Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q3 2023 Earnings Presentation
31 slides from Chesapeake Utilities's earnings presentation, Nov 3, 2023
Slide 1: Third Quarter 2023 Earnings Conference Call
CHESAPEAKE Third Quarter 2023 Ear nings Conference Call UTILITIES C O R P O R AT I O N November 3, 2023 1
Slide 2: Today's Presenters
Today’s Presenters Jeff Householder Chairman of the Board, President, and Chief Executive Officer Beth Cooper Executive Vice President, Chief Financial Officer, Treasurer, and Assistant Corporate Secretary Jim Moriarty Executive Vice President, General Counsel, Corporate Secretary, and Chief Policy
Slide 3: Forward Looking Statements and Other Statements
Forward Looking Statements and Other Statements Safe Harbor Statement Some of the Statements in this document concerning future Company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking s
Slide 4: Financial Highlights
Financial Highlights • Adjusted EPS of $0.69 and $3.63, respectively, for the quarter and year- to-date periods ended September 30, 2023 • Excludes transaction-related expenses of $0.16 attributable to the announced acquisition of Florida City Gas ("FCG") • Historically warmer temperatures throughou
Slide 5: Florida City Gas: Acquisition Announcement Recap
Florida City Gas: Acquisition Announcement Recap In September, Chesapeake Utilities reached a definitive agreement to acquire Florida City Gas (FCG) for $923 million Expands Platform Enhances Scale Financial Benefits in Florida and Efficiency Builds on CPK’s High growth utility CPK has extensive tra
Slide 6: Florida City Gas: Acquisition Closing Progress Update
Florida City Gas: Acquisition Closing Progress Update We remain on track for closing in the fourth quarter of 2023 Approvals update Transition •Hart-Scott-Rodino waiting period expires at the end of the day on November 6 Planning update •Delaware PSC regulatory approval received October 25 •Maryland
Slide 7: Continued Expansion to Serve Growing Demand
Continued Expansion to Serve Growing Demand Announced ESNG’s Worcester Resiliency Upgrade Ongoing and Recently Completed Expansions • Planned liquefied natural gas storage facility in Bishopville, MD Ongoing Expansions allowing for up to 0.5 million gallons of storage • Wildlight Expansion: Multiple
Slide 8: Year-to-Date 2023 Financial Performance
Year-to-Date 2023 Financial Performance Key Year-to-Date Earnings Adjusted Gross Adjusted Diluted Earnings Margin Drivers Per Share $3.58 $3.63 $13.2M $7.7M $6.4M Regulated Pipeline Higher Propane Infrastructure Expansions and Margins per gallon Programs Natural Gas Organic and fees and Recovery Gro
Slide 9: Third Quarter and Year-to-Date 2023 Financial Summary
Third Quarter and Year-to-Date 2023 Financial Summary Solid performance, despite significantly warmer weather and continued inflationary environment Consolidated Third Quarter Change Year to Date Change (in thousands except per share data) 2023 2022 $ % 2023 2022 $ % 1 Total Adjusted Gross Margin $
Slide 10: Key Drivers of Performance – Quarter Ended September 30, 2023
Key Drivers of Performance – Quarter Ended September 30, 2023 Q3 2022 Adjusted Diluted Earnings Per Share $0.54 Absence of Interest income from Federal Income A -$0.03 Tax refund Core business growth (not impacted by B $0.33 consumption) C Lower customer consumption -$0.03 D Operating expenses -$0.0
Slide 11: Key Drivers of Performance – Year-to-Date September 30, 2023
Key Drivers of Performance – Year-to-Date September 30, 2023 YTD 2022 Adjusted Diluted Earnings Per Share $3.58 A Absence of gain from sales of assets -$0.08 Absence of Interest income from Federal Income B -$0.03 Tax refund C Reduction in state tax rate $0.07 D Core business growth (not impacted by
Slide 12: Regulated Energy Segment – Financial Summary
Regulated Energy Segment – Financial Summary Continued expansion and customer growth, offset by reduced consumption Third Quarter Change Year-to-Date Change (in thousands) 2023 2022 $ % 2023 2022 $ % Adjusted Gross Margin 1 $ 75,893 $ 69,732 $ 6,161 8.8% $ 240,130 $ 222,800 $ 17,330 7.8% Dep., amort
Slide 13: Unregulated Energy Segment – Financial Summary
Unregulated Energy Segment – Financial Summary Warmer weather partially offset by continued demand for virtual pipeline services Third Quarter Change Year-to-Date Change (in thousands) 2023 2022 $ % 2023 2022 $ % Adjusted Gross Margin1 $ 18,589 $ 17,146 $ 1,443 8.4% $ 83,818 $ 82,193 $ 1,625 2.0% De
Slide 14: Capital Structure Overview – Strong Balance Sheet to Support Growth
. Capital Structure Overview – Strong Balance Sheet to Support Growth 9/30/2023 12/31/2022 Stockholders' equity $ 866,677 $ 832,801 Long-Term Debt Long-term debt, net of current maturities 643,801 578,388 • Avg. Interest Rate: 3.89% Total permanent capitalization $ 1,510,478 $ 1,411,189 • $80M: 5.43
Slide 15: Key Drivers of Growth
Key Drivers of Growth • 5.6% / 4.0% residential customer growth in Delmarva / Florida for Q3’23 Organic Growth: • Added more than 8,700 residential customers since September 2022 • Natural gas continues to be the preferred energy source for our customers • Completion of St. Cloud / Twin Lakes expans
Slide 16: Major Projects and Initiatives Update
Major Projects and Initiatives Update Key Projects and Initiatives Driving Capital Investment and Adjusted Gross Margin Adjusted Gross Margin Three Months Ended Nine Months Ended Year Ended Estimate for Project/Initiative September 30, September 30, December Fiscal (in thousands) 2023 2022 2023 2022
Slide 17: Regulatory Initiatives
Regulatory Initiatives Florida Public Utilities Maryland LDCs Florida City Gas • Rates became effective • Planning combined rate case • Rates became effective May 1, March 1, 2023 and depreciation studies for: 2023 • Incremental $17.2 million Maryland Division, Sandpiper • Incremental $23.3 million
Slide 18: Chesapeake Utilities' Company Culture: Tradition of Recognition Continues
Chesapeake Utilities' Company Culture Tradition of Recognition Continues • Recognized as 2023 Champion of Board Diversity by The Forum of Executive Women • For the fourth consecutive year, Chesapeake Utilities was recognized as Best Energy Provider and Sharp Energy as Best Propane Company by the Del
Slide 19: Capital Expenditure Guidance Update
Capital Expenditure Guidance Update $1.5-$1.8 Billion 5-year Capital Investment Plan (2024-2028), a ~65% Increase from Previous Plan New 2024-2028 Guidance $1.5B-$1.8B Increase New 5-year plan: $1.5B to $1.8B (2024-2028) ~65% Previous 2021-2022 2023-2025 Key Drivers of Investment Plan Guidance $369M
Slide 20: Track Record of Growing Capital Expenditures
Track Record of Growing Capital Expenditures Long Track Record of Successfully Growing Capital Investment Plan ~$300-$360M/yr run rate ($1.5-$1.8 bn 5-yr plan) ~$150-$250M/yr avg. $283 FCG ~$75-$100M/yr avg. $228 $195 $192 $199 $196 $169 ~$50M/ $141 yr avg. $108 $98 $240 $200 $78 $193 To $169 $180 $
Slide 21: Extending Earnings Growth Projections
Extending Earnings Growth Projections Earnings Per Share Growth Guidance Extended through 2028* $8.00 $7.75 $6.15 $6.35 CPK Guidance – High Range CPK Guidance – High Range CPK Guidance – Low Range CPK Guidance – Low Range $5.04 $4.73 $4.21 $3.72 $3.47 2018 2019 2020 2021 2022 2025 2025 2028 2028 * D
Slide 22: Investment Proposition – Committed to Superior Performance
Investment Proposition – Committed to Superior Performance Our Foundation for Growth Remains Strong We continually increase shareholder value through our: Over and over, we have proven we get it done; we have a long history of top-tier earnings growth TRACK • Consistently beating expectations, recor
Slide 23: Appendix
CHESAPEAKE UTILITIES Appendix C O R P O R AT I O N 23
Slide 24: Exceptionally Warm Weather Across All Service Areas
Customer Consumption During the Nine Months Ended September 30, 2023 Nine Months Ended Variance Delmarva September 30, Year-over-Year Exceptionally Warm Weather Across 2023 2022 # % Actual HDD 2,069 2,603 (534) -21% All Service Areas 10-yr Avg HDD (“Normal”) 2,731 2,710 21 Variance from # (662) (107
Slide 25: GAAP to Non-GAAP Reconciliation – Consolidated Results
GAAP to Non-GAAP Reconciliation – Consolidated Results Third Quarter Change Year-to-Date Change (in thousands) 2023 2022 $ % 2023 2022 $ % Operating Revenues $ 131,547 $ 131,053 $ 494 0.4% $ 485,269 $ 493,403 $ (8,134) -1.6% Cost of Sales: Natural gas, propane and electric costs (37,094) (44,205) 7,
Slide 26: GAAP to Non-GAAP Reconciliation – Regulated Energy Segment
GAAP to Non-GAAP Reconciliation – Regulated Energy Segment Third Quarter Change Year-to-Date Change (in thousands) 2023 2022 $ % 2023 2022 $ % Operating Revenues $ 102,411 $ 90,980 $ 11,431 12.6% $ 345,822 $ 311,064 $ 34,758 11.2% Cost of Sales: Natural gas, propane and electric costs (26,518) (21,2
Slide 27: GAAP to Non-GAAP Reconciliation – Unregulated Energy Segment
GAAP to Non-GAAP Reconciliation – Unregulated Energy Segment Third Quarter Change Year-to-Date Change (in thousands) 2023 2022 $ % 2023 2022 $ % Operating Revenues $ 34,970 $ 47,914 $(12,944) -27.0% $ 158,886 $ 202,669 $(43,783) -21.6% Cost of Sales: Natural gas, propane and electric costs (16,381)
Slide 28: GAAP to Non-GAAP Reconciliation – Adjusted Net Income and EPS
GAAP to Non-GAAP Reconciliation – Adjusted Net Income and EPS Third Quarter Year-to-Date (in thousands, except shares and per share data) 2023 2022 2023 2022 Net Income (GAAP) $ 9,407 $ 9,662 $ 61,884 $ 63,646 Transaction-related expenses, net1 2,804 - 2,898 - Adjusted Net Income (Non-GAAP) $ 12,211
Slide 29: Quarterly Earnings Cadence
Quarterly Earnings Cadence* Adjusted EPS Year Q1 Q2 Q3 Q4 FY 2023 $2.04 $0.90 $0.69* 2022 $2.08 $0.96 $0.54 $1.46 $5.04 % of FY 41% 19% 11% 29% 2021 $1.96 $0.78 $0.71 $1.28 $4.73 % of FY 41% 16% 15% 27% 2020 $1.77 $0.64 $0.56 $1.24 $4.21 % of FY 42% 15% 13% 29% 2019 $1.75 $0.54 $0.38 $1.04 $3.72** %
Slide 30: Solid Track Record of Return on Equity
Solid Track Record of Return on Equity Consistently exceeding peer median and 75th percentile Return on Equity 14% 13% 12.7% 12.6% 12.2% 12.2% 12.1% 12.0% 11.8% 11.7% 11.7% 12% 11.3% 11.3% 11.6% 11.3% 11.2% 11.3% 11.1% 11.0% 11.0% 11% 10% * 10-Year Peer 75th Percentile – 9.4% 9% * 10-Year Peer Media
Slide 31: Mission, Vision and Values
Mission, Vision and Values OUR Mission We deliver energy that makes life better for the people and communities we serve. OUR Vision We will be a leader in delivering energy that contributes to a sustainable future. OUR Values Care Integrity Excellence We put people first. We tell the truth. We achie