Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q4 2019 Earnings Presentation
31 slides from Chesapeake Utilities's earnings presentation, Feb 28, 2020
Slide 1: A Strong Foundation for Growth
Exhibit 99.1 A STRONG foundation FOR GROWTH Fourth Quarter and Year-End 2019 Earnings Conference Call February 27, 2020
Slide 2: Forward Looking Statements and Other Disclosures
Forward Looking Statements and Other Disclosures 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-lookin
Slide 3: 2019 Highlights
• Enhanced Chesapeake team to support growth GAAP Cont. Ops. • EPS growth: 1-year 14.8% 7.2% 3- year 11.5% 10.3% 5- year 9.9% 9.4% 10-year 10.7% 11.3% • Generated a Return on Equity of 12% (11.3% from continuing operations), while investing $199 million in capital in 2019 • 9.5% annualized dividend
Slide 4: Strategic Plan Execution: Capital Discipline and Efficiency
Strategic Plan Execution Capital Discipline and Efficiency Peer/Industry ROE vs. Capital Expenditures (October 2016 – September 2019) Financial discipline to maintain 20% High Returns/Low Investment High Returns/High Investment upper quartile performance of 18% Capital Investment, EPS Growth, ROE, D
Slide 5: 2020 – 2022 Strategic Growth Initiatives
2020 – 2022 Strategic Growth Initiatives Develop new Complete transmission Earnings transmission infrastructure projects Per Share projects Growth DNG and FPU Expand Marlin gas organic 2020 – 2022E: CNG delivery growth $297mm to $532mm Total Return on Dividend 2019E: $170mm Shareholder to $185mm Equ
Slide 6: Capital Investment Guidance
Capital Investment Guidance Continued Record Investment in Our Business to Drive Growth $350,000 $303,153 Target 2018 – 2022: $750 million - $1 billion $300,000 $282,861 $250,000 $250,000 $215,000 Reach $1 billion $198,986 $1.%1,00BIllion75 $200,000 $30,000 0 MM $150,000 $185,000 $100,000 $50,000 Re
Slide 7: Updated Earnings Guidance
Updated Earnings Guidance Increasing 2022 EPS target to $4.70 - $4.90 $5.00 $4.90 $4.55 $4.70 Previous 2022 EPS $4.50 guidance of $4.20 to $4.55 is now increased to $4.70 - $4.90, $4.20 $4.00 based on our current $3.72 strategic plan investments and growth prospects. $3.50 $3.00 2019 2022 Prior 2022
Slide 8: Financial Summary
Financial Summary Income from Continuing and Discontinuing Operations Fourth Quarter Year-to-Date Record High Earnings per Share: (in thousands except per share data) 2019 2018 2019 2018 Operating Income $ 29,642 $ 28,873 $ 106,287 $ 94,843 • EPS (GAAP) of $3.96 • 14.8% increase in 2019 Other Expens
Slide 9: Reconciliation of Year-to-Date Results from Continuing Operations
Reconciliation of Year-to-Date Results from Continuing Operations Key Variances for the twelve months ended December 31, 2019 vs. 2018 Pre-tax Net Earnings Income Income Per Share (in thousands, except per share data) $ 78,094 $ 56,862 $ 3 .47 Year ended December 31, 2018 Reported Results from Conti
Slide 10: Reconciliation of Year-to-Date Results Key Variances
Reconciliation of Year-to-Date Results Key Variances for the years ended December 31, 2019 vs. 2018 Pre-tax Net Earnings (in thousands except earnings per share) Income Income Per Share Increased (Decreased) Gross Margin Eastern Shore and Peninsula Pipeline service expansions (including related $ 12
Slide 11: Capital Expenditures
Capital Expenditures 2019 and 2020 Actual for Fiscal Estimate for Fiscal 2020 (dollars in thousands) 2019 Low High Regulated Energy: Natural gas distribution $ 62,744 $ 72,000 $ 83,000 Natural gas transmission 62,000 83,000 96,000 Electric distribution 5,860 5,000 7,000 Total Regulated Energy 130,60
Slide 12: Capital Capacity to Support Future Growth
Capital Capacity to Support Future Growth Total Capitalization has More Than Doubled in Five Years Available Financing Capacity (in thousands) Stockholders' Equity Long-Term Debt Short-Term Debt * * $1,294,716 $1,294,716• $370 million bank lines of credit through October 2020 $1,140,852 • $160 milli
Slide 13: Major Projects and Initiatives
Major Projects and Initiatives Increasing Shareholder Value by Continuously Seeking and Developing Projects and Initiatives Gross Margin for the Period Key 2019 Margin Increase Drivers: Year Ended December 31, Estimated for Fiscal • $12.6 MM from new pipeline projects in thousands 2018 2019 2020 202
Slide 14: Propane Growth Initiatives
Propane Growth Initiatives Residential Community Gas Systems PROPANE DELMARVA PROPANE FLORIDA § Maintain/develop residential builder relationships to capitalize on new development opportunities § These relationships are translating into new CGS in non-core markets AutoGas Fueling Stations § Strategi
Slide 15: Marlin Gas Services – Engine for Growth
Marlin Gas Services – Engine for Growth and Customer Service Continues to Exceed Performance Expectations Marlin Gas Services Gross Margin Estimates 2020 - 2021 $8,000 $7,000 $6,400 $7,000 $6,000 $5,400 $5,000 $4,000 2019 2020 2021 Marlin Gas Services continues to actively expand the territories it
Slide 16: Committed to Reducing Emissions while Protecting Consumers
Chesapeake Utilities Corporation Committed to Reducing Emissions while Protecting Consumers Source:: 16Chesapeake Utilities Corporation Committed to Reducing Emissions while Protecting Consumers Source:: 16
Slide 17: Climate change and natural gas perspective
There is good dialogue today for how our society finds effective measures to understand and address climate change. As this dialogue continues, we remain mindful of the following: • U.S. emissions are at a 25 year low • The U.S. leads the world in carbon emission reductions • Natural gas is replacin
Slide 18: Culture of sustainability
Our businesses embrace the Company’s culture of sustainability where progress creates value. • Conservation program to help customers reduce energy costs and receive energy-saving products and programs • Modern pipeline infrastructure with zero miles of cast iron • Invested $144 million in Gas Relia
Slide 19: Diversity, safety and community
• We embrace a culture of diversity, inclusion, teamwork and entrepreneurship • We promote a culture of safety and compliance and work closely with our first responders and firefighters • We volunteer throughout our service territories, including with the Nature Conservancy, the Food Bank, the YMCA
Slide 20: Committed to Superior Performance – TSR, EPS, Dividend Growth
Chesapeake Utilities Corporation Committed to Superior Performance – TSR, EPS, Dividend Growth Chesapeake Utilities Corporation Total Return (Annualized) EPS Growth (CAGR) Dividend Growth (CAGR) Retention Rate Peer Peer Peer Peer Period CPK Median CPK Average CPK Average CPK Average 3 Year 15% 12% 1
Slide 21: CPK Stock Price Surpasses $100.00 per share
Chesapeake Utilities Corporation CPK Stock Price Surpasses $100.00 per share on February 13, 2020 Thank You! The Chesapeake Team is proud of this record achievement in its share price. We appreciate the support and confidence of our shareholders in terms of our future growth potential. 21Chesapeake
Slide 22: Any Questions?
Any Questions? Jim Moriarty Jeff Householder Beth Cooper Executive Vice President, General President & CEO Executive Vice President, Counsel and Corporate Secretary jhouseholder@chpk.com CFO and Asst. Secretary jmoriarty@chpk.com bcooper@chpk.com Thank You!Any Questions? Jim Moriarty Jeff Householde
Slide 23: Appendix
Appendix Key Projects Driving Growth + Boulden Propane Acquisition + Elkton Gas Acquisition Pipeline Expansions
Slide 24: Benefits of Boulden Acquisition
Benefits of Boulden Acquisition - Added approximately 5,200 customers in five counties in Delaware, Maryland Ohl Acquisition and Pennsylvania effective 12/16/19 December 2018 - Overlays nicely with Elkton Gas acquisition to establish a strong unified energy delivery platform in Cecil County Boulden
Slide 25: Elkton Gas Company Strategic Acquisition for Delmarva Natural Gas
Elkton Gas Company Strategic Acquisition for Delmarva Natural Gas Summary of Transaction: • On December 5, 2019, Chesapeake Utilities and South Jersey Industries entered into an agreement under which Chesapeake will acquire Elkton Gas Company for approximately $15 million • The transaction is expect
Slide 26: Existing Cecil County Operations
Existing Cecil County Operations Elkton Gas and Chesapeake Utilities Current SJI – Elkton Current CPK - Cecil County Cecil County Operations Operations • Leased • No Office or Administrative Operations Office Space Facilities in Cecil County • Owned Operations Facilities • No Local • Nine Local Empl
Slide 27: Elkton Gas Company Strategic Fit
Elkton Gas Company Strategic Fit • Elkton Gas gives CPK an operational platform in Cecil County including personnel, a contractor pool and an operations center which will enable Chesapeake to more quickly expand our footprint in Cecil County • Additional growth is expected in the area, due to its pr
Slide 28: Del-Mar Energy Pathway Project Under Development
Del-Mar Energy Pathway Project Under Development Strategic Growth Initiative Provides additional natural gas transmission pipeline infrastructure in Eastern Sussex County, Delaware and expands service into Somerset County, Maryland; serves four large anchor customers • Estimated Project Cost: $ 37 M
Slide 29: West Palm Beach Expansion
West Palm Beach Expansion Enhances Reliability and Provides Additional Customer Growth • $33 million capital investment • $2.1 million margin in 2019 • $5.0 million margin in 2020 • $5.2 million margin in 2020 • Q4 - 2018 initial service; fully in-service Q1 - 2020 • Four PPC projects to serve FPU’s
Slide 30: Callahan Pipeline
Callahan Pipeline Nassau County, Florida Peninsula Pipeline is constructing a jointly owned 26 mile pipeline serving Nassau and Duval counties in Florida; Project will be jointly owned and built with Seacoast Gas Transmission (affiliate of Emera) • Estimated CPK Project Cost: $ 32.5 Million* • Estim
Slide 31: Aspire Energy – Natural Gas Pipeline Project
Aspire Energy – Natural Gas Pipeline Project Guernsey Power Station • In December 2017, Aspire executed a binding precedent agreement with Guernsey Power Station, LLC (GPS) providing for the relocation of an existing 6” steel Aspire pipeline (completed March 2018). Aspire received the exclusive righ