still a big residential season for us. And, as we looked at the two businesses, I think Hugh mentioned this is probably the last time we will be able to look at them separately on volume. But, Heritage and AmeriGas really stacked up evenly.

Okay, got you. And, with respect to the declining propane prices this quarter. How much did they contribute to APU margins?

Well, as I said, our margins were off about 3%.

3%? Okay.

Up 3%.

Up 3%. Can you please let me know what the APU wholesale volumes were as well?

Wholesale volume in the quarter, I imagine it was about -- I don't have the exact number but it probably was in the 15 million-gallon range.

We've not accelerated wholesale at all off our normal base, nor used it in any way other than we normally do. When we give you volume it's usually retail volume.

Yes.

And, I guess my final question is for Hugh. With respect to hedges at International Propane, what do those look like going forward?

Hedges at International Propane? Currency?

Yes, currency hedges, that's right.

At this point, Danilo, we have a typical program that we follow throughout the year and we are executing it. I mean, usually our goal is to be hedged by the end of the year. So, we're not there yet.

Okay. Thank you, those are my questions.

All right, great, thanks.

Yves Siegel, Neuberger Berman.

Thanks, good afternoon.

Hi, Yves.

Lon, can you just expand on the E&P comment one more time for me? Just from the perspective of core competency and expertise, would you -- how would you envision getting into that business? Would it be through a JV or would you just hire a management team? How -- could you just elaborate a little bit there?

Sure, Yves, you've known us a long time and one of our mantras over these years is know what you know and know what you don't know. Well, I have to confess, I have some E&P experience because when I first got to UGI we were in the E&P business. I don't think anybody is comfortable with me using that expertise any longer. Including you probably.

Enough to be dangerous, maybe.

There you go. And, that's, unfortunately, with me in many cases. And so, we would likely do it through ventures with others that we don't have the expertise in-house as you know and we would hire consultant expertise to make sure we understood what we're doing and how we're doing it. And, we would supplement ourselves to the extent we needed some in-house expertise. But, we are not likely to be the operators, direct operators. Our goal would be to get access to gas at a value price and that gave us access to support for our Midstream business be it gathering pipeline projects or our retail business, non-regulated commodity business that we have as you know.

And, also there's opportunities to provide our utilities with a steady support of gas -- steady supply of gas at a price which might be attractive to the utilities as well. So, I think to frame it, don't expect us to be in the E&P business and have a segment called E&P. Don't expect us to go hire a management team or do a buyout of any E&P company. We will do it with people who are well known, who are reputable and who have got -- who know what they're doing. And, our value will be brought to the table through our other business units as we go forward. So, it would be very complementary to what we do. That's why I focus on, I said indirectly, but largely Pennsylvania, Marcellus, perhaps as far as Utica kind of stuff. We are not going far a stream because it is not an effort to get into the E&P business directly. It is an effort to make three out of one and one.

Could you perhaps discuss how large a capital commitment you might be thinking about?

Yes, I told you that it would not -- we would take scale into mind. And so, I think Yves, that's probably -- we are not looking at -- we don't have a brochure before us. We don't have -- people have come in and have casual conversations with us all the time on lots of opportunities. This one I mentioned because it is so complementary and related to our other businesses that I see an opportunity to make three out of one and one.

But, we're going to be very mindful of scale. You know me well enough that I'm not going to do something that is going to scare the hell out of the market. And so, I can't define it anymore to you because I don't have any project that I'm looking at that would define it any better than that. But, we're not going to do anything that's going to scare the hell out of everybody in terms of our appetite for this. The appetite truly is an appetite to have a value opportunity to complement our other businesses moving forward.

I got it. Thanks, so much.

Yes.

Thank you. This does conclude our question-and-answer session for today. I'd like to turn the call back over to Lon Greenberg for any closing remarks.

Okay. Thank you, very much, Bethany. We appreciate your support and interest in UGI. We are really optimistic about the future. We are kind of working now on our future plans and our Analyst Day. We think you will be impressed with the quality of the presentations and hopefully with our thoughts at that time. We look forward to speaking with you and we will see you soon. Thanks, everybody.

Ladies and gentlemen, this does conclude today's conference. You all may disconnect and have a good day.