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Executives

John L. Walsh - President & CEO

Analysts

Christine Cho - Barclays Capital

UGI Corporation (UGI) Barclays CEO Energy-Power Conference September 13, 2013 11:05 AM ET

Christine Cho - Barclays Capital

We know it’s been a long couple of days. So thank you to everyone who is -- who are really sticking out to the end. Our next presenter is a diversified company with four businesses, a Domestic Propane business in all 50 states, a European propane distribution business, the Utility segment and a Midstream and Marketing business. Please welcome – okay, I was like wait a minute. Please welcome John Walsh President and CEO of UGI.

John L. Walsh

Thanks, Christine, and good morning, everybody. Thanks for being here and also welcome to the folks that are listening in on the webcast. What I would like to do today is give you a brief overview for those of you who are not familiar with UGI, kind of give you an overview of the company. Also update all of you, some of you who are very familiar with us on what’s been going on more recently in the business.

Before I do that, I just remind you that the presentation contains certain forward-looking statements that we certainly believe is -- are reasonable as of today’s date. We would encourage you to go to our website to take a look at all those factors on the 10-K that affect our results and also explore our website in terms of other information relative to the company that is useful to you as an investor.

Okay as Christine, she started my presentation form is UGI, just a little background. We are a marketer and distributor of energy products and services. We’ve been in business about 130 years. We have four main businesses, Domestic Propane and International Propane. Domestic propane is AmeriGas, which is a separately listed MLP. We are active in 16 countries in Europe. We have a midstream in marketing business quite dynamic and growing its present time with all the activities around Marcellus and finally and most significant we have our Utilities business, which is our largest business at UGI and accounts for about one-third of our earnings.

Just a quick look again at the four businesses geographically. AmeriGas operates -- service about 2 million customers in all 50 states. Our International Propane business operates in Europe, in 16 countries in Europe. The Midstream business operates in the mid Atlantic region, as you can see there with the cross hatches. This is on Slide 4 for those in the webcast and finally UGI Utilities operates -- our gas utilities and the small electric utility in Pennsylvania. So quite a broad reach for our businesses.

Fundamental question, obviously we’re looking an answer for you is why invest in UGI or if you’re a current owner of UGI, why continue to invest in UGI? Four primary factors that I will take you through, that we feel are compelling in terms of the case for investment in UGI. First of those is significant cash generation. One of the great strengths for our businesses are that all four businesses generate cash after fulfilling all of their requirements in terms of ongoing CapEx, organic growth, paying dividends etcetera and its really an engine for the continued growth of the company and helps us deliver that balance of growth and income that’s so important to our shareholders.

Secondly, we’re a diversified company. We have the four businesses that I talked about, that give us diversification of exposure to different geographies, commodities, different customer segments etcetera. Just as importantly though that diversification is supplemented by a lot of common ground, lot of common DNA across our businesses. So we believe we have the best of both worlds in terms of the financial benefits of the diversification, but diversification within the energy marketing and distribution segment of the energy sector, which makes our job as senior management easier in terms of providing insight on execution on the operational side, but also making effective decisions on redeployment of cash.

Growth and income, I touched on the fact that we’re a balanced growth and income investment. We are very specific in terms of the -- what we tell our owners to expect from us. You should expect 6% to 10% earnings growth over the long-term and 4% annual dividend growth.

And lastly and following on to that one of the great things about UGI and the strong points and compelling points about UGI is our track record. We have a track record of meeting or exceeding the commitments we make to our shareholders. We pay dividends for long time and as we’ve been around for about a 130 years, we paid dividends for 129 of those years uninterrupted. We’ve increased our dividends for 26 consecutive years. We got a strong track record for EPS and dividend growth and driving that has been a successful track record in terms of ongoing capital reinvestment of the cash that's generated by these four businesses.

When you look at that -- you step back and look at us relative to our peers and look at us as an investment opportunity relative to others -- other sectors you may look at, regardless of the term you use, whether it's a short-term or longer term and this takes you from a one-year picture to a 20-year picture. You look at the total shareholder return of UGI and it stacks up very well. And you look at that total return versus the 6% to 10% that we promise our shareholders and you see again it stacks up very well. So, we’re proud of this track record. It gives us a lot of strength. It provides a great foundation. We also recognize that is no guarantee of future success, so you have to keep applying the disciplines and approaches that are so critical to us in order to ensure future success both executing on the operational side, but also capital allocation and reinvestment.

That’s a very quick overview of the company. What I’d like to do is now talk in a little bit more detail about the business units, those four business units within the company. First, I will talk about -- I mentioned the Utilities is our largest business. I will talk about UGI Utilities. And that’s a business that essentially was the core in 1882 that from which we started, that became a company we’re today.

We are Pennsylvania's gas -- largest gas utility. We operate in about 45 counties across the state, serving over 700 municipalities, primarily a gas utility with 600,000 gas customers, 60,000 electric customers. You can see the map there. We cover a good portion of Pennsylvania. Once you get outside the suburban areas of Philadelphia, pretty much its UGI or one of the UGI companies that covers a good portion of the state until you start to get into the western half of the state. So quite a bit of coverage. About 30% of the square miles in Pennsylvania covered by us, 12,000 miles of main, so we -- an extensive network. And one of the most critical aspects of UGI that's been a critical differentiator for us over the long period of time has been our ability to consistently grow our customer base within our Utilities business.

We delivered 2% net customer growth in 2012. That’s not a new thing for us. If you look at how we performed in terms of growth, I mentioned the 2% this past year. We will deliver a very similar, if not slightly better performance in 2013. Major focus on conversions from fuel oil and particular to natural gas. That's not a new thing for us. We’ve been operating a pretty focused conversion effort for the last 20 years.

As we can see from the slide, if you can see it, it's ramped up, considerably one of the things we did within our utilities business is as we saw the new housing starts drop, we're really focused and the spread between fuel oil and natural gas increased. We're really focused with more intensity on conversion, so we’ve gone from 2004 where about 80% of our new customers were through new housing developments to 2012 were probably 75% of the customers came by conversions. It takes a lot of work, but that’s -- those are very attractive customers to add.

As we look out there is still a lot of opportunity for conversions for us. There is over 250,000 conversion customers that are within a 100 feet of our gas main. So we see a continued opportunity to grow via conversion and as the new housing market slowly comes back, we want to add obviously supplement that core growth with something we’re very good at as you can see from our history, which is growing through residential development.

In addition to the focus on growth in utilities a major effort underway on infrastructure replacement, we replaced all our cast iron by 2027 and all our bare steel by 2043 and as a utility obviously our goal is to deliver safe and reliable service to our customers, that’s our core responsibility and continue to do what we’ve done for a long period of time is to grow our utility business profitably.

Now we shift to propane, domestically AmeriGas. AmeriGas I mentioned earlier is a separately listed MLP on the New York Stock Exchange. UGI owns approximately 24% of AmeriGas, its units and it’s also the general partner for AmeriGas. Serve its customers in all 50 states. About 8,500 employees, approximately 2,000 locations may be 800 to 900 of those are staffed locations. Large and broad customer base, 2 million customers and well over a billion gallons a year distributed annually. You can see enhanced with the largest, roughly 15% market share. It’s a quite fragmented market -- industry you have a lot of small propane distributors in addition to a few large one such as ourselves.

AmeriGas over the last 18 months has been integrating a major acquisition. We acquired Heritage Propane from Energy Transfer. That integration has gone extremely well. It gives for AmeriGas a number of strengths. These were core strengths for AmeriGas before the Heritage acquisition, adding the Heritage network and Heritage people to our business and drawing strengths from that really intensify what we already had as basic strengths in the market.

Unmatched geographic coverage, which improves our customer density, serves as well in terms of providing service to large customers. We reach more small distributors who we can acquire and blend it gives us, you can see there with the two pie charts on Slide 17. Great diversity if you look at our mix by customer segments quite strong. You can see the various segments we serve with residential and commercial being the predominant, but other critical segments as well.

You can also see the geographic diversity we have across the business are great spread. So if you think about the weather risk etcetera, we’ve got our -- we are basically spread across the U.S. So you spread that risk and you also are able to fundamentally reach any customer in the United States.

We have certain kind of seasonal business. Businesses with our ACE, which is the barbecue cylinder business being the most significant. We also have taken over the last 10 to 15 years significant steps in terms of fee-based services, which again help us in terms of consistent revenue streams regardless of weather, particularly winter weather.

And lastly and most critically an extremely strong balance sheet. We are very balance sheet focused across UGI, AmeriGas is no exception. And if you look at AmeriGas’s metrics relative to MLPs, as you think about MLP investment when you look at things like distribution coverage, a great strength there in terms of the way we manage our balance sheet and our ability to generate -- consistently generate cash within the business.

A number of strengths in critical segments that are attractive for AmeriGas as we leverage those strengths, I mentioned national accounts. We can reach any account anywhere in the United States with our network. That's particularly attractive if you’re serving significant accounts, customers like Home Depot, Wal-Mart any of the major transport companies, large railroads that have hundreds of thousands of locations. We have an unmatched coverage and a strong orientation to serving those customers and that enables us to grow much more rapidly in that segment and others in the industry.

I already mentioned cylinder exchange, quite a good business for us. The propane industry is quite fragmented. Our share of cylinder exchange is much higher than that, 15%. And it’s really because the cylinder exchange business has a capital intensity and operational immensity that really plays to our strength and we’ve been able to demonstrate that to customers in that segment and that’s enabled us to build quite a nice position in terms of cylinder exchange.

And lastly acquisitions. Accusations have been an ongoing part of the AmeriGas strategy for the last 20 -- over the last 50 years, since it was really launched as business propane in UGI back in the 50s. Since its inception as an MLP in the mid 90s, consistent track record of 100s of acquisitions, the Heritage acquisition expands our scope and gives us the ability to essentially integrate and deliver synergies with any propane distributor in the United States, if they’re interested in selling their business. And as is the case with UGI, AmeriGas is also very specific in terms of the advice sort of the vision they share with unitholders or potential unitholders, unitholder should expect 3% to 4% average EBITDA growth per annum and 5% distribution growth annually.

So we try to be specific in terms of the commitments we make to our shareholders and unitholders. And also we take those commitments seriously as you see from the -- our track record in terms of delivering on those commitments.

We'll stay on propane, but shifts across the Atlantic, we will go to Europe. One of the unique aspects of UGI probably for all of you here at the conference, we’ve a significant propane distribution business in Europe, which has been built over the last 15 years into a very attractive and significant segment for us.

We operate in 16 countries and Northern and Central Europe. Today we have -- we announced an acquisition in Poland. Last week that closed. We have approximately 750 million gallons of propane that we distribute in Europe. So not quite the same scale as AmeriGas, which is about 1.1 billion to 1.2 billion, but quite significant. A range of competitors, Europe tends to be more concentrated than the U.S. You don't have the small distributors like you have in the U.S typically, but some significant competitors there.

In a volume mix that looks quite similar to the U.S with the exception of autogas, use of propane for transport -- for automobile transport in some vehicle, heavy vehicle transport is more developed across Europe and certain markets in Europe. In markets like Poland as an example is a much bigger autogas segment. So it tends to stick out as a differentiator.

The most critical point -- one of the most critical points about the European propane business is operationally and commercially it is very similar to the business in the U.S. The attributes of the business are common, which is critical, so that is an important attribute and our ability to share best practice are the key point. Our ability to share best practice across our U.S and European businesses is quite strong and it’s a source of strength for the company.

You can see the evolution we’ve been active over the last six or seven years, especially in doing -- adding acquisitions that have strengthened our position. We’ve gone from being active in eight markets in Europe. If you go back to 2008 to 16 markets today, you can see the growth on the Slide 21 in terms of EBITDA. So we’ve grown EBITDA quite significantly. We have also diversified.

France is still the largest market, but you can see other markets emerging and becoming material for us and it gives us opportunities for growth in particular as we moved into markets like Poland, quite a different growth trajectory in Poland and some of the other more mature markets in Europe. So we’re excited about our ability to continue to grow in Europe. We will continue to look for acquisition opportunities, but also we’ve some nice opportunities for organic growth in Europe.

In terms of organic growth, that we have heating oil to LPG conversions. I talked about conversions in the gas utility side, but we have -- on the propane side in Europe as well. Those are particularly compelling for commercial customers. So we have a quite a few commercial conversions and industrial conversions ongoing. That’s most intense up in the Nordics, but its true elsewhere in Europe.

We are pleased to now be in the U.K. It’s a really attractive market and looking at opportunities to expand our position there. We have – I mentioned Poland being a nice source of growth. That’s a growing economy and also as the per capita income in Poland increases you have customers, residential customers in particular, who are looking to upgrade the quality of their heating source. So you go from coal and wood to propane and it’s a higher quality solution, energy solution for those customers.

And finally in Europe, in terms of growth, we are now active in marketing natural gas in France and we’ve been for about the last 18 months and more recently in Belgium. So we're taking the skills we developed as a natural gas marketer in the U.S and applying them in the markets in Europe where we see attractive opportunities for us.

I mentioned we will continue to look at acquisitions. BP just closed that’s a significant acquisition for us in a large market and we continue to look at opportunities. You can look at the map there; there is one or two holes. We are continuing to look at opportunities to add geographies, but also add scale and improve density within the markets where we currently serve.

Poland in particular was in the news for us. We close the deal as I mentioned, last week on September 4. Our business in Poland is quite significant, its 250 million gallons a year. You see the segments there in the slide and we’ve both opportunities for organic growth and acquisition growth in Poland. Lot of -- based on new housing development and upgrading of fuel source, we have the highest rate of small bulk residential growth across Europe.

In Poland we’ve growth in the industrial and commercial segments as well. And we’re very busy right now having closed the acquisition last week and executing integration plan -- acquisition integration is a great strength for UGI. We’ve done dozens of acquisitions if you go back over the last 10 or 15 years, dozens of pretty significant accusations and done it successful and a lot of that is about being very clear and with the integration of business caters for the acquisition and then not losing focus post acquisition and actually executing the plan.

So the team in Poland was very ready for the acquisition. We had a lot of time during the approval process to get ready, so they hit the ground running and very actively working through that integration, because we want to be ready as every propane distributor in the world wants to be for winter. And winter in Poland is pretty serious thing. So you want to be ready when winter hits.

Okay. Last business I like to talk about is the most sort of dynamic business within UGI. That’s our Midstream and Marketing business. It’s the part of our Company where we’ve the highest level of organic growth and the most change going on in our environment. Three basic segments in this business are gas and power marketing segment, our Midstream business, which is where the highest level of activity exists and our Power Generation segment, which for us is actually quite a small business.

Natural gas marketing, we serve about 30,000 gas customers, about 10,000 power customers in an eight state region, mid Atlantic region. It has been a really good business for us, focus strategy which I will touch on in a minute. Midstream business very dynamic, very growing, lots of activity around Marcellus, we have a few projects. I'll touch on those and I'll show you our network. We have a nice developed network, existing network of assets in the Marcellus region in the eastern side of Marcellus. We are looking to supplement now with these new investments and I will touch on some of that new investments and we think we’ve got an opportunity for ongoing investment.

And lastly on generation we have some – we’ve gas-fired, coal-fired and some renewable assets. I won’t talk a lot about this business, because it's a small slice of our overall business portfolio. But we're nicely balanced with this tiny portfolio of power generation.

If you look historically you see the split of business. Marketing has been our largest segment for an extended period of time. Just over 50% of our EBIT Midstream as on average it’s been about 30% and growing and generation historically was a higher percentage. But as our business has grown and we haven’t invested in new generation, that’s gotten to be a smaller and smaller percentage.

If you look forward, roughly the balance will be 50-ish percent from marketing, about 40% from Midstream and moving up with generation as I said about small – about 5%. We are in a great position. I'll show you the maps in terms of where we’re located. We want to leverage our position, leverage the assets we have in place and also participate in the development of new infrastructure that’s badly needed in Marcellus to serve the customer base from the locally produced -- with locally produced resource.

That's our marketing business. I won’t go into a great detail on this slide, but you can see over time its weather sensitive. But we’ve a marketing business that has consistently grown. It's very targeted. We basically focus on commercial accounts, small and mid-sized commercial accounts. We are very focused in terms of where we contract. We do back-to-back contracting. S we contract with the customer, we hedge the volumes to make sure we’re well positioned to serve the customer. It’s a sales force intensive business to that segment and as I said over a long period of time, we’ve had a good track record in terms of consistently generating margin, sensitive to weather as many of our businesses are, but a real good track record of commodity marketing, regardless of market conditions, because market conditions change dramatically.

Midstream as a touchdown is certainly the area of the most intense focus, quite a broad range of growth initiatives for UGI. Fundamentally as a Pennsylvania-based company with hundreds of thousands of customers, 600,000, 700,000 gas customers in the State of Pennsylvania. We are intensively interested in making sure the infrastructure is present to serve those customers, our utilities and those -- and their customers, our marketing business and their customers with low cost Marcellus produced gas through efficient pipelines and we want that infrastructure in place to serve those customers for their foreseeable future.

So we’re busy building new pipeline capacity and I'll talk about those projects. We are integrating our structure -- of those pipeline infrastructure with other Midstream assets that we have in Australian map in terms of where those assets exist, storage assets, peaking assets etcetera. As we use that network of assets, that group of assets we can be very effective in providing value to customers, but also generating incremental margin through effectively using that network of assets particularly as we have volatility in the market and opportunities exist in various parts of the overall gas distribution system to earn incremental margin by effective use of assets. And lastly where we moved into the gathering business, we last year announced a deal with Tenaska we will be providing gathering services to new acreage that we will be developing in FY14 and FY15.

This is the map I talked about. You can see the interstate pipelines on the map of Pennsylvania, you see the Marcellus there -- the Marcellus Shale area of Pennsylvania highlighted there. If you just look at UGI’s asset base, existing assets and new assets, as I said we’ve a nice range of assets. You see our gas storage fields 15 Bcf of natural gas storage in North Central Pennsylvania.

You see our LNG storage facility, which is right outside Temple, Pennsylvania. That facility has been used historically as a peaking -- to deliver peaking services to utilities, we're also using that capability that’s liquid fraction onsite as well to serve the emerging transport segment for LNG. See our propane air plants which also serve our peaking business spread across our system in Southern – Eastern and Northern Pennsylvania that supplements our LNG to provide peaking services from our Midstream business.

I mentioned the newer assets, if you caught it up there, that little green pipe that went in, that's ourAuburn I pipeline that we put into service in its new mode. Last February that's transporting Marcellus produced gas in -- from Wyoming County up to the Tennessee Interstate pipeline, really nice project.

The Auburn II project, which is blue line is a 30 mile extension of the Auburn line that takes -- provides the producer the capability to move that product down to the Transco pipeline. So we are excited about that project. It's in the final stages of field execution. That project will go into service in the last calendar quarter of 2013 and it subscribe primarily with FT. So its -- there is fee-based income for the vast majority of the capacity of that new pipe on the day it goes into service.

And lastly we – last year I mentioned the deal we -- the partnership with Tenaska, that’s the acreage in North Central Pennsylvania where it will be as they develop the acreage we will be providing the gathering service and we also have a small stake on the production side in their existing acreage. So we are excited about the network of assets some of which we’ve owned for quite a while and some of which are new in service and really significantly strengthening our Midstream asset base in the eastern side of Marcellus and putting us in a great position in terms of future development of our Midstream business, but also supporting our other businesses in Pennsylvania as well.

And you see the -- finally the utility service territory, we are fortunate by luck and nature to be adjacent to abundant natural gas supplies as UGI utilities. So we’re taking advantage of that and making sure we’re incorporating Marcellus into our supply portfolio in a very significant way.

Okay. Just coming back to the question of why UGI? What’s compelling about UGI? And I will touch on this, we look at this as our engine for growth and income. Critical things about UGI, the core businesses, our four core businesses, organically will deliver 3% to 4% earnings growth. In addition to that, all four businesses generate significant cash.

So we’ve a diversified set of businesses, but unlike other diversified businesses, we don’t have one or two businesses that generate all the cash and two or three businesses that consume all the cash. We have businesses that all generate free cash organically after they satisfy maintenance and organic growth CapEx. They all do, which is a great source of strength for us.

So we deliver those base earnings growth through the four businesses. We generate $250 million to roughly 300 million of cash flow. We satisfy our dividends and we then have anywhere from $125 million to $150 million of investable cash and the other critical activity for us is allocation of that capital, meaning looking at projects, making decisions and moving forward with investments both acquisitions and I’ve talked about several acquisitions and capital projects like the one we just talked about with our Midstream business.

The effective reinvestment of the cash that's coming off the businesses enables us to deliver the incremental 3% to 6% of earnings growth that gets us to our commitment of 6% to 10%. We’ve made our 6% to 10% commitment of earnings growth for quite a long time. I showed you our track record, we’ve outperformed that. We tell our shareholders expect 6% to 10%, obviously we are going to work diligently to do the very best job we can in both phases of this, work hard to generate the organic earnings and cash and work equally hard to make good decisions about where and how to invest.

One of the great things about having a diversified set of business is as you’re not compelled to invest in any one segment of our business or any one business unit. So as we think about use of capital, as we think about how to deploy the incremental cash that comes off of our businesses, one of the great strengths we have is we have a range of opportunities that cuts across those four businesses I’ve described, that enables us to make good decisions on opportunities that are a strategic fit for the company and opportunities where the business case, the financials for the investment make sense and are compelling.

And sometimes you get one of the two, sometimes you have a strategic fit, but financial case isn’t compelling and you got to have the discipline to pull back and not go forward with projects that don't have a compelling business case associated with them. So we have the diligent approach to business development. You see the range of projects we are looking at, but we also are very diligent and disciplined approach to allocation of the capital to those projects in order to ensure that we can effectively deliver the results that we commit to our shareholders,

And that comes back to these four basic fundamental attributes. Those are the things that drive us forward. That’s what underpinned the performance that we described. I’ve described over the last 15 to 20 years, those attributes are critical and compelling we think in terms of a decision investment around UGI and a result in performance over time that differentiates us, that is compelling. We have got a different case and we think a compelling case for why you and others should invest in the Company.

With that, I'll conclude and open it up for any questions you might have.

Question-and-Answer Session

Christine Cho - Barclays Capital

Hi. Just a question about propane market in general. So with the backdrop of demand and supply changes and more export facilities being built and coming online, how do you think that impacts your business and your profitability?

John L. Walsh

Yes, we have a somewhat unique view, because we have 1.2 billion gallons of propane to distribute in the U.S and we have 750 million gallons of propane and butane distributed in Europe. So we’re looking at it from both sides. Personally I feel good about the availability of propane and butane as we move forward. I think the -- and particularly due to the significant demand for natural gas for consumers and for power generation, what will happen is you're going to see a continued ramp up in natural gas production, significant amount of that natural gas is going to be in NGL rich areas, propane and butane coming off those processes will be significant. So personally I believe we have more than sufficient propane to satisfy the needs in the U.S and having folks commit to export facilities for propane and butane to go elsewhere in the world from our standpoint it's a good thing because we would like to see supply diversity in Europe. So more choice to suppliers in Europe, more options for European propane and butane distributors is a good thing from our perspective. So we feel very positive about sort of the evolution of the supply demand balance and that's my opinion.

In terms of the strategies in where we execute, we don’t act on that opinion. We don’t know what propane cost will be next year. And one of the real strengths of the business is that we operate regardless of the cost of the commodity, whether its up $0.30, down $0.30 or $0.40, our focus is delivering consistent growth in unit margins and if you look at the track record of the Company, both in U.S and in Europe over an extended period of time, we’ve a track record of being able to deliver unit margin growth regardless of the underlying movement in the cost of the commodity.

Christine Cho - Barclays Capital

Kind of piggybacking off that question, if you look at or if you believe that all of these hockey sticks forecast out of the Marcellus for NGL production, it looks like propane production out of that area is going to grow like a weed. And if I had to guess, producers would rather serve local markets, rather than shipping it down to the Gulf Coast. How simple is it for a residential customer to switch from using fuel oil as to keep their home to propane, because I would imagine that that’s a great opportunity, but there is some upfront fixed cost.

John L. Walsh

Sure. Yes, it’s a good question. On conversion from fuel oil to propane, it's kind of the Holy Grail for propane if you think about it. We know we have the utilities, but UGI I mentioned in the last 20 years has been converting fuel oil customers to natural gas. So we’ve lots of insights in terms of how you take the customer through. You’ve got to buy a new furnace, you’ve got to convert your plants, it’s a lot of work for the customer to do. But if the economics are compelling, the customer obviously will make that change particularly if their system is more than 10 years old for sure you just need to -- you really need to work closely with those customers to enable the change.

And reality is that if you look at every fuel oil customer in the United States and say which of those customers can be reached with the natural gas main within the next 50 years, based on where they’re located probably 80% -- at least 80% of the fuel oil customers are in a position where they’re never going to be reached by natural gas main. We know that from our own territory, which means the best alternative solution for them are or one very viable solution is propane. So if the differential between propane and fuel oil increases that opportunity for conversion is absolutely there and obviously we' build – we have this skills in the Company.

We are doing conversions, significant conversions in Europe. We're also doing some conversions in -- particularly in New England as well on the commercial site from fuel oil to propane. So we’re building our skill base and learning how to most effectively communicate with customers to help them through the process, because it’s a big change for individual household.

Christine Cho - Barclays Capital

We're out of time. Breakout will be in Liberty III.

John L. Walsh

Thank you.

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