ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MD&A discusses our results of operations for Fiscal 2025 and Fiscal 2024, and our financial condition. For discussion of our results of operations and cash flows for Fiscal 2024 compared with Fiscal 2023, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Fiscal 2024 Annual Report on Form 10-K, filed with the SEC on November 26, 2024. MD&A should be read in conjunction with Items 1 and 2, “Business and Properties,” Item 1A, “Risk Factors,” and the Consolidated Financial Statements, including “Segment Information” in Note 22 to Consolidated Financial Statements.
Because most of our businesses sell or distribute energy products used in large part for heating purposes, our results are significantly influenced by temperatures in our service territories, particularly during the heating-season months of October through March. Accordingly, our results of operations, after adjusting for the effects of gains and losses on derivative instruments not associated with current-period transactions as further discussed below, are significantly higher in our first and second fiscal quarters.
Recent Developments
Global LPG Business Transactions
As part of the Company’s ongoing global LPG business portfolio optimization efforts, the Company is strategically divesting operations in non-core markets to focus resources where it can achieve superior operational results and deliver enhanced customer value.
UGI International. In October 2025, UGI International, through a wholly-owned subsidiary, entered into a definitive agreement to divest its LPG distribution business located in Austria. The Company expects to recognize a gain upon closing, which is expected in the first quarter of Fiscal 2026.
In June 2025, UGI International, through a wholly-owned subsidiary, completed the sale of UniverGas, its LPG distribution business in Italy. In conjunction with the sale, the Company recorded a pre-tax loss of $50 million in Fiscal 2025.
In June 2025, UGI International, through a wholly-owned subsidiary, entered into a definitive agreement to divest its cylinder business in the United Kingdom. Accordingly, the assets and liabilities associated with this business, primarily comprised of long-lived assets, have been classified as held for sale at September 30, 2025. During Fiscal 2025, the Company recognized a non-cash, pre-tax impairment charge of $3 million to record such assets at estimated fair value less costs to sell. The sale was completed in October 2025.
AmeriGas Propane. In September 2025, AmeriGas OLP completed the sale of its propane business located in Hawaii. The transaction included the sale of approximately 750,000 gallons of propane storage facilities and multiple delivery fleet assets. In conjunction with the sale, the Company recorded a pre-tax gain of $17 million in Fiscal 2025.
See Note 5 to Consolidated Financial Statements for additional information.
Non-GAAP Financial Measures
UGI management uses “adjusted net income attributable to UGI Corporation” and “adjusted diluted earnings per share,” both of which are non-GAAP financial measures, when evaluating UGI’s overall performance. Management believes that these non-GAAP measures provide meaningful information to investors about UGI’s performance because they eliminate gains and losses on commodity and certain foreign currency derivative instruments not associated with current-period transactions and other significant discrete items that can affect the comparison of period-over-period results.
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UGI does not designate its commodity and certain foreign currency derivative instruments as hedges under GAAP. Volatility in net income attributable to UGI Corporation can occur as a result of gains and losses on such derivative instruments not associated with current-period transactions. These gains and losses result principally from recording changes in unrealized gains and losses on unsettled commodity and certain foreign currency derivative instruments and, to a much lesser extent, certain realized gains and losses on settled commodity derivative instruments that are not associated with current-period transactions. However, because these derivative instruments economically hedge anticipated future purchases or sales of energy commodities, or in the case of certain foreign currency derivatives, reduce volatility in anticipated future earnings associated with our foreign operations, we expect that such gains or losses will be largely offset by or on anticipated future energy commodity transactions or mitigate in anticipated future earnings. Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures.
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The following tables reflect the adjustments referred to above and reconcile net income 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:
Year Ended September 30,
(Millions of dollars, except per share amounts)
Adjusted net income attributable to UGI Corporation:
Utilities
Midstream & Marketing
UGI International
AmeriGas Propane
Corporate & Other (a)
Net income attributable to UGI Corporation
Net losses (gains) on commodity derivative instruments not associated with current-period transactions (net of tax of $(2) and $17, respectively)
Unrealized losses (gains) on foreign currency derivative instruments (net of tax of $(3) and $(9), respectively)
Loss associated with impairment of AmeriGas Propane goodwill (net of tax of $0 and $(3), respectively)
Loss on extinguishments of debt (net of tax of $(2) and $(3), respectively)
AmeriGas operations enhancement for growth project (net of tax of $0 and $(6), respectively)
Restructuring costs (net of tax of $0 and $(20), respectively)
Costs associated with exit of the UGI International energy marketing business (net of tax of $0 and $(15), respectively)
Net loss on disposals of businesses (net of tax of $2 and $(11), respectively)
Impairments of equity method investments and assets (net of tax of $0 and $(3), respectively)
Release of valuation allowance on certain deferred tax assets
Total adjustments (a) (b)
Adjusted net income attributable to UGI Corporation
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Year Ended September 30,
Adjusted diluted earnings per share:
Utilities
Midstream & Marketing
UGI International
AmeriGas Propane
Corporate & Other (a)
Earnings per share - diluted
Net losses (gains) on commodity derivative instruments not associated with current-period transactions
Unrealized losses (gains) on foreign currency derivative instruments
Loss associated with impairment of AmeriGas Propane goodwill
Loss on extinguishments of debt
AmeriGas operations enhancement for growth project
Restructuring costs
Costs associated with exit of the UGI International energy marketing business
Net loss on disposals of businesses
Impairments of equity method investments and assets
Release of valuation allowance on certain deferred tax assets
Total adjustments (a)
Adjusted diluted earnings per share
(a) Corporate & Other includes certain adjustments made to our reporting segments in arriving at net income attributable to UGI Corporation. These adjustments have been excluded from the segment results to align with the measure used by our CODM in assessing segment performance and allocating resources. See Note 22 to Consolidated Financial Statements for additional information related to these adjustments, as well as other items included within Corporate & Other.
(b) Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
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Executive Overview
Fiscal 2025 Compared with Fiscal 2024
Net income attributable to UGI Corporation was $678 million (equal to $3.09 per diluted share) and $269 million (equal to $1.25 per diluted share) in Fiscal 2025 and Fiscal 2024, respectively. These results include net gains (losses) from changes in unrealized commodity derivative instruments and certain foreign currency derivative instruments of $(14) million and $38 million in Fiscal 2025 and Fiscal 2024, respectively.
Net income attributable to UGI Corporation in Fiscal 2025 also includes (1) a $38 million net loss on disposals of certain non-core assets from our global LPG business, reflecting a $51 million loss at UGI International and a $13 million gain at AmeriGas Propane; (2) $10 million income tax benefits associated with the release of valuation allowance on certain deferred tax assets at AmeriGas Propane; and (3) a loss on extinguishments of debt of $8 million, primarily at AmeriGas Propane.
Net income attributable to UGI Corporation in Fiscal 2024 also includes (1) a $192 million loss associated with impairment of AmeriGas Propane goodwill; (2) $69 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; (3) restructuring costs of $56 million largely attributable to a reduction in workforce and related costs, primarily at UGI International; (4) a $55 million loss on disposal of UGID; (5) $30 million of impairments associated with equity method investments and certain other assets at UGI International; (6) external advisory fees of $19 million associated with AmeriGas operations enhancement for growth project; and (7) loss on extinguishments of debt of $6 million, primarily at AmeriGas Propane.
Adjusted net income attributable to UGI Corporation was $728 million (equal to $3.32 per diluted share) and $658 million (equal to $3.06 per diluted share) in Fiscal 2025 and Fiscal 2024, respectively. The increase in adjusted net income attributable to UGI Corporation during Fiscal 2025 reflects higher earnings contributions primarily from our AmeriGas Propane and Midstream & Marketing segments, partially offset by lower earnings contributions from our UGI International segment. In Fiscal 2025, temperatures in all of our business segments were colder than the prior year.
Utilities adjusted net income in Fiscal 2025 was comparable to the prior year as higher total margin due in large part to higher core market volumes was substantially offset by higher operating and administrative expenses.
Midstream & Marketing adjusted net income increased $31 million in Fiscal 2025 compared to the prior year. The increase is primarily attributable to lower income tax expenses, reflecting higher investment tax credits in Fiscal 2025, partially offset by lower total margin.
UGI International’s adjusted net income decreased $20 million in Fiscal 2025 compared to the prior year. The decrease is mainly attributable to higher income tax expenses and lower margin contributions primarily from our LPG business, reflecting lower LPG retail volumes sold, partially offset by lower operating and administrative expenses.
AmeriGas Propane’s adjusted net income increased $59 million in Fiscal 2025 compared to the prior year, principally reflecting lower income tax expenses and, to a lesser extent, higher total margin, primarily attributable to higher average retail propane unit margins, and lower operating and administrative expenses.
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Analysis of Segment Results
The following analysis compares results of operations by our reportable segments for Fiscal 2025 and Fiscal 2024:
Utilities
Increase (Decrease)
(Dollars in millions)
Revenues
Total margin (a)
Operating and administrative expenses (a)
Operating income
Earnings before interest expense and income taxes
Gas Utility system throughput – bcf
Core market
Total
Electric Utility distribution sales - gwh
Gas Utility degree days—% (warmer) than normal (b)
(a) Total margin represents total revenues less total cost of sales and revenue-related taxes (i.e. gross receipts and business and occupation taxes) of $24 million each during Fiscal 2025 and Fiscal 2024. For financial statement purposes, revenue-related taxes are included in “Operating and administrative expenses” on the Consolidated Statements of Income (but are excluded from operating expenses presented above).
(b) Deviation from average heating degree days is determined on a 10-year period utilizing volume-weighted weather data based on weather statistics provided by NOAA for airports located within Gas Utility service territories.
Temperatures in Gas Utility’s service territories during Fiscal 2025 were 2.4% warmer than normal and 11.3% colder than the prior year. Gas Utility core market volumes increased 10% during Fiscal 2025, principally reflecting the impact from the colder weather. Total Gas Utility volume was comparable to the prior-year period as the increase in core market volumes was substantially offset by lower large firm delivery service volumes. The increase in Electric Utility distribution sales volumes during Fiscal 2025 is primarily attributable to warmer weather during the cooling season in the fourth quarter of Fiscal 2025.
Revenues increased $163 million during Fiscal 2025, reflecting higher Gas Utility revenues ($154 million) and higher Electric Utility revenues ($9 million). The increase in Gas Utility revenues was largely attributable to the higher core market volumes, higher off-system sales and the increase in the WV Gas Utility base rates, effective January 1, 2024. These increases were partially offset by the effects of the weather normalization adjustments. The increase in Electric Utility revenues is principally attributable to higher DS rates and higher volumes.
Cost of sales increased $124 million during Fiscal 2025, reflecting higher Gas Utility cost of sales ($116 million) and higher Electric Utility cost of sales ($8 million). The increase in Gas Utility cost of sales was largely attributable to the higher core market volumes and higher cost of sales associated with off-system sales. The increase in Electric Utility cost of sales is principally attributable to higher DS rates and higher sales volumes.
Total margin increased $39 million during Fiscal 2025, substantially attributable to higher Gas Utility total margin ($38 million). The increase in Gas Utility total margin mainly reflects the higher core market volumes and the increase in the WV Gas Utility base rates, effective January 1, 2024, partially offset by the effects of the weather normalization adjustments. Electric Utility margin was comparable to the prior-year period.
Operating income and earnings before interest expense and income taxes each increased $3 million during Fiscal 2025. The increase largely reflects the increase in total margin ($39 million) substantially offset by higher operating and administrative expenses ($25 million) and higher depreciation expense ($12 million). The higher operating and administrative expenses reflect, among other things, higher personnel expenses, higher general insurance costs and higher maintenance expenses. The higher depreciation expense compared to the prior year reflects the effects of continued distribution system capital expenditure activity.
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Midstream & Marketing
Increase (Decrease)
(Dollars in millions)
Revenues
Total margin (a)
Operating and administrative expenses
Operating income
Earnings before interest expense and income taxes
(a) Total margin represents total revenues less total cost of sales.
Average temperatures across Midstream & Marketing’s energy marketing territory during Fiscal 2025 were 0.4% warmer than normal and 12.2% colder than the prior year.
Revenues increased $114 million during Fiscal 2025, primarily reflecting higher revenues from natural gas marketing activities ($115 million) that were primarily impacted by the colder weather, and higher revenues from renewable energy ($12 million). These increases were partially offset by the absence of revenues from UGID that was sold in September 2024 ($35 million).
Cost of sales increased $125 million during Fiscal 2025, primarily reflecting higher natural gas costs ($95 million) related to the previously mentioned natural gas marketing activities, higher midstream cost of sales ($16 million), mainly from higher peaking activities, and higher cost of sales from renewable energy ($9 million). These increases were partially offset by the absence of cost of sales from UGID that was sold in September 2024 ($19 million).
Midstream & Marketing total margin decreased $11 million during Fiscal 2025, primarily reflecting lower midstream margins ($22 million), mainly from lower natural gas gathering and processing activities, and the absence of margins from UGID that was sold in September 2024 ($16 million). These decreases were partially offset by higher total margin from natural gas marketing activities ($20 million).
Operating income during Fiscal 2025 decreased $13 million, largely attributable to the lower total margin ($11 million) and, to a lesser extent, slightly higher operating and administrative expenses ($4 million).
Earnings before interest expense and income taxes during Fiscal 2025 decreased $20 million, principally reflecting the lower operating income ($13 million) and, to a lesser extent, lower income from equity investees ($4 million).
UGI International
Increase (Decrease)
(Dollars in millions)
Revenues
Total margin (a)
Operating and administrative expenses
Operating income
Earnings before interest expense and income taxes
LPG retail gallons sold (millions)
Degree days—% (warmer) than normal (b)
(a) Total margin represents total revenues less total cost of sales.
(b) Deviation from average heating degree days is determined on a rolling 10-year period utilizing volume-weighted weather data at locations in our UGI International service territories.
Average temperatures during Fiscal 2025 were 3.3% warmer than normal and 5.0% colder than Fiscal 2024. Notwithstanding the colder weather, total LPG retail gallons sold during Fiscal 2025 slightly decreased compared to Fiscal 2024, largely attributable to continued structural conservation and the absence of certain customers who previously converted from natural gas to LPG, substantially offset by the impact from the colder weather and higher crop drying campaigns.
UGI International base-currency results are translated into U.S. dollars 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 Fiscal 2025 and Fiscal 2024, the average unweighted euro-to-dollar translation
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rates were approximately $1.11 and $1.08, respectively, and the average unweighted British pound sterling-to-dollar translation rates were approximately $1.31 and $1.27, 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 $6 million and $11 million in Fiscal 2025 and Fiscal 2024, respectively.
Average wholesale prices for propane and butane during Fiscal 2025 in northwest Europe were approximately 4.4% and 4.0% lower, respectively, compared to Fiscal 2024. Revenues and cost of sales decreased $160 million and $122 million, respectively, in Fiscal 2025. The decrease in revenues and cost of sales principally reflects significantly lower energy marketing activities during Fiscal 2025, 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 was also attributable to the lower LPG retail volumes sold, partially offset by LPG price increases across Europe and the translation effects of the stronger foreign currencies (approximately $21 million). The decrease in cost of sales was also attributable to the lower LPG retail volumes sold, substantially offset by higher LPG product costs and the translation effects of the stronger foreign currencies (approximately $12 million).
Total margin decreased $38 million during Fiscal 2025 primarily reflecting the lower margin contributions from our LPG business and, to a lesser extent, from our energy marketing activities. The lower margin from our LPG business primarily reflects the lower LPG retail volumes sold, partially offset by the effects of higher average unit margins during Fiscal 2025 and the translation effects of the stronger foreign currencies (approximately $9 million). The lower margin from our energy marketing activities reflects the impact of the aforementioned exit of substantially all of UGI International’s energy marketing business.
Operating income decreased $6 million during Fiscal 2025. The decrease reflects the lower total margin ($38 millions) and, to a much lesser extent, higher depreciation and amortization expenses ($4 million), largely offset by lower operating and administrative expenses ($35 million). The lower operating and administrative expenses during Fiscal 2025 primarily reflect (1) lower personnel expenses, (2) lower distribution and maintenance expenses in our LPG business, (3) lower uncollectible accounts expense, and (4) a decline in energy marketing-related operating expenses. These decreases were partially offset by the effects of inflationary increases and the translation effects of the stronger foreign currencies (approximately $10 million).
Earnings before interest expense and income taxes decreased $9 million during Fiscal 2025. The decrease largely reflects the lower operating income ($6 million) and lower realized gains on foreign currency exchange contracts ($5 million) entered into in order to reduce volatility in UGI International earnings resulting from the effects of changes in foreign currency exchange rates.
AmeriGas Propane
Increase (Decrease)
(Dollars in millions)
Revenues
Total margin (a)
Operating and administrative expenses
Operating income / earnings before interest expense and income taxes
Retail gallons sold (millions)
Degree days—% (warmer) than normal (b)
(a) Total margin represents revenues less cost of sales.
(b) Deviation from average heating degree days is determined on a rolling 10-year period utilizing volume-weighted weather data based on weather statistics provided by NOAA for 344 regions in the United States, excluding Alaska and Hawaii.
Average temperatures during Fiscal 2025 were 1.3% warmer than normal and 6.3% colder than the prior year. Total retail gallons sold slightly decreased during Fiscal 2025 as the impact from continuing customer attrition was substantially offset by the effects of the colder weather.
Average daily wholesale propane commodity prices during Fiscal 2025 at Mont Belvieu, Texas, one of the major supply points in the U.S., were approximately 6% higher than such prices during Fiscal 2024. Total revenues increased $5 million during
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Fiscal 2025, largely reflecting the effects of higher average retail propane selling prices ($46 million), partially offset by lower fee income ($16 million), lower wholesale revenues ($15 million) and the lower retail volumes sold ($10 million).
Total cost of sales decreased $5 million during Fiscal 2025, largely reflecting lower wholesale cost of sales ($13 million) and the lower retail propane volumes sold ($5 million), partially offset by the higher retail propane product costs ($17 million).
Total margin increased $10 million in Fiscal 2025, largely reflecting higher average retail propane unit margins ($30 million), partially offset by lower fee income ($12 million) and the lower retail propane volumes sold ($6 million).
Operating income and earnings before interest expense and income taxes each increased $24 million in Fiscal 2025 primarily reflecting the higher total margin ($10 million), lower operating and administrative expenses ($9 million) and higher other operating income ($5 million), mainly resulting from higher gains on sales of fixed assets during Fiscal 2025. Lower operating and administrative expenses reflect, among other things, lower uncollectible accounts expense and lower vehicle expenses.
Interest Expense and Income Taxes
Our consolidated interest expense during Fiscal 2025 was $411 million compared to $394 million during the prior year. The increase in interest expense reflects the effects of (1) higher average long-term debt outstanding at Utilities and UGI Corporation and (2) higher average credit agreement borrowings during Fiscal 2025, substantially offset by lower interest expense from lower average long-term debt outstanding at AmeriGas Propane.
Our effective income tax rate decreased in Fiscal 2025 compared to Fiscal 2024, primarily due to (1) the higher release of valuation allowances on deferred tax assets expected to be utilized by our UGI International and AmeriGas Propane segments; and (2) higher investment tax credits available in Fiscal 2025 due to a larger level of project completions in our Midstream & Marketing segment.
See Note 7 to Consolidated Financial Statements for additional information on our income taxes.
Financial Condition and Liquidity
The Company expects to have sufficient liquidity including cash on hand and available borrowing capacity, to continue to support long-term commitments and ongoing operations. Our total available liquidity balance, comprising cash and cash equivalents and available borrowing capacity on our revolving credit facilities, totaled approximately $1.6 billion and $1.5 billion at September 30, 2025 and 2024, respectively. In November 2025, the Company used a portion of proceeds from the issuance of the UGI Utilities 5.10% Senior Notes and 5.68% Senior Notes to repay the $175 million outstanding principal balance of the 1.59% and 1.64% UGI Utilities senior notes maturing in June and September 2026. Accordingly, $175 million aggregate principal amounts of these maturing senior notes have been classified as long-term debt on the September 30, 2025 Consolidated Balance Sheet. As of September 30, 2025, current maturities of long-term debt principally comprises $100 million outstanding principal balance of UGI Utilities, 2.95% Senior Notes, due June 2026. Except as noted, the Company does not have any senior notes or term loans maturing in the next twelve months. UGI and its subsidiaries were in compliance with all of its debt covenants as of September 30, 2025.
We depend on both internal and external sources of liquidity to provide funds for working capital and to fund capital requirements. Our short-term cash requirements not met by cash from operations are generally satisfied with borrowings under credit facilities and, in the case of Midstream & Marketing, also from a Receivables Facility. Long-term cash requirements are generally met through the issuance of long-term debt, hybrid or equity securities. We believe that each of our business units has sufficient liquidity in the forms of cash and cash equivalents on hand; cash expected to be generated from operations; credit facility and Receivables Facility borrowing capacity; and the ability to obtain long-term financing to meet anticipated contractual and projected cash commitments. Issuances of debt, hybrid and equity securities in the capital markets and additional credit facilities may not, however, be available to us on acceptable terms.
The primary sources of UGI’s cash and cash equivalents are the dividends and other cash payments made to UGI or its corporate subsidiaries by its principal business units. Our cash and cash equivalents totaled $335 million and $213 million at September 30, 2025 and 2024, respectively. Excluding cash and cash equivalents that reside at UGI’s operating subsidiaries, our cash and cash equivalents totaled $214 million and $72 million at September 30, 2025 and 2024, respectively. Such cash is available to pay dividends on Common Stock and for investment purposes.
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During Fiscal 2025 and Fiscal 2024, our principal business units paid cash dividends and made other cash payments to UGI and its subsidiaries as follows:
(Millions of dollars)
Utilities
Midstream & Marketing
UGI International
Total
Common Stock
Dividends
Quarterly dividends per share of Common Stock paid during Fiscal 2025 and Fiscal 2024 were as follows:
1 st Quarter
2 nd Quarter
3 rd Quarter
4 th Quarter
Total
On November 20, 2025, the Board of Directors declared a cash dividend equal to $0.375 per common share. The dividend will be payable on January 1, 2026, to shareholders of record on December 15, 2025.
Repurchases of Common Stock
During Fiscal 2025, the Company repurchased 1 million shares of its Common Stock at a total purchase price of $33 million. During Fiscal 2024, there were no repurchases of Common Stock. For additional information on the authorization of these repurchases, see Note 13 to Consolidated Financial Statements.
Long-term Debt and Credit Facilities
The Company’s debt outstanding at September 30, 2025 and 2024, comprised the following:
(Millions of dollars)
Utilities
Midstream & Marketing
UGI International
AmeriGas Propane
Corp & Other
Eliminations (a)
Total
Total
Short-term borrowings
Long-term debt (including current maturities):
Senior notes
Term loans
Other long-term debt
Unamortized debt issuance costs
Total long-term debt
Total debt
(a) Represents the elimination of the intersegment loan between UGI International and AmeriGas Partners.
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Significant Financing Activities
The following significant financing activities occurred during Fiscal 2025. See Note 6 to Consolidated Financial Statements for additional information on these transactions.
Utilities
UGI Utilities Senior Notes. In July 2025, UGI Utilities entered into a note purchase agreement with a consortium of lenders. Pursuant to the note purchase agreement, in November 2025, UGI Utilities issued $150 million aggregate principal amount of 5.10% Senior Notes due November 15, 2030, and $125 million aggregate principal amount of 5.68% Senior Notes due November 15, 2035. These senior notes are unsecured and rank equally with UGI Utilities’ existing outstanding senior debt. UGI Utilities used the net proceeds from the issuance of these senior notes to (1) repay the $100 million outstanding principal balance of the 1.59% Senior Notes, due June 2026 and $75 million outstanding principal balance of the 1.64% Senior Notes, due September 2026; (2) reduce short-term borrowings; and (3) for general corporate purposes.
In November 2024, UGI Utilities entered into a note purchase agreement with a consortium of lenders. Pursuant to the note purchase agreement, UGI Utilities issued $50 million aggregate principal amount of 5.24% Senior Notes due November 30, 2029, and $125 million aggregate principal amount of 5.52% Senior Notes due November 30, 2034. The net proceeds from these issuances were used to reduce short-term borrowings and for general corporate purposes.
Mountaineer 2025 Credit Agreement . In May 2025, Mountaineer entered into the Mountaineer 2025 Credit Agreement providing for borrowings up to $150 million, including a $20 million sublimit for letters of credit. Mountaineer may request an increase in the amount of loan commitments to a maximum aggregate amount of $250 million, subject to certain terms and conditions. In connection with entering into the Mountaineer 2025 Credit Agreement, Mountaineer paid off in full and terminated the Mountaineer 2023 Credit Agreement, dated as of November 2019. Borrowings under the Mountaineer 2025 Credit Agreement can be used to refinance Mountaineer’s existing indebtedness, finance the working capital needs of Mountaineer and for general corporate purposes. The Mountaineer 2025 Credit Agreement is scheduled to expire in May 2030, and Mountaineer has the option, with the consent of the lenders, to extend the maturity date to May 2031, and then to May 2032.
Mountaineer Senior Notes . In April 2025, Mountaineer entered into a note purchase agreement with a consortium of lenders. Pursuant to the note purchase agreement, in May 2025, Mountaineer issued $50 million aggregate principal amount of 6.11% Senior Notes due June 1, 2035 and $20 million aggregate principal amount of 6.21% Senior Notes due June 1, 2037. These senior notes are unsecured and rank equally with Mountaineer’s existing outstanding senior debt. Mountaineer used the net proceeds from the issuance of these senior notes to reduce short-term borrowings and for general corporate purposes.
AmeriGas Propane
AmeriGas Partners Senior Notes. In May 2025, AmeriGas Partners and AmeriGas Finance Corp. issued $550 million aggregate principal amount of 9.5% Senior Notes due June 2030. The 9.5% Senior Notes rank equally with AmeriGas Partners’ existing and future outstanding senior notes. The net proceeds from the issuance of the 9.5% Senior Notes, together with cash on hand and other sources of liquidity, were used for the early repayment, pursuant to a tender offer and notice of redemption, of all AmeriGas Partners 5.875% Senior Notes having an aggregate principal amount of $664 million, plus tender and make whole premiums and accrued and unpaid interest.
In February 2025, UGI International borrowed $221 million under its revolving credit facility. The proceeds from these borrowings were subsequently used to fund an intercompany loan of $221 million to AmeriGas Partners. In March 2025, AmeriGas Partners and AmeriGas Finance Corp, using the cash on hand from borrowings under the intercompany loan, redeemed all of the $218 million outstanding aggregate principal balance of the 5.50% Senior Notes due May 2025, plus accrued and unpaid interest. As of September 30, 2025, borrowings outstanding on the intercompany loan, due January 2027, were $200 million and subsequent to September 30, 2025, the Partnership repaid $35 million of such borrowings.
AmeriGas Senior Secured Revolving Credit Facility. In October 2024, AmeriGas OLP amended the AmeriGas Senior Secured Revolving Credit Facility to increase total commitments from $200 million to a total of $300 million.
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UGI Corporation
UGI Corporation 2025 Credit Agreement. In October 2024, UGI entered into a new UGI Corporation 2025 Credit Agreement, providing a $475 million revolving credit facility, including a $10 million sublimit for letters of credit, and a $400 million term loan facility. Borrowings under the credit agreement can be used for general corporate purposes, including refinancing a portion and of the UGI Corporation Credit Facility Agreement and ongoing working capital needs of the Company. The revolving credit facility is scheduled to expire in October 2028, and the term loan facility is scheduled to mature in October 2027. In connection with entering into the UGI Corporation 2025 Credit Agreement, the Company paid off in full and terminated the UGI Corporation Credit Facility Agreement.
In August 2025, the Company amended its UGI Corporation 2025 Credit Agreement to add an additional revolving credit facility of $300 million, the borrowings of which, if any, can be used solely to fund the cash consideration in the event of early conversion requests of the UGI Corporation Senior Notes (see “UGI Corporation Senior Notes” below). The $300 million credit facility is scheduled to expire in August 2026, and the Company has the option, subject to meeting certain conditions, to convert and extend the credit facility borrowings into a one year term loan.
UGI Corporation Senior Notes. In June 2024, UGI issued, in an underwritten private placement, an aggregate $700 million principal amount of 5.00% UGI Corporation Senior Notes due June 2028. The UGI Corporation Senior Notes are senior, unsecured obligations and rank equal in right of payment with our existing and future senior, unsecured indebtedness.
The UGI Corporation Senior Notes are convertible subject to the occurrence of certain events and circumstances. Before March 1, 2028, noteholders will have the right to convert their notes only upon the occurrence of certain events. From and after March 1, 2028, holders of the UGI Corporation Senior Notes may convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.
As of September 30, 2025, none of the events permitting the noteholders to convert their notes early existed. Accordingly, the UGI Corporation Senior Notes are classified as “Long-term debt” on the Consolidated Balance Sheet at September 30, 2025.
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Credit Facilities
Information about the Company’s principal credit agreements (excluding the Energy Services’ Receivables Facility, which is discussed below) as of September 30, 2025 and 2024, is presented in the tables below.
(Currency in millions)
Expiration Date
Total Capacity
Borrowings Outstanding
Letters of Credit and Guarantees Outstanding
Available Borrowing Capacity
Weighted Average Interest Rate - End of Year
September 30, 2025
AmeriGas OLP (a)
August 2029
UGI International, LLC (b)
March 2028
Energy Services
May 2028
UGI Utilities
November 2028
Mountaineer
May 2030
UGI Corporation (c)
October 2028
September 30, 2024
AmeriGas OLP (a)
August 2029
UGI International, LLC (b)
March 2028
Energy Services
May 2028
UGI Utilities
November 2028
Mountaineer
December 2025
UGI Corporation (c)
August 2025
(a) The maximum amount available for borrowing at any time under the AmeriGas Senior Secured Revolving Credit Facility is limited to the borrowing base valuation, as defined by the agreement.
(b) Permits UGI International, LLC or UGI International Holdings B.V. to borrow in euros or USD.
(c) Borrowings outstanding have been classified as “Long-term debt” on the Consolidated Balance Sheets.
N.A. - Not applicable
The average daily and peak short-term borrowings under the Company’s principal credit agreements are as follows:
(Currency in millions)
Average
Peak
Average
Peak
AmeriGas OLP
UGI International, LLC
Energy Services
UGI Utilities
Mountaineer
UGI Corporation
Receivables Facility. Energy Services has a Receivables Facility with an issuer of receivables-backed commercial paper. In October 2025, the expiration date of the Receivables Facility was extended to October 2026. The Receivables Facility provides Energy Services with the ability to borrow up to $150 million of eligible receivables during the period October 17, 2025 to April 30, 2026, and up to $75 million of eligible receivables during the period May 1, 2026 to October 16, 2026, with the option to request consent for an increase of $50 million. Energy Services uses the Receivables Facility to fund working capital, margin calls under commodity futures contracts, capital expenditures, dividends and for general corporate purposes.
Under the Receivables Facility, Energy Services transfers, on an ongoing basis and without recourse, its trade accounts receivable to its wholly owned, special purpose subsidiary, ESFC, which is consolidated for financial statement purposes. ESFC, in turn, has sold and, subject to certain conditions, may from time to time sell, an undivided interest in some or all of the receivables to a major bank. Amounts sold to the bank are reflected as “Short-term borrowings” on the Consolidated Balance Sheets. ESFC was created and has been structured to isolate its assets from creditors of Energy Services and its affiliates, including UGI. Trade receivables sold to the bank remain on the Company’s balance sheet and the Company reflects a liability
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equal to the amount advanced by the bank. The Company records interest expense on amounts owed to the bank. Energy Services continues to service, administer and collect trade receivables on behalf of the bank, as applicable.
At September 30, 2025, the outstanding balance of trade receivables was $69 million, $17 million of which was sold to the bank. Amounts sold to the bank are reflected as “Short-term borrowings” on the Consolidated Balance Sheet. At September 30, 2024, the outstanding balance of trade receivables was $51 million, none of which were sold to the bank. During Fiscal 2025 and Fiscal 2024, peak sales of receivables were $41 million and $97 million, respectively. During Fiscal 2025 and Fiscal 2024, average daily amounts sold were $4 million and $22 million, respectively.
See Note 6 to Consolidated Financial Statements for further information on the Company’s long-term debt, credit facilities and the Receivables Facility.
Cash Flows
Due to the seasonal nature of the Company’s businesses, cash flows from operating activities are generally strongest during the second and third fiscal quarters when customers pay for natural gas, LPG, electricity and other energy products and services consumed during the peak heating season months. Conversely, operating cash flows are generally at their lowest levels during the fourth and first fiscal quarters when the Company’s investment in working capital, principally inventories and accounts receivable, is generally greatest.
Operating Activities:
Year-to-year variations in our cash flows from operating activities can be significantly affected by changes in operating working capital, especially during periods with significant changes in energy commodity prices. Cash flows from operating activities in Fiscal 2025 and Fiscal 2024 were $1,227 million and $1,182 million, respectively. Cash flows from operating activities before the effects of changes in operating working capital were $1,247 million in Fiscal 2025 and $1,215 million in Fiscal 2024. Cash used to fund changes in operating working capital totaled $20 million in Fiscal 2025 compared to $33 million of cash flow used in Fiscal 2024. The decrease in cash required to fund changes in operating working capital in Fiscal 2025 reflects, among other things, a decrease in cash used to fund changes in accounts payable and other current liabilities largely offset by higher cash required to fund changes in accounts receivable.
Investing Activities:
Investing activity cash flow is principally affected by cash expenditures for property, plant and equipment; cash paid for acquisitions of businesses and assets; investments in equity method investees; and cash activity associated with dispositions of businesses and assets. Cash expenditures for property, plant and equipment totaled $837 million in Fiscal 2025 and $796 million in Fiscal 2024. The increase in cash payments for property, plant and equipment in Fiscal 2025 compared with Fiscal 2024 principally reflects the effects of the Company’s continued distribution system capital expenditure activity at our Utilities segment. Net proceeds from the disposal of businesses and assets primarily includes proceeds from the disposition of UniverGas and the Hawaii propane business in Fiscal 2025 and the sale of UGID in Fiscal 2024, among other things. Investments in equity method investments was $38 million in Fiscal 2025 principally comprising continuing investments in renewable energy projects at our Midstream & Marketing segment.
Financing Activities:
Changes in cash flow from financing activities are primarily due to issuances and repayments of long-term debt; net short-term borrowings; dividends on Common Stock; quarterly payments on outstanding Purchase Contracts; and issuances and repurchases of equity instruments.
Cash flow used by financing activities was $406 million in Fiscal 2025 compared to cash flow used by financing activities of $506 million in Fiscal 2024.
Cash flow from financing activities in Fiscal 2025 includes, among other things, (a) the issuance by UGI Utilities of $50 million and $125 million principal amount of senior notes (b) entering into the UGI Corporation 2025 Credit Agreement and corresponding repayment of the borrowings outstanding under the UGI Corporation Credit Facility Agreement, (c) the repayment by AmeriGas Propane of the $218 million outstanding aggregate principal amount of the 5.50% Senior Notes, (d) the issuance by Mountaineer of $50 million and $20 million principal amount of senior notes, (e) the issuance by AmeriGas Propane of $550 million principal amount of senior notes, and (f) the repayment by AmeriGas Propane of the $664 million outstanding aggregate principal amount of the 5.875% Senior Notes.
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Cash flow from financing activities in Fiscal 2024 includes, among other things, the June 2024 issuance by UGI Corporation of the $700 million of the UGI Corporation 5.00% Senior Notes and UGI Utilities issuance of $250 million principal amount of senior notes. Proceeds from the UGI Corporation 5.00% Senior Notes were used to reduce amounts outstanding under UGI Corporation’s revolving credit facility, to repay its outstanding variable-rate amortizing term loan, and to fund a capital contribution to the Partnership in the amount of $315 million which, along with other sources of liquidity, the Partnership used to repurchase $475 million aggregate principal amount of its 5.50% Senior Notes.
Capital Expenditures
In the following table, we present capital expenditures (which exclude acquisitions of businesses and assets) for Fiscal 2025 and Fiscal 2024. We also provide amounts we expect to spend on capital expenditures in Fiscal 2026. We expect to finance a substantial portion of our Fiscal 2026 capital expenditures from cash generated by operations and cash on hand.
(Millions of dollars)
(estimate)
Utilities
Midstream & Marketing
UGI International
AmeriGas Propane
Total
The increase in capital expenditures in Fiscal 2025 was primarily driven by continued distribution system capital expenditure activity at the Utilities segment.
Contractual Cash Obligations and Commitments
The Company has contractual cash obligations that extend beyond Fiscal 2025. The following table presents contractual cash obligations with non-affiliates under agreements existing as of September 30, 2025:
Payments Due by Period
(Millions of dollars)
Total
Fiscal
Fiscal
Fiscal
Thereafter
Short-term borrowings (a)
Long-term debt (a)
Interest on long-term fixed-rate debt (a)(b)(c)
Operating leases
UGI International supply contracts
Midstream & Marketing supply contracts
Utilities construction, supply, storage and transportation contracts
Derivative instruments (d)
Total
(a) Based upon stated maturity dates for debt outstanding at September 30, 2025. In July 2025, UGI Utilities entered into a note purchase agreement which was funded in November 2025 issuing $150 million of 5.10% Senior Notes due November 15, 2030, and $125 million of 5.68% Senior Notes due November 15, 2035. The net proceeds from the issuance were used, in part, to repurchase $175 million aggregate principal amount of existing senior notes maturing in Fiscal 2026. As of September 30, 2025, based on the Company’s intent and ability to refinance these obligations, the maturing senior notes have been classified as long-term debt on the Consolidated Balance Sheet.
(b) Based upon stated interest rates adjusted for the effects of interest rate swaps.
(c) Calculated using applicable interest rates or forward interest rate curves, and UGI’s and its subsidiaries’ leverage ratios, as of September 30, 2025.
(d) Represents the sum of amounts due if derivative instrument liabilities were settled at the September 30, 2025 amounts reflected in the Consolidated Balance Sheet (but excluding amounts associated with interest rate contracts).
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“Other noncurrent liabilities” included in our Consolidated Balance Sheet at September 30, 2025, principally comprise operating lease liabilities; regulatory liabilities; refundable tank and cylinder deposits; litigation, property and casualty liabilities and obligations under environmental remediation agreements; pension and other postretirement benefit liabilities recorded in accordance with accounting guidance relating to employee retirement plans; and liabilities associated with executive compensation plans. These liabilities, with the exception of operating lease liabilities, are not included in the table of Contractual Cash Obligations and Commitments because they are estimates of future payments and not contractually fixed as to timing or amount. The minimum required contributions to the U.S. Pension Plans (as further described below under “U.S. Pension Plans”) in Fiscal 2026 are approximately $18 million. The minimum required contributions to the U.S. Pension Plans in years beyond Fiscal 2026 will depend, in large part, on the impacts of future returns on pension plan assets and interest rates on pension plan liabilities.
U.S. Pension Plans
The U.S. Pension Plans consist of (1) a defined benefit pension plan for employees hired prior to January 1, 2009, of UGI, UGI Utilities, and certain of UGI’s other domestic wholly owned subsidiaries, and (2) a defined benefit pension plan for Mountaineer employees hired prior to January 1, 2023. The fair values of the U.S. Pension Plans’ assets totaled $654 million and $635 million at September 30, 2025 and 2024, respectively. At September 30, 2025 and 2024, the underfunded positions of the U.S. Pension Plans, defined as the excess of the PBO over the U.S. Pension Plans’ assets, were $3 million and $38 million, respectively.
We believe we are in compliance with regulations governing defined benefit pension plans, including the ERISA rules and regulations. The minimum required contributions to the U.S. Pension Plans in Fiscal 2026 are approximately $18 million.
GAAP guidance associated with pension and other postretirement plans generally requires recognition of an asset or liability in the statement of financial position reflecting the funded status of pension and other postretirement benefit plans with current year changes recognized in shareholders’ equity unless such amounts are subject to regulatory recovery. At September 30, 2025, we have recorded pre-tax gains to UGI Corporation’s stockholders’ equity of $12 million and recorded regulatory assets totaling $100 million in order to reflect the funded status of the U.S. Pension Plans.
See Note 8 to Consolidated Financial Statements for further information on the U.S. Pension Plans and our other postretirement benefit plans.
Related Party Transactions
During Fiscal 2025 and Fiscal 2024, we did not enter into any related-party transactions that had a material effect on our financial condition, results of operations or cash flows.
Off-Balance-Sheet Arrangements
UGI primarily enters into guarantee arrangements on behalf of its consolidated subsidiaries. These arrangements are not subject to the recognition and measurement guidance relating to guarantees under GAAP.
We do not have any off-balance-sheet arrangements that are expected to have a material effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Utility Regulatory Matters
UGI Utilities. On January 27, 2025, PA Gas Utility filed a request with the PAPUC to increase its base operating revenues for residential, commercial and industrial customers by $110 million annually. On September 11, 2025, the PAPUC issued a final order approving a settlement providing for a $70 million annual base distribution rate increase, effective October 28, 2025, and maintenance of the Weather Normalization Adjustment through the end of its pilot period with modification.
On January 27, 2023, Electric Utility filed a request with the PAPUC to increase its annual base distribution revenues by $11 million. On September 21, 2023, the PAPUC issued a final order approving a settlement providing for a $9 million annual base distribution rate increase for Electric Utility, effective October 1, 2023.
Mountaineer. On July 31, 2025, WV Gas Utility submitted its 2025 IREP filing to the WVPSC requesting recovery of $24 million, an increase of $5 million, for costs associated with capital investments after December 31, 2022, that total $274 million, including $77 million in calendar year 2026. The filing included capital investments totaling $445 million over the 2026 - 2030 period. An order from the WVPSC is expected in December, with new rates to be effective January 1, 2026.
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On July 31, 2024, WV Gas Utility submitted its 2024 IREP filing to the WVPSC requesting recovery of $19 million, which includes $3 million of prior year under-recovery, for costs associated with capital investments after December 31, 2022, that total $197 million, including $74 million in calendar year 2025. The filing included capital investments totaling $418 million over the 2025 - 2029 period. On October 28, 2024, the WVPSC issued an order approving WV Gas Utility’s request, with new rates effective January 1, 2025.
On July 31, 2023, WV Gas Utility submitted its 2023 IREP filing to the WVPSC requesting recovery of $10 million, an increase of $6 million, for costs associated with capital investments after December 31, 2022, that total $131 million, including $67 million in calendar year 2024. With new base rates expected to be effective January 1, 2024, revenues from IREP rates would decrease by $12 million. The filing included capital investments totaling $383 million over the 2024 - 2028 period. On December 20, 2023, the WVPSC issued a final order approving a settlement effective January 1, 2024.
On March 6, 2023, WV Gas Utility submitted a base rate case filing with the WVPSC seeking a net revenue increase of $20 million, which consisted of an increase in base rates of $38 million and a decrease in the IREP rates of $18 million annually. On October 6, 2023, the WVPSC issued a final order approving a settlement providing for a $14 million net revenue increase, effective January 1, 2024. The WVPSC also approved a five-year weather normalization adjustment rider pilot program beginning October 1, 2024, which adjusts residential and small commercial distribution billings when weather deviates more than 2% from normal during the October-May heating season.
Other Matters
West Reading, Pennsylvania Explosion. On March 24, 2023, an explosion occurred in West Reading, Pennsylvania which resulted in seven fatalities, injuries to at least ten others, and extensive property damage to buildings owned by R.M. Palmer, a local chocolate manufacturer, and neighboring structures. The NTSB investigated and the PAPUC is investigating the West Reading incident. The NTSB investigative team included representatives from the Company, the local fire department and the Pipeline and Hazardous Materials Safety Administration. The Company cooperated with the investigation. In September 2023, OSHA closed their investigation of this matter, without any finding pertaining to UGI Utilities.
On December 10, 2024, the NTSB staff presented its draft findings to the NTSB Board. On April 8, 2025, the NTSB released its final report concluding that a fracture in an R.M. Palmer steam pipe created elevated underground temperatures that caused thermal degradation of a UGI Utilities service tee, resulting in a natural gas leak, and recommended UGI Utilities inventory and address risks to plastic gas assets in high-temperature environments.
The Company has received claims as a result of the explosion and is involved in lawsuits relative to the incident. With the issuance of the final NTSB report, discovery in the litigation has begun. The Company maintains liability insurance for personal injury, property and casualty damages and believes that third-party claims associated with the explosion, in excess of the Company’s deductible, are recoverable through the Company’s insurance. The Company cannot predict the result of these pending or future claims and legal actions at this time.
Regarding these pending claims and legal actions, the Company does not believe, at this early stage, that there is sufficient information available to reasonably estimate a range of loss, if any, or conclude that the final outcome of these matters will or will not have a material effect on our financial statements.
Market Risk Disclosures
Our primary market risk exposures are (1) commodity price risk; (2) interest rate risk; and (3) foreign currency exchange rate risk. Although we use derivative financial and commodity instruments to reduce market price risk associated with forecasted transactions, we do not use derivative financial and commodity instruments for speculative or trading purposes.
Commodity Price Risk
The risk associated with fluctuations in the prices the Partnership and our UGI International operations pay for LPG is principally a result of market forces reflecting changes in supply and demand for LPG and other energy commodities. Their profitability is sensitive to changes in LPG supply costs. Increases in supply costs are generally passed on to customers. The Partnership and UGI International may not, however, always be able to pass through product cost increases fully or on a timely basis, particularly when product costs rise rapidly. In order to reduce the volatility of LPG market price risk, the Partnership uses contracts for the forward purchase or sale of propane, propane fixed-price supply agreements and over-the-counter derivative commodity instruments including price swap and option contracts. Our UGI International operations use over-the-counter derivative commodity instruments and may from time to time enter into other derivative contracts, similar to those used by the Partnership, to reduce market risk associated with a portion of their LPG purchases. Over-the-counter derivative
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commodity instruments used to economically hedge forecasted purchases of LPG are generally settled at expiration of the contract.
Utilities’ tariffs contain clauses that permit recovery of all prudently incurred costs of natural gas it sells to its retail core-market customers, including the cost of financial instruments used to hedge purchased gas costs. The recovery clauses provide for periodic adjustments for the difference between the total amounts actually billed to customers through PGC and PGA rates and the recoverable costs incurred. Because of this ratemaking mechanism, there is limited commodity price risk associated with our Utilities operations. PA Gas Utility uses derivative financial instruments, including natural gas futures and option contracts traded on the NYMEX, to reduce volatility in the cost of gas it purchases for its retail core-market customers. The cost of these derivative financial instruments, net of any associated gains or losses, is included in PA Gas Utility's PGC recovery mechanism.
In order to manage market price risk relating to substantially all of Midstream & Marketing’s fixed-price sale contracts for physical natural gas, Midstream & Marketing enters into NYMEX, ICE and over-the-counter natural gas and electricity futures and option contracts, and natural gas basis swap contracts or enters into fixed-price supply arrangements. Although Midstream & Marketing’s fixed-price supply arrangements mitigate most risks associated with its fixed-price sales contracts, should any of the suppliers under these arrangements fail to perform, increases, if any, in the cost of replacement natural gas would adversely impact Midstream & Marketing’s results. In order to reduce this risk of supplier nonperformance, Midstream & Marketing has diversified its purchases across a number of suppliers. In order to manage market price risk relating to fixed-price sales contracts for electricity, Midstream & Marketing entered into electricity futures and forward contracts. Prior to the sale of UGID in September 2024, Midstream & Marketing, through UGID, also used NYMEX and over-the-counter electricity futures contracts to economically hedge the price of a portion of its anticipated future sales of electricity from its electric generation facilities. Prior to the exit of substantially all of the Company’s energy marketing business in Europe (see Note 5 to Consolidated Financial Statements), UGI International’s natural gas and electricity marketing businesses also use natural gas and electricity futures and forward contracts to economically hedge market risk associated with a substantial portion of anticipated volumes under fixed-price sales and purchase contracts.
Interest Rate Risk
We have both fixed-rate and variable-rate debt. Changes in interest rates impact the cash flows of variable-rate debt but generally do not impact their fair value. Conversely, changes in interest rates impact the fair value of fixed-rate debt but do not impact their cash flows.
Our variable-rate debt at September 30, 2025, includes revolving credit facility borrowings and variable-rate term loans at UGI International, Utilities, Energy Services and UGI Corporation. These debt agreements have interest rates that are generally indexed to short-term market interest rates. We have entered into pay-fixed, receive-variable interest rate swap agreements on a significant portion of the term loans’ principal balances and a significant portion of the term loans’ tenor. We have designated these interest rate swaps as cash flow hedges. At September 30, 2025, combined borrowings outstanding under variable-rate debt agreements, excluding the previously mentioned effectively fixed-rate debt, totaled $786 million. Based upon average borrowings outstanding under variable-rate borrowings (excluding effectively fixed-rate term loan debt), an increase in short-term interest rates of 100 basis points (1%) would have increased our Fiscal 2025 interest expense by approximately $7 million. The remainder of our debt outstanding is subject to fixed rates of interest. A 100 basis point increase in market interest rates would result in decreases in the fair value of this fixed-rate debt of approximately $225 million at September 30, 2025. A 100 basis point decrease in market interest rates would result in increases in the fair value of this fixed-rate debt of approximately $235 million at September 30, 2025.
Long-term debt associated with our domestic businesses is typically issued at fixed rates of interest based upon market rates for debt with similar terms and credit ratings. As these long-term debt issues mature, we may refinance such debt with new debt having interest rates reflecting then-current market conditions. In order to reduce interest rate risk associated with near- to medium-term forecasted issuances of fixed rate debt, from time to time we enter into IRPAs.
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Foreign Currency Exchange Rate Risk
Our primary currency exchange rate risk is associated with the USD versus the euro and, to a lesser extent, the USD versus the British pound sterling. The USD value of our foreign currency denominated assets and liabilities will fluctuate with changes in the associated foreign currency exchange rates. From time to time, we use derivative instruments to hedge portions of our net investments in foreign subsidiaries, including anticipated foreign currency denominated dividends. Gains or losses on these net investment hedges remain in AOCI until such foreign operations are sold or liquidated. With respect to our net investments in our UGI International operations, a 10% decline in the value of the associated foreign currencies versus the USD would reduce their aggregate net book value at September 30, 2025, by approximately $80 million, which amount would be reflected in other comprehensive income. We have designated certain euro-denominated borrowings as net investment hedges.
In order to reduce the volatility in net income associated with our foreign operations, principally as a result of changes in the USD exchange rate between the euro and British pound sterling, we enter into forward foreign currency exchange contracts. We layer in these foreign currency exchange contracts over a multi-year period to eventually equal approximately 90% of anticipated UGI International foreign currency earnings before income taxes.
Derivative Instrument Credit Risk
We are exposed to risk of loss in the event of nonperformance by our derivative instrument counterparties. Our derivative instrument counterparties principally comprise large energy companies and major U.S. and international financial institutions. We maintain credit policies with regard to our counterparties that we believe reduce overall credit risk. These policies include evaluating and monitoring our counterparties’ financial condition, including their credit ratings, and entering into agreements with counterparties that govern credit limits or entering into netting agreements that allow for offsetting counterparty receivable and payable balances for certain financial transactions, as deemed appropriate.
We have concentrations of credit risk associated with derivative instruments and we evaluate the creditworthiness of our derivative counterparties on an ongoing basis. As of September 30, 2025, the maximum amount of loss, based upon the gross fair values of the derivative instruments, we would incur if these counterparties failed to perform according to the terms of their contracts was $97 million. In general, many of our over-the-counter derivative instruments and all exchange contracts call for the posting of collateral by the counterparty or by the Company in the forms of letters of credit, parental guarantees or cash. At September 30, 2025, we received cash collateral from derivative instrument counterparties totaling $2 million. In addition, we may have offsetting derivative liabilities and certain accounts payable balances with certain of these counterparties, which further mitigates the previously mentioned maximum amount of losses. Certain of the Partnership’s derivative contracts have credit-risk-related contingent features that may require the posting of additional collateral in the event of a downgrade of the Partnership’s debt rating. At September 30, 2025, if the credit-risk-related contingent features were triggered, the amount of collateral required to be posted would not be material.
The following table summarizes the fair values of unsettled market risk sensitive derivative instrument assets (liabilities) held at September 30, 2025 and changes in their fair values due to market risks. Certain of UGI Utilities’ commodity derivative instruments are excluded from the table below because any associated net gains or losses are refundable to or recoverable from customers in accordance with UGI Utilities ratemaking.
Asset (Liability)
(Millions of dollars)
Fair Value
Change in
Fair Value
September 30, 2025
Commodity price risk (1)
Interest rate risk (2)
Foreign currency exchange rate risk (3)
(1) Change in fair value represents a 10% adverse change in the market prices of certain commodities
(2) Change in fair value represents a 50 basis point adverse change in prevailing market interest rates
(3) Change in fair value represents a 10% adverse change in the value of the Euro and the British pound sterling versus the USD.
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Critical Accounting Policies and Estimates
The accounting policies and estimates discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they involve significant judgments and uncertainties. The application of these accounting policies and estimates necessarily requires management’s most subjective or complex judgments regarding estimates and projected outcomes of future events. Changes in these policies and estimates could have a material effect on our financial statements. Also, see Note 2 to Consolidated Financial Statements which discusses our significant accounting policies.
Goodwill Impairment Evaluation. Our goodwill is the result of business acquisitions. We do not amortize goodwill, but test it at least annually for impairment at the reporting unit level. A reporting unit is an operating segment, or one level below an operating segment (a component), if it constitutes a business for which discrete financial information is available and regularly reviewed by segment management. Components are aggregated into a single reporting unit if they have similar economic characteristics. A reporting unit with goodwill is required to perform an impairment test annually or whenever events or circumstances indicate that the value of goodwill may be impaired.
For certain of our reporting units with goodwill, we assess qualitative factors to determine whether it is more likely than not that the fair value of such reporting unit is less than its carrying amount. For our other reporting units with goodwill, we bypass the qualitative assessment and perform the quantitative assessment by comparing the fair values of the reporting units with their carrying amounts, including goodwill. We determine fair values generally based on a weighting of income and market approaches. For purposes of the income approach, fair values are determined based upon the present value of the reporting unit’s estimated future cash flows, including an estimate of the reporting unit’s terminal value based upon these cash flows, discounted at appropriate risk-adjusted rates. We use our internal forecasts to estimate future cash flows, which may include estimates of long-term future growth rates based upon our most recent reviews of the long-term outlook for each reporting unit. Cash flow estimates used to establish fair values under our income approach involve management judgments based on a broad range of information and historical results. In addition, external economic and competitive conditions can influence future performance. For purposes of the market approach, we use valuation multiples for companies comparable to our reporting units. The market approach requires judgment to determine the appropriate valuation multiples. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to such excess but not to exceed the total amount of the goodwill of the reporting unit.
During the fourth quarter of Fiscal 2024, as part of its annual goodwill impairment assessment, the Company performed a quantitative assessment for its AmeriGas Propane reporting unit. Using level 3 inputs, we performed a quantitative assessment of the AmeriGas Propane reporting unit using a weighting of the income and market approaches to determine its fair value. With respect to the income approach, management used a discounted cash flow (“DCF”) method, using unobservable inputs. The significant assumptions in our DCF model include projected EBITDA and a discount rate (and estimates in the discount rate inputs). With respect to the market approach, management used recent transaction market multiples for similar companies in the U.S. The resulting estimates of fair value from the income approach and the market approach were then weighted equally in determining the overall estimated fair value of AmeriGas Propane.
Based on our evaluations in Fiscal 2024, the estimated fair value of the AmeriGas Propane reporting unit was determined to be less than its carrying value. As a result, the Company recorded a non-cash pre-tax goodwill impairment charge of $195 million in Fiscal 2024 to reduce the carrying value of AmeriGas Propane to its fair value.
With respect to the AmeriGas Propane reporting unit’s Fiscal 2025 impairment test, we performed a quantitative assessment. Based on our evaluation, we determined that AmeriGas Propane’s fair value exceeded its carrying value by more than 25%. While the Company believes that its judgments used in the quantitative assessment of AmeriGas Propane’s fair value are reasonable based upon currently available facts and circumstances, if AmeriGas Propane were not able to achieve its anticipated results and/or if its discount rate were to increase, its fair value would be adversely affected, which may result in an impairment. There is $1.1 billion of goodwill in this reporting unit as of September 30, 2025.
Except for the previously mentioned impairment charges at the AmeriGas Propane reporting unit, there were no other impairments of goodwill recognized in Fiscal 2025 and Fiscal 2024.
Impairment of Long-Lived Assets. An impairment test for long-lived assets (or an asset group) is required when circumstances indicate that such assets may be impaired. If it is determined that a triggering event has occurred, we perform a recoverability test based upon estimated undiscounted cash flow projections expected to be realized over the remaining useful life of the long-lived asset. If the undiscounted cash flows used in the recoverability test are less than the long-lived asset's carrying amount, we determine its fair value. If the fair value is determined to be less than its carrying amount, the long-lived asset is reduced to its estimated fair value and an impairment loss is recognized in an amount equal to such shortfall. When determining whether a long-lived asset has been impaired, management groups assets at the lowest level that has identifiable
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cash flows that are independent of other assets. Performing an impairment test on long-lived assets involves judgment in areas such as identifying when a triggering event requiring evaluation occurs; identifying and grouping assets; and, if the undiscounted cash flows used in the recoverability test are less than the long-lived asset's carrying amount, determining the fair value of the long-lived asset. Although cash flow estimates are based upon relevant information at the time the estimates are made, estimates of future cash flows are by nature highly uncertain and contemplate factors that change over time such as the expected use of the asset including future production and sales volumes, expected fluctuations in prices of commodities and expected proceeds from disposition.
The impairment of AmeriGas Propane’s goodwill in Fiscal 2024 was determined to be a triggering event requiring an impairment analysis of AmeriGas Propane’s long-lived and definite lived intangible assets. Accordingly, the Company performed a recoverability test of AmeriGas Propane’s long-lived assets, including right-of-use (“ROU”) assets and definite lived intangible assets, as of July 31, 2024, the measurement date of our annual goodwill impairment test, using estimated undiscounted cash flow projections expected to be generated over the remaining useful life of the primary asset of the asset group at the lowest level with identifiable cash flows that are independent of other assets. Based on the recoverability tests performed, we determined that (1) AmeriGas Propane’s long-lived assets, including ROU assets and definite lived intangible assets, were recoverable and, as such, no impairment charges were recorded; and (2) no adjustments to the remaining useful lives were necessary as of July 31, 2024. There were no such triggering events in Fiscal 2025.
See Note 5 to Consolidated Financial Statements for information on the impairment loss associated with the disposal of UGID during Fiscal 2024. There were no other material provisions for impairments of long-lived assets that occurred during Fiscal 2025 and Fiscal 2024.
Loss Contingencies and Environmental Remediation Liabilities. We are involved in litigation that arises in the normal course of business, and we are subject to environmental laws and regulations intended to mitigate or remove the effects of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current or former operating sites.
We establish reserves for loss contingencies including pending litigation when it is probable that a liability exists and the amount or range of amounts related to such liability can be reasonably estimated. When no amount within a range of possible loss is a better estimate than any other amount within the range, liabilities recorded are based upon the low end of the range. With respect to unasserted claims arising from unreported incidents, we may use the work of specialists to estimate the ultimate losses to be incurred using actuarially determined loss development factors applied to actual claims data.
The likelihood of a loss with respect to a particular loss contingency is often difficult to predict. In addition, a reasonable estimate of the loss, or a range of possible loss, may not be practicable based upon the information available and the potential effects of future events and decisions by third parties that will determine the ultimate resolution of the loss contingency. Reasonable estimates involve management judgments based on a broad range of information and prior experience. For litigation and pending claims including those covered by insurance policies, the analysis of probable loss is performed on a case by case basis and includes an evaluation of the nature of the claim, the procedural status of the matter, the probability or likelihood of success in prosecuting or defending the claim, the information available with respect to the claim, the opinions and views of outside counsel and other advisors, and past experience in similar matters. These judgments are reviewed quarterly as more information is received, and the amounts reserved are updated as necessary. Our estimated reserves for contingencies may differ materially from the ultimate liability and such reserves may change materially as more information becomes available and estimated reserves are adjusted.
We accrue reserves for environmental remediation when assessments indicate that it is probable a liability has been incurred and an amount can be reasonably estimated. Amounts recorded as environmental liabilities on the Consolidated Balance Sheets represent our best estimate of costs expected to be incurred or, if no best estimate can be made, the minimum liability associated with a range of expected environmental investigation and remediation costs. These estimates are based upon a number of factors including whether the company will be responsible for such remediation, the scope and cost of the remediation work to be performed, the portion of costs that will be shared with other potentially responsible parties, the timing of the remediation and possible impact of changes in technology, and the regulations and requirements of local governmental authorities. Our estimated reserves for environmental remediation may differ materially from the ultimate liability and such reserves may change materially as more information becomes available and estimated reserves are adjusted. PA Gas Utility receives ratemaking recognition of environmental investigation and remediation costs associated with its in-state environmental sites. This ratemaking recognition balances the accumulated difference between historical costs and rate recoveries with an estimate of future costs associated with the sites.
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Regulatory Assets and Liabilities. The accounting for our rate regulated gas and electric utility businesses differs from the accounting for nonregulated operations in that these businesses are required to reflect the effects of rate regulation in the consolidated financial statements. Regulatory practices that assign costs to accounting periods may differ from accounting methods generally applied by nonregulated businesses. When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, these costs that otherwise would be expensed by nonregulated companies are deferred as regulatory assets. Similarly, regulatory liabilities are recognized when it is probable that regulators will require customer refunds through future rates or when revenue is collected from customers for expenditures that have yet to be incurred. We continually assess whether the regulatory assets are probable of future recovery by evaluating the regulatory environment, recent rate orders and public statements issued by the PAPUC, WVPSC and MDPSC, and discussions with regulatory authorities and legal counsel. If future recovery of regulatory assets ceases to be probable, the elimination of those regulatory assets would adversely impact our results of operations and cash flows. As of September 30, 2025, our regulatory assets and regulatory liabilities totaled $340 million and $314 million, respectively. For additional information on regulatory assets and liabilities, see Notes 2 and 9 to Consolidated Financial Statements.
Income Taxes. We use the asset and liability method of accounting for income taxes. We recognize the tax benefits from income tax positions that have a greater than more likely than not likelihood of being sustained upon examination by the taxing authorities. A liability is recorded for uncertain tax positions where it is more likely than not the position may not be sustained based on its technical merits. We use assumptions, judgments and estimates to determine our current provision for income taxes. We also use assumptions, judgments and estimates to determine our deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset. The interpretation of tax laws involves uncertainty since tax authorities may interpret the laws differently. Our assumptions, judgments and estimates relative to the current provision for income tax give consideration to current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Changes in tax law or our interpretation thereof and the resolution of current and future tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements. Our assumptions, judgments and estimates relative to the amount of deferred income taxes take into account estimates of the amount of future taxable income. Actual taxable income or future estimates of taxable income could render our current assumptions, judgments and estimates inaccurate. Changes in the assumptions, judgments and estimates mentioned above could cause our actual income tax obligations to differ significantly from our estimates. As of September 30, 2025, our net deferred tax liabilities totaled $890 million.
Recently Issued Accounting Pronouncements
See Note 3 to Consolidated Financial Statements for a discussion of recently issued accounting guidance.
