Good morning. My name is Sean. I will be your conference operator today. At this time, I would like to welcome everyone to the UGI AmeriGas Second Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions] Thank you. Treasurer of UGI, Mr. Dan Platt, you may begin your conference.

Thank you, Sean. Good morning and thank you for joining us. As we begin, let me remind you that our comments today will include certain forward-looking statements, which 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 our 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 of 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 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 companies. These, non-GAAP financial measures are not comparable to measures used by other companies and should be considered in conjunction with performance measures such as cash flow from operating activities. With me today are Hugh Gallagher, CFO of AmeriGas Propane; Kirk Oliver, CFO of UGI Corporation; Jerry Sheridan, President and CEO of AmeriGas Propane; and your host President and CEO of UGI Corporation John Walsh. John?

Thanks, Dan. Good morning and welcome to our call. I hope that you’ve all had a chance to review our press releases reporting a very strong second quarter results for UGI and AmeriGas. While we didn’t see the extremes of the polar vortex winter of fiscal 2014, we did experience favorable market conditions in Q2, particularly in terms of colder weather in Houston and Mid-Atlantic U.S., and increased pipeline capacity values in the Mid-Atlantic. Our businesses delivered an exceptional performance and we clearly showed the strength of our diversified operations. The U.S. Energy Sector continues to develop at a rapid rate and we see significant growth opportunities for companies like ours with the concentration of assets, resources and customers in the Mid-Atlantic region. I’ll comment on our financial performance as well as our major accomplishments in the second quarter. Then turn over to Kirk who’ll provide you with a more detailed review of UGI’s financial performance. Jerry, will follow with an overview on AmeriGas and I’ll wrap up with an update on our strategic initiatives. Our Q2 GAAP EPS was $1.40, while our adjusted EPS, which reflects total mark-to-market adjustments of $0.17, was a $1.23. The adjusted EPS includes the impact of approximately $0.03 related to transaction expenses for the pending Totalgaz acquisition. This follows just slightly below our record adjusted EPS of $1.27 in the second quarter of fiscal 2014 and represents the second highest adjusted quarterly EPS in the history of the company. Based on the strong Q2 performance and a solid outlook for the balance of the year, we’ve increased our fiscal 2015 guidance range to $2 to $2.10 from the previously stated range of $1.88 to $1.98. In both cases, the guidance excludes the impact of the Total acquisition. Kirk will comment in more detail on…

Thank you, John, and good morning, everyone. This chart shows a reconciliation of GAAP to adjusted earnings per share for this year’s second quarter versus the second quarter of last year. The only adjustment each quarter is for the unrealized portion of mark-to-market gains or losses on commodity hedges. Also we had $0.03 of transaction expenses this quarter in connection with our pending acquisition of the Total LPG business in France. Adjusting for this transaction expense we take the quarter to $1.26 per share, only a $0.01 of the record $1.27 reported last year. We experienced colder weather than last year in every business expect for AmeriGas where it was 7% warmer than last year. The Gas Utility experienced weather that was 22% colder than normal. The International businesses were mixed with weather at Antargaz close to normal and at Flaga although colder than last year still over 10% warmer than normal. In summary, we had a very strong quarter, driven largely by high peaking and capacity management margins in the Midstream & Marketing business, record high throughput and margins at Utilities, and strong unit margins in the International businesses and successful cost management at AmeriGas. I’ll summarize the performance of all the businesses later, but I wanted to point out here that although the Midstream & Marketing segment had very strong results they were off slightly from the record results we experienced last year. This graph shows the basis differential between LIGHTY [ph] and Texas Eastern for the second fiscal quarter over the last four years. You can see how on the blue line we experienced some extremely high peaks last year in January. The red line shows that this year we did not experience the extremely high price spikes of last year, but we did see strong prices…

Okay. Thank you, Kirk. Yes, for AmeriGas, adjusted EBITDA for the second quarter was $342 million a record quarter for the company, $11 million above the $331 million earned last year. Volume for the quarter was 448 million gallons, or 6% below last year on weather that was 7% warmer than last year. The business performed quite well nationally with strong volumes in the Eastern and Midwest parts of the country, where weather was colder than normal, but slightly warmer than last year. And once again our operations in the West were faced with very warm weather in the quarter, weather averaged about 15% warmer than last year. Propane cost at Mont Belvieu averaged $0.53 in Q2, which was $0.23 below Q1 and $0.78 below the second quarter last year. We were also able to work through the high cost inventory that negatively affected our cost of gas in Q1 and spilled over into January and February. This lower price deck for propane allowed our customers to enjoy lower cost, as our average selling prices decreased over 20%. The decline in cost environment enabled slightly higher margins and we finished Q2 with margins $0.05 above last year’s Q2. Operating expenses were also a good story with expenses down 9%, or $24 million due primarily lower bad debt expense, reduced vehicle fuel and repair costs, and lower payroll and benefits costs, as our fuel teams managed over time quite well, overall, the good quarter. Now turning to our growth drivers, ACE, our AmeriGas Cylinder Exchange program increased volume by 3% in the quarter and we’re looking forward to the spring/summer drilling season. AmeriGas Cylinder Exchange markets from over 47,000 outlets nationwide. Our National Accounts program volume increased by 14%, which was very positive given the warmer weather relative to the prior year. The growth has been organic with National Accounts adding 29 new accounts this year. We also completed five small-scale acquisitions year-to-date and see a growing pipeline into the spring. Given our solid performance in the quarter and our expectations for the second-half, we’re maintaining our full-year guidance at $635 million to $665 million in adjusted EBITDA for fiscal 2015. Finally, we were pleased that our Board of Directors approved a 4.5% distribution increase to $0.92 per quarter, or $3.68 annualized. And this represents the 11th consecutive year that AmeriGas has increased the distribution and a compound average growth rate of distribution has averaged over 5% in the last five years. In addition to our distribution growth, we’ve also been consistent in providing solid returns to our unitholders with a compound average unitholder return for the last three-year, five-year, and 10-year periods of 14%, 11%, and 13% respectively. That concludes my comments. I’ll turn the call back over to John.

All right. Thanks, Jerry. I’d like to close by briefly reviewing progress on the strategic investments that are so critical to our future. PennEast pipeline project is progressing through the FERC pre-approval process. There have been a serious of FERC meetings in the areas that will be served by the new pipeline to share information on the project and gather feedback from all constituencies. The feedback from these meetings will provide input as we finalize our FERC filing. The project is expected to be on-stream late in calendar 2017. In addition to the PennEast project, we announced two new pipeline projects in Q2 that will serve the expanding natural gas demand for power generation in Pennsylvania. Our Energy Services team announced $160 million project to supply new 1000 megawatt plant in Sunbury, Pennsylvania, while our Utility team announced the pipeline project to serve the new Invenergy 1300 megawatt unit in Jessup. In addition to these two new projects, which we expect to bring on-stream in late 2017, the Utility’s team is nearing completion of $25 million project that will serve New Panda Energy 1000 megawatt plant in Clinton Township, Pennsylvania. Each of these projects represents an attractive investment opportunity for UGI and enabled the build-out of much needed gas-fired power generation capacity in locations across Central and Eastern Pennsylvania that can access local Marcellus gas. Our proposed acquisition of Total’s LPG distribution business in France continues to progress through the regulatory review phase with the ADLC, the French Competition Authority. While the closing date will be largely determined by the regulatory process, we believe the closing will occur during the current quarter. During this interim period leading up to closing, our teams have been working on detailed project plants that will be executed once we have completed the regulatory review…

Thank you. Good morning, everybody, and nice results. Maybe, if I could start with a couple of questions on the Midstream side. And John, I don’t know, is it possible to - I appreciate the waterfall as far as the delta in the changes year-over-year, is it possible to take that $100 million of operating income and break that down to rough contribution, what was coming from gas, what was coming from peaking et cetera, or is that too much of a competitive disclosure?

We show the changes in that from quarter-to-quarter in the…

Well, I’ll tell you what, what I’m trying to get to, and then maybe this might be a better way to answer the question is, is the, say for instance the peaking capacity or the disconnect, for instance, between light in Zone 3, is that something that you all are using as simply one of the many factors kind of illustrative of the current volatility or is that a primary factor where that sustained disconnect, for instance, perhaps made up half of the operating income, meaning that should be one of the single biggest factors we should be looking at going forward?

Carl, when we think about it, we kind of step back and look big picture at all the elements. So in any given year you have a variety of factors that, what we see happening as you - as Kirk’s slide noted, you see these peaks where you have opportunities on certain days or for certain periods to take advantage of quite - some quite significant differentials, which are great. And this year as we noted, what we saw is that volatility while not achieving the same peaks was much more sustained. And I think as illustrative of a trend that we’ve commented on which is that volatility in the market has returned after being dormant say in the 2010, 2011, 2012 period. Definitely has returned and it’s now being impacted by rapidly increasing demand as power generation ramps up and we see the core demand for heating also increasing. So those are factors, so the impact of volatility in that differential is one factor. Its’ not the overriding factor, because what’s happening in the business, what has been happening over the last few years is the core of the business has been - the foundation of the business has been - is being built up, because we see increased demand for mid-to long- term peaking contracts as entities around utility and other entities looking to secure long-term ability to supply their peak. So what we see is the foundation for a long-term earning delivery being built. While at the same time we see these more opportunistic developments. And it evolves, this year is, our performance is more reflective of that building foundation, which is more peaking contracts that go over multiple years, higher demand that we are serving, the increased contribution from fixed fees, from new projects like Auburn that have come on stream. So Midstream & Marketing definitely have a combined impact and we provide some detail in our earnings release and in the Q. I think the key point for us is that - is this building of foundation for long-term earnings performance and delivery, and that’s something that we certainly see happening as we and our customers respond to the infrastructure gap that we’ve been talking about. It’s translating into from - last year was driven more by some of the opportunistic peaking, this year that was a factor and contributed but when you see this sort of foundation being built that is much more mid- and long-term in terms of earnings capacity.

Yes, and that LIGHTY to Texas Eastern, that’s an example of one place where we have that kind of opportunity that’s happening in other parts of the system as well.

No, certainly, and then I appreciate all the color. That’s what I wanted to make sure, we didn’t get to overly myopic on just that one differential, for instance. I appreciate all that color. And then John, it sounds like because you really sort of helped to answer, sort of one of my other questions. But with sort of building that more sustained foundation that, simply as we look at the change in guidance for instance this year, as you guys noted moving up $0.12 at the mid-point, but I think if we - given that the first-half has already been now achieved, it looks like the mid-point of guidance would suggest something like maybe $0.16 being earned the back-half of this year versus only $0.02 last year, and obviously not being seasonal events. Is high level, most of that uplift coming from what you might call the sustained base that you are putting into Midstream?

Yes. Thanks, Carl. Yes, if you look at the second-half of the year, as you noted, it’s a relatively strong second-half. I think if you take midpoint to versus where we sit today, and you correct for those the Total expense, it’s about - it’s $0.12 roughly in the second-half of the year if you use the midpoint. And I think there are multiple factors impacting. One is what we are just talking about, the increased value of capacity, even in shoulder periods, with the asset network that we have in our Midstream business. That’s a factor that’s contributing. The other factor that’s contributing across our LPG businesses is you get some parachute effect with the costs having dropped and that’s a positive. And the last factor, which is a long-term factor is, you’re starting to see, we’re starting to see the impact of more the Midstream & Marketing business being generated or related to fee-based and in most cases take-or-pay fee-based revenue streams, so all those factors are contributing to a really solid second-half of the year for us.

Great. I appreciate the color, guys.

Thanks, Carl.

Your next question comes from the line of Chris Sighinolfi from Jefferies. Your line is open.

Hey, John. How are you?

Hey, good.

I want to follow-up on Carl’s question regarding guidance, just a point of clarification, we regard to the guidance, I understand it excludes any impact from Total, but I was just curious, assumption is that it excludes - sorry, includes the cost associated with that acquisition, the $0.03 for example in the second quarter. Is that $0.03 charge in the guidance or not in the guidance?

No, it’s completely out. So any cost including the year-to-date $0.04 for Total is out. So…

Okay. That’s helpful.

Yes.

And then you mentioned some elements in your prepared remarks about what remains to be down from an approval process on that, but could you just elaborate in terms of utilities being your contention that you would close this in the first-half of the calendar year? There is probably what six or seven weeks, I’m just curious if we could get sort of the more full update on where things stand there. I assume it sits with the French regulator, but what you see as sort of the conditions to move that forward?

Yes, it’s - and obviously I wouldn’t delve into too much detail since it’s - the regulator is driving that process, but today we were confident that we will close, we expect to close. But we recognize that it’s a regulatory body, the ADLC that needs to reach a conclusion and communicate that, what we are conveying today in terms of the timing is our best informed view of when it will close. And that process has been ongoing, which gives us the basis to make the statements that we made and that’s probably all I can say given that the regulator is assessing it as we speak.

Okay. Understood, understood. I guess two other questions for me, John. With regard to the Utilities, I think last time we had sat down you talked about the potential given the amount of capital outlay at the legacy UGI Utility. The opportunity in a not too distant future for perhaps the first rate case filing in quite some time there, understood that the weather dynamic likely helped or certainly helped the results of the utility and may have delayed that for some time. But just curious, so latest thoughts on what sort of potential deficiency might be at UGI Utilities and sort of that timing around any potential rate filing?

Yes, I don’t have an update in terms of timing and obviously we - it’s in sort of our - it’s on the radar. It’s in the foreseeable future given the level of investment as always with us. It’s been tempered by continued growth which is - put us in the 20-year period since the last rate case, but we can definitely see it. We haven’t reached any conclusion and we’ll use this year’s results to - and have forward projection to assess that and then be in discussions or communicate with the PUC with regard to timing. So nothing new, we’ll probably know more when we come out, when we talk about next year and at that time might have a clearer view as we look at this year’s results and level of investment on timing. So it’s - we can see it but we’re not at a point yet where we’d come out with any definitive view on timing of a filing for UGI Gas.

Okay. And then, I guess, a final question for me is just circling back on Midstream opportunities. We saw obviously some additional projects filter out here in the last couple of months, pipelines, intrastate pipelines in Pennsylvania. Just curious, as it pertains to this infrastructure gap and the opportunities from an asset perspective to leverage some of the volatility that occurs, the 50% liquefaction capacity added at Temple, I’m just wondering, that’s obviously become a pretty significant asset for you guys. Wondering if there is an opportunity for further expansion there or if there is another site that were something like that could be replicated. I think when we toured it, one of the major attributes that you guys spoke about was the proximity to the major interstate pipe and the pressure differential that’s created and coming off the system. And just wondering within your sort of area of operations if there is an opportunity for something similar to be created?

Yes, thanks, Chris. In terms of LNG, we’re really excited to be bringing on that additional 50%, the increase in our liquefaction capacity. We would love to have that additional liquid at the start of this winter rather than in the spring, but that was never the plan. The plan was always to bring it on at this point. It does a number of things for us, that additional capacity. It provides us with more liquid to be used to serve some of these significant opportunities that arise during periods of constraints, so that will be great. It also enables us to continue to develop our position serving emerging segments for LNG around transport and distributed generation. So it gives us an enhanced liquefaction capacity which then positions us to continue to develop peaking and sort of non-peaking LNG segments. And then one critical point to make about LNG and peaking is that, what for ourselves and for virtually every gas utility in the Eastern and Northeast, Mid-Atlantic, U.S., this past winter you saw announcements in terms of record throughputs and in many cases record peaks. So we see the needs for gas at peak to be increasing that reflects the underlying growth in customers with lots of convergence and other increasing demand coupled with the demand for gas-fired generation I talked about earlier, so there are significant demands for LNG. We’re bringing the additional liquid to market at a great time, because there’s not a lot of LNG available and we would certainly look hard at other opportunities to expand our footprint or capacity of LNG. So yes, that remains a focus for us, because it’s really been a great asset for us, a huge and sort of core asset for us in terms of our Midstream business. So with the liquefaction were augmenting it, but we then look at opportunities potentially to further expand and enhance our position on the LNG side to continue to serve peaking demand, which is increasing in a pretty material way and the other emerging segments that I referenced.

Great. Thanks again for the time this morning. I appreciate it.

Thank you.

The next question is from Sharon Lui with Wells Fargo. Your line is open.

Hi, good morning.

Good morning, Sharon.

This question is for Jerry on AmeriGas. Just given, I guess, that the higher priced inventory was sold in the second quarter, just wondering what your expectations for propane margins are for the balance of the year.

Yes, we are glad that we are able to get some weather and get the high cost inventory out. Things have stabilized now. So I mean, we’re basically at the same differentials that we typically you’re at. The propane cost has been stable which is wonderful, not only for us but the whole industry, customers are enjoying lower prices. So I’d expect our margin expansion that we experienced in the quarter to continue for the rest of the year.

Okay. That’s helpful. And I guess regarding the propane acquisition market, maybe if you can comment on whether activity levels and multiples have been tracking in line with expectations and whether you think I guess potential opportunities could ramp up for the balance of the year.

I think, they will, I mean our pipeline is pretty good right now. And this is the season when most of the independence that have chosen to sell, think hard about it in the spring. We had years now where multiples really haven’t expanded. So we’re still seeing five to six multiples. That just hasn’t changed. It’s been very stable, but the amount of opportunities has also been quite stable. So should be a good spring for us.

Okay, it’s helpful. And then, I guess on the UGI side, given your significant project backlog, just wondering if you’ve seen any reductions to date on material costs or just pipe contracting costs that could improve your returns on these types of investments.

Sure, I would say, no, we haven’t seen any material changes. The most significant - the material costs are certainly an important element. On number of these projects the actual construction field labor costs are more significant and we’ve been pleased that we’ve been able to develop really attractive projects. With the challenge that all of us faced in the Marcellus in terms of finding, staffing and executing around projects and that’s gone really well for us. And I think one of the things is that our Midstream marketing team is done really well, and the utilities team is to enhance our resources, staff up and aligned with some major contractors that enable us to execute a range of projects for UGI that are well above any range of projects, capital projects that we’ve executed in our history. So we’ve been pleased that the costs have been sort of well-managed and understood, but we haven’t seen any significant changes in our costs to execute projects.

Okay, thanks for the color.

Yes, thank you.

Your next question comes from the line of Nathan Judge from Janney. Your line is open.

Good morning.

Good morning.

Just wanted to inquire a little bit more about - good morning - a little bit more about the foreign exchange headwind that looks to be coming. Can you just - I know you ratably hedge, but could you give us a better idea of what as far as the headwind could be - if you’ve actually quantified that and will we see any change as it relates to the inclusion of Total?

We haven’t quantified in terms of dollar amount the headwind. If you think about it, I mean, if you try to ask that, we typically get that hedging done by the end of the second quarter of the year we’re in and we settled in as I described. So you think kind of look at where rates are and average demand and you can kind of come up with something there, if you wanted to try to estimate that. With Total, we haven’t hedged anything yet, because the transaction hasn’t closed, but once we close the acquisition we will use the same policy with respect to the earnings there.

Actually, we wouldn’t be specific in terms of next year say FY 2016, but I can say on a broad basis that, based on the hedging policy that current reference, we are not looking at ForEx being or currency being a significant factor as we look at our targets for next year, largely because it’s hedged and it’s hedged at a weighted value that’s not dissimilar from this year basically. So it’s not a significant or a material event for us. Now although over three years, you get - you sort get to - you have a soft landing over three years, but who knows where the markets would go. But for next year, we’re in a - we know who are all we’re going to see and it’s not a material change from this year.

Okay. Well, and just a follow-up on weather, clearly, some of the weather in the first quarter wasn’t as robust as it was in the second. But can you give us an idea of what the net impact of weather would have been this year relative to normal?

Yes, we typically don’t do that. I mean, you can look at the - you can look at each business and kind of look at weather and throughout and margin, and it tends to flow. It tends to flow pretty clearly if you look at AmeriGas, and we provided now, I would say the slides that we provide with the year, and you can sort of see the volume impact largely is weather related. And then we do our best in the businesses, which can respond to unit margin management to counter act that. But that combination of volume, which is largely weather impacted offset by, how we do on our unit margin management sort of is a good proxy for weather. The hardest one to characterize, because it’s multiple factors with weather being one is around the Midstream business and the impact of weather and other operational factors on volatility and margin from a pipeline capacity, that one is difficult. We explain it as best we can. It’s - and weather - cold weather is one of the key enablers of volatility, but that’s a harder one to sort of specifically call out.

Okay. Thank you. And just finally, you are talking about having a better second-half than you had historically as far as contribution from earnings. When you look out in future periods, do you see comparable level of higher earnings, it sounds like when you talk about your projects in uplift your sustainable cash flows in those businesses that you are looking for better back-half of the year is going forward, is that fair to say?

I think each year is unique, but some of the things, I referenced a few things. Certainly, the build of our take or pay fee-based revenue streams will contribute to up earning consistently ratably throughout the year. I think the what’s going on in terms of the pipeline capacity markets does tend to help us even in shoulder months, so that again is a positive contributor towards reducing to some limited expense of the weather volatility we see in our earnings and helping us in the second-half of the year. Something like the parachute effect that I referenced is depends on factors and is sort of available to us in years, where cost move in a certain direction and certain - with certain timing, so that’s one that’s not necessary. I’m sure we’ll repeat in some future years, but I wouldn’t see that as a trend, that’s just an event. But the other two, I think are positive trends that are helpful in terms of second-half earnings for the company.

Thank you very much.

Okay. Thanks, Nathan.

Your next question comes from the line of Ben Brownlow from Raymond James. Your line is open.

Good morning.

Good morning.

Jerry, I know you don’t like to give too much comments or - on the quarterly kind of guidance. But kind of assuming normal weather in business in the second-half of this year, and I think the latter half of last year was slightly unfavorable, particularly in the fiscal third quarter. So just taking guidance or step further, is it fair to assume that you are looking for volume growth in the second-half this year?

We will have slightly higher volumes in the summer mostly because of the National Accounts business that I mentioned. So National Accounts is great, because it’s more of a commercial less weather sensitive business and, of course, the Cylinder Exchange business as well. But I wouldn’t say it’s a material jump in volume.

Okay. That’s helpful. And on the distribution growth of sequentially a $0.04, which is what you’ve historically done over the past, two years. But obviously over time that represented a little bit of a slowdown in the growth rate from about 5%, 4.5%. Just how should we think about that longer-term growth objective on the distribution?

Well, we’ve continued to maintain that we are growing earnings 3% to 4% and increasing the distribution 5% over time. So I think we’ve always said in cold years don’t look for a big jump about 5%, in warm years, don’t expect the drop well below 5%. But as I said, we want kind of the average over time for our unitholders that hang onto AmeriGas to expect 5% over time.

Okay. And then just last one from me, just kind of thinking about the industry from a longer-term structural standpoint of kind of a multi-year timeframe. How should I think about AmeriGas’s ability to capture higher propane margins which helps to offset some of the conservation that you’re seeing in the industry?

Yes. Well, I mean, we’ve got a plenty of ways to grow the volume organically. So that’s kind of the magic of our Cylinder Exchange business and National Accounts, as they actually grow volume. And commercial businesses in the U.S. and the use of propane for autogas is a growing segment, but I think the really nice thing about AmeriGas as a large-scale rollup is that, there’s over 3,000 acquisition candidates out there. So it will be a very, very long time before that runs out. So even in secular declining industries, the rollup strategy is great when you get that many choices.

Okay. Thanks.

In the earlier I just had a comment on earnings, one of the things that Jerry and the whole team in AmeriGas did a great job of this quarter is expense control, expense management. So, in terms - as we think about future, you drive the top line certainly and look for growth opportunities and we’ve always done that. But focusing on operational efficiency is also critically important, and I think that team did a great job this quarter in terms of driving operational efficiency that came through when you look at OpEx and earnings.

Okay. Congrats on the quarter. Thanks.

Thank you.

Thanks.

Your next question comes from the line of Mark Barnett from Morningstar. Your line is open.

Hey, good morning, everyone.

Good morning.

Question for Jerry, obviously it was a great quarter as you mentioned on the OpEx efficiency and whatnot. And I’m wondering, looking at over the course of the rest of the year and what have you, was most of this stuff kind one-time management in nature given the conditions, or did you see any kind longer-term cost savings that you’ve - that you are recognizing?

Yes, I mean, a lot of work here. I mean, this year obviously when we got lower propane prices, it results, because we’re margin-based business, lower top line, which is not a bad thing, we’re still making more money, but our customers are getting lower bills. That really takes bad debt down. We’re enjoying lower diesel costs to run the trucks. Last year was a very expensive year to do business with all the Polar Vortex activity. We had huge bills that were related to repair and maintenance, a lot of over time, because we had the short fill through the shortage of propane, all of that’s gone. So we’ve had a pretty good run that should continue when year-over-year comps whether it’s over time bad debt diesel et cetera. So I think for the rest of the year certainly, we’re going to see expenses better than last year.

Great. Thanks a lot.

Yep. Thank you. Your last question comes from the line of Carl Kirst from BMO Capital Markets. Your line is open.

Hey, thank you, guys. I appreciate the time. Just had a couple of quick follow-ups, and the first really on the Totalgaz acquisition, I guess to the extent that are there any biases to the return, for instance, that we should be thinking of, John, you mentioned not necessarily the parachute effect, but just that prices are down 40%. Is that stimulating demand, or to the extent that we’re seeing things take maybe to the outer part of the envelope for closing, has that clipped anything, just wanted to touch base on it?

Sure. Yes, Carl, I would say at a high level, there’s the opportunity with Total looks very much the way we look when we first talked about it late last summer or early last fall. It’s - with the change in the exchange rate between the dollar and the euro, it’s gotten a little cheaper for us and will translate earnings back at a different rate. But the fundamentals of the investment remain exactly the same. One thing I’d point out is, the funding - the capital markets remain very attractive, so we’re really pleased with the funding opportunities the way we’re going to funded this - it’s - the rates remain very attractive, so that’s a positive. And just in general whether we’re talking about Antargaz, Total, or AmeriGas having lower commodity cost is a great thing as a distributor. It relieves any strain on our balance sheet, and Kirk talked about as being out of the revolvers across all of our company. And probably most critically it relieves burden on our customers and as a distributor that’s what you want. You want less burden on your customers, because you want them encourage that consume. So we feel good about lower commodity costs, I would say doesn’t have material effect on the financial model for the investment, but it’s a positive development.

Great, great, I appreciate that. And then last question, is it going back to Midstream and certainly appreciating all the color that you had given about sort of the sustainable foundation being up and you had even mentioned that one point seeing some cases fee-based but some cases even take-or-pay fee-based. And I was wondering if it was possible at this point to even give what an annualized fee-based or take or pay-based component was to Midstream?

Yes, that’s something that we - you have communicated, we’ve shown some sort of longer-term sort of historical view and the future view with fee-based elements to it, where we’re moving forward, we’re going to see fee-based - percentage of fee-based revenue and Energy Services moving from what historically has been about 30% to, if you project forward two, three years about 55%, so it’s quite a significant move. And for most of our revenues when we talk about the fee-based revenues, most of those are take or pays. So they’re - which from our standpoint is very attractive, because they’re clearly lower risk and you’re not subject to the volume risk of the variability around volume. And the other key factor there is, again, when we look at our revenue stream around the take or pay fees, the quality of the counterparties in our take or pay agreements is quite high, which is the other key factor you got to make sure when you’re signing a five-year, seven-year or 30year contract with somebody for take or pay fees that they’re going to be around to deliver on that commitment. So we’ve got very creditworthy counterparties, which is the other key for us. So we’ve shared some decal on that in terms of the movement and certainly we’ll try to make sure, we do our best to provide information that will enable you to just kind of see in a little bit more detail the evolution of that business, because it’s an important evolution for us.

Absolutely, great. Thank you so much.

Okay. Thank you, Carl.

There are no further questions at this time. Presenters, I turn the call back to you.

Okay. That’s it. Thank you very much. We look forward to keeping your abreast, and we’ll talk to you soon. Take care.