UGI Corporation 10-Q Summary: Quarter Ended March 31, 2026
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026 (Fiscal 2026 Q2) and the six months ended March 31, 2026. UGI Corporation operates through four reportable segments: Utilities (regulated gas and electric distribution), Midstream & Marketing (energy marketing and midstream infrastructure), UGI International (LPG distribution in Europe), and AmeriGas Propane (domestic propane marketing). The company is a large accelerated filer with 214.4 million shares of common stock outstanding as of April 30, 2026.
Key Financial Metrics
| Metric | Three Months Ended Mar 31, 2026 | Six Months Ended Mar 31, 2026 |
|---|---|---|
| Revenues | $2,685 million | $4,768 million |
| Net Income (Attributable to UGI) | $520 million | $817 million |
| Diluted EPS | $2.33 | $3.68 |
| Operating Cash Flow | N/A (Six-month only) | $730 million |
| Total Debt | $7,041 million | $7,041 million |
| Cash & Equivalents | $494 million | $494 million |
| Adjusted Net Income (Non-GAAP) | $466 million | $745 million |
Note: Operating cash flow is reported on a six-month basis in the filing. Total debt includes $807 million in current maturities.
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 0.7% year-over-year for the quarter ($2,685M vs. $2,666M) and 1.5% for the six-month period ($4,768M vs. $4,696M).
- Net Income: GAAP net income increased 8.6% for the quarter ($520M vs. $479M) but decreased 4.3% for the six-month period ($817M vs. $854M).
- Adjusted Earnings: Adjusted net income decreased 3.7% for the quarter ($466M vs. $484M) and 4.4% for the six-month period ($745M vs. $779M), primarily due to lower earnings in the Midstream & Marketing segment.
- Segment Performance:
- Utilities: Earnings increased due to higher total margins driven by rate increases effective October 2025 and colder weather (7.1% colder than normal in Q2).
- AmeriGas Propane: Adjusted earnings increased significantly ($60M in Q2) due to lower income taxes, despite a 5% decline in retail gallons sold due to warmer weather.
- UGI International: Adjusted earnings increased $10M in Q2, aided by lower taxes and favorable currency translation, offset by warmer weather and divestitures.
- Midstream & Marketing: Adjusted earnings decreased $41M in Q2, primarily due to higher income tax expenses from lower investment tax credits.
- Dispositions: The company recognized a net loss of $62 million on disposals of businesses in Q2 2026, largely driven by a $64 million non-cash impairment charge on assets held for sale in Central Europe (Czech Republic, Hungary, Poland, Slovakia).
Guidance, Outlook, and Risks
- Divestitures: UGI is actively optimizing its global LPG portfolio. It completed the sale of its Romania LPG business and entered a definitive agreement to divest operations in Czech Republic, Hungary, Poland, and Slovakia (expected to close Q3 Fiscal 2026). Additionally, it agreed to sell its Electric Utility for $470 million, with closing expected in Q2 Fiscal 2027.
- Convertible Debt: $700 million of UGI Corporation Senior Notes (due 2028) became eligible for early conversion by noteholders from April 1, 2026, through June 30, 2026. The company has classified this debt as current. No noteholders have elected to convert to date. The company maintains $300 million in a dedicated credit facility and $151 million in unused capacity on its revolving credit facility to fund potential cash settlements.
- Regulatory Matters: Rate increase requests for PA Gas Utility ($99M annually) and Electric Utility ($17M annually) were filed in early 2026 but suspended by regulators for investigation. A formal complaint regarding pipeline safety violations related to the 2023 West Reading explosion was filed by the PAPUC in March 2026; management does not expect a material adverse effect.
- Market Risks: Primary risks include commodity price volatility, foreign currency fluctuations (Euro/GBP), and weather conditions impacting demand. The company uses derivative instruments to hedge these risks.
Investor Verification Checklist
- Convertible Note Conversion: Monitor whether noteholders elect to convert the $700 million Senior Notes during the window ending June 30, 2026, and the impact on cash liquidity.
- Disposal Closing: Verify the closing timeline and final proceeds for the Central Europe LPG divestiture and the Electric Utility sale.
- Regulatory Outcomes: Track the resolution of the suspended rate cases for PA Gas Utility and Electric Utility, and the outcome of the PAPUC complaint regarding the West Reading explosion.
- Weather Sensitivity: Assess the impact of weather normalization adjustments on Utilities earnings, as colder weather drove Q2 volume but may not persist.
- Non-GAAP Reconciliations: Review the reconciliation of GAAP to Adjusted Net Income, specifically the treatment of unrealized gains/losses on commodity derivatives which significantly impacted reported earnings.