Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q3 2024 Earnings Presentation
35 slides from Chesapeake Utilities's earnings presentation, Nov 8, 2024
Slide 1: Third Quarter 2024 Earnings Call Presentation
Third Quarter 2024 Earnings Call Presentation November 8, 2024 1
Slide 2: Safe Harbor for Forward-Looking Statements
Safe Harbor for Forward-Looking Statements Safe Harbor Statement Some of the statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable law. Such forward-looking statements may be identified by the
Slide 3: Safety Moment: Safe Driving Habits for Fall & Winter
Safety Moment: Safe Driving Habits for Fall & Winter • As seasons change, check / update fluids, windshield wipers & roadside emergency supplies • Be aware of lower visibility as the time change shifts sunrise and sunset • Leave extra room between your car and others to account for wet, slippery roa
Slide 4: Today's Presenters
Today’s Presenters Jeff Householder Beth Cooper Jim Moriarty Lucia Dempsey Chair of the Board, Executive Vice President, Executive Vice President, Head of President & Chief Financial Officer, Treasurer General Counsel, Investor Relations Chief Executive Officer & Asst. Corporate Secretary Corporate
Slide 5: Continued Strong Financial Performance in Q3 2024
Continued Strong Financial Performance in Q3 2024 1 Adjusted Diluted EPS Key Financial Highlights $3.76 Q3 2024 Results $3.63 • Adjusted Gross Margin: $121.9M, up 29% from Q3 2023 $0.69 $0.80 Q3 • Adjusted Net Income: $18.1M, up 48% from Q3 2023 • Adjusted EPS: $0.80, up 16% from Q3 2023 Q2 $0.90 $0
Slide 6: Operational Updates
Operational Updates Hurricane Update The Journey Continues • No significant damage from Hurricanes Debby, Helene, or Milton Achieving Operational Synergies Consolidating processes and resources • ~13,000 Florida Electric customers did lose and incorporating operations into existing power during Hurr
Slide 7: High-Growth Service Areas Drive Investment Opportunities
High-Growth Service Areas Drive Investment Opportunities Strong Customer Growth Q3 2024 vs Q3 2023 Delmarva Residential 3.9% Commercial 1.4% & Industrial 3.9% Residential Strong growth expected Florida Commercial & Industrial 1.0% to continue, with YTD 2024 vs YTD 2023 50+ 3.9% Delmarva Residential
Slide 8: Executing On Our Long-Term Growth Plan
Executing On Our Long-Term Growth Plan Growth in earnings to support growth and increased shareholder value Prudently Proactively Continually deploy manage execute on investment regulatory business capital agenda transformation Foundation of operational excellence across the organization 8
Slide 9: 5-Year Capex Guidance is On-Track and Achievable
5-Year Capex Guidance is On-Track and Achievable ~$1.3 billion of identified capital projects support our 5-year CapEx guidance of $1.5 - $1.8 billion Segment 5-Year Guidance 5-Year Identified Regulated CapEx Spend Regulated Natural Gas LDC Organic Growth $625M $600 - $645M Distribution Worcester Re
Slide 10: 2024 Capital Investment On Track to Drive Margin Growth
2024 Capital Investment On Track to Drive Margin Growth YTD 2024 Capital Spend $300 - $360M General Corporate CapEx: $4 - $6M Other Unregulated: $13 - $15M Energy Transmission: $5 - $6M Propane Distribution: $13 - $15M Electric Distribution: $30 - $38M 78% $257M YTD 2024 Natural Gas Transmission: $7
Slide 11: Organic Growth Driving Delmarva & Florida Investments
Organic Growth Driving Delmarva & Florida Investments Total Adj. Gross Margin ($M) # Project Name Status In-Service CapEx 2024E 2025E 1 Southern Expansion In-Service Q4 2023 ~$14M $2.3 $2.3 1 2 North Ocean City Connector In-Service Q2 2023 ~$6M — — Worcester Resiliency Pending 3 Approval Q3 2025 ~$8
Slide 12: Business Transformation: People, Processes, Systems & Structures
Business Transformation: People, Processes, Systems & Structures We are continually evaluating our operations and implementing improvements in order to ensure long-term success and growth in an ever-changing environment. Upcoming Process & Technology Improvements & Investments: In August 2024, CPK s
Slide 13: Increasing Adj. Gross Margin Driving Bottom-Line Growth
Increasing Adj. Gross Margin Driving Bottom-Line Growth Gross margin growth doubled operating income and drove nearly 50% growth in bottom-line Adj. Net Income 1 1 1 Adjusted Gross Margin Adjusted Net Income Adjusted Earnings Per Share +29% $121.9 +48% +16% 0.80 $18.1 $94.5 0.69 $12.2 Q3 2023 Q3 202
Slide 14: Key Drivers of Performance – Three Months Ended September 30, 2024
Key Drivers of Performance – Three Months Ended September 30, 2024 Adjusted EPS for the third quarter benefited from our recent acquisition of Florida City Gas and increased margin from our from our legacy business, offset primarily by financing costs related to the FCG acquisition. 1 Adjusted Dilut
Slide 15: Strong Regulated Energy Operating Income Growth
Strong Regulated Energy Operating Income Growth 1 Adj. Gross Margin up 35% & Operating income up 76%, driven by: $102.3 $43.9 •$23.4M from FCG operations & growth $75.9 •$2.6M from natural gas growth, conversions and service expansions •$1.8M from regulated infrastructure programs $24.9 Partially of
Slide 16: Improvement in Unregulated Energy Segment
Improvement in Unregulated Energy Segment 1 Adjusted Gross Margin up 6%, primarily driven by: $19.7 • $1.1M attributable to increased Marlin virtual pipeline services • $0.8M of lower payroll, benefits and other employee-related expenses $18.6 $(3.1) $(4.7) Q3 2023 Q3 2024 1 Adjusted Gross Margin $
Slide 17: Strong Balance Sheet Supports Growth Plan
Strong Balance Sheet Supports Growth Plan 2 Total Capitalization Total Liquidity $ in millions $2,755 Total available $2,632 31% liquidity of Equity $1,246 47% $1,348 49% $484M 69% out of Total Capacity of $705M Short-Term $233 1 $198 8% 8% Debt 2024 Equity & Debt Issuances Long-Term • $63.8M equity
Slide 18: Three Decades of Dividend Growth Drive Shareholder Return
Three Decades of Dividend Growth Drive Shareholder Return Annualized Dividend per Share Dividend Increases in 29 of the last 31 Years – Since 1994 Increase of 8.5% 64 Consecutive Years of Dividend Payments – Since 1961 21 Consecutive Years of Dividend Increases – Since 2004 f9 % Ro AG e ndC vi d 12%
Slide 19: Driving Increased Shareholder Value; Reaffirming Earnings Guidance
Driving Increased Shareholder Value; Reaffirming Earnings Guidance Earnings Per Share - Diluted Earnings Growth Driven by Capital Investment... +8.4 – 8.7% 1 10-Year • YTD 2024 Adjusted Earnings Per Share of $3.76 CAGR • 2024 Adj. EPS Guidance of $5.33 to $5.45 • 2025 Adj. EPS Guidance of $6.15 to $
Slide 20: Pathway to 2024 EPS Guidance
Pathway to 2024 EPS1 Guidance Our 2024 target is based on continued growth from our legacy businesses, a full year of contribution from FCG, and additional opportunities we have identified. 1 Adjusted Diluted Earnings Per Share Additional Opportunities $0.20 - $0.30 • Cost & Operating Synergies $0.3
Slide 21: Proactive Rate Case and Regulatory Agenda
Proactive Rate Case and Regulatory Agenda 21
Slide 22: Full Circle Dairy Commissioning Completed
Full Circle Dairy Commissioning Completed Full Circle Dairy RNG Facility • The company celebrated full operations at Full Circle Dairy (FCD) with a ribbon-cutting ceremony at the end of October 2024 • Since June 2024, nearly 21,000 dekatherms (Dth) of RNG have been captured and transported for use;
Slide 23: Worcester Resiliency Upgrade Project Proceeding On Schedule
Worcester Resiliency Upgrade Project Proceeding On Schedule ESNG LNG Storage project designed to meet critical energy service to customers during the peak winter heating season. • $80 million planned LNG storage facility in Bishopville, MD • Project consists of five low-profile horizontal storage ta
Slide 24: Active Legislative Engagement & Election Updates
Active Legislative Engagement & Election Updates CPK remains focused on maintaining consistent dialogue and building strong relationships to ensure continued support for the company's operations and the natural gas industry overall Delaware: New Democratic governor and new legislative leadership, ma
Slide 25: Working Toward Excellence on All Fronts
Working Toward Excellence on All Fronts Sustainability Reporting Community Support & Engagement In the aftermath Micro-Sustainability of Hurricanes Helene Report on and Milton, CPK has Environmental donated $50,000 Stewardship to support recovery issued in efforts in affected September 2024 communit
Slide 26: Why Chesapeake Utilities?
Why Chesapeake Utilities? CPK’s unique combination of operational expertise, growth potential and consistent delivery of long-term shareholder return connects our strong historical track record with our future success. Expertise Growth since 2003: Innovative & diligent • 10x Asset Growth Nimble, yet
Slide 27: Appendix
”n Ww? : : Appendix
Slide 28: Quarterly Earnings Cadence
Quarterly Earnings Cadence 1 Adjusted EPS Year Q1 Q2 Q3 Q4 FY 2024 $2.10 $0.86 $0.80 % of FY 39% 16% 15% 2 2023 $2.04 $0.90 $0.69 $1.64 $5.31 % of FY 38% 17% 13% 31% 2022 $2.08 $0.96 $0.54 $1.47 $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
Slide 29: Weather Has Generally Been Warmer than Normal in 2024
Weather Has Generally Been Warmer than Normal in 2024 Delmarva Ohio Florida NORMAL —% Year to Date (13)% (13)% (14)% MILDER (24)% (33)% YTD 2023 YTD 2024 YTD 2023 YTD 2024 YTD 2023 YTD 2024 Note: Normal reflects 10-Year Average Heating Degree Days (HDD). Percentages reflect actual HDD above / (below
Slide 30: Approved Infrastructure Programs Support Capital Growth
Approved Infrastructure Programs Support Capital Growth Gas Electric Eastern Shore Florida City Gas Florida Public Utilities Capital Cost Surcharge SAFE Program GUARD Program Storm Protection 5-Year CapEx $50-100M 10-Year CapEx $255M 10-Year CapEx $205M 5-Year CapEx $50-75M ‘24E Gross Margin $3.2M 2
Slide 31: Aligning our Work with a Higher-Level Purpose
Aligning our Work with a Higher-Level Purpose Our Mission Our Vision We deliver energy We will be a leader in that makes life better delivering energy that for the people and contributes to a communities we serve. sustainable future. Our Values Care We put people first. Integrity We tell the truth.
Slide 32: Long-Term Debt Profile – Positioned to Execute Growth Plan
Long-Term Debt Profile – Positioned to Execute Growth Plan $ in millions Minimal maturities over next 2 years $206 enables CPK the flexibility to: • Execute on a robust growing $162 $159 $157 organic capital plan • Fully integrate $135 $137 Florida City Gas $132 and capitalize on commercial synergie
Slide 33: GAAP to Non-GAAP Reconciliation – Consolidated Results
GAAP to Non-GAAP Reconciliation – Consolidated Results $ in millions Third Quarter Results Year-to-Date Results Consolidated Reconciliation Q3 2024 Q3 2023 $ % YTD 2024 YTD 2023 $ % GAAP Operating Revenues $ 160.1 $ 131.5 $ 28.6 22% $ 572.2 $ 485.3 $ 86.9 18% Cost of Sales Nat Gas, Propane, & Electr
Slide 34: GAAP to Non-GAAP Reconciliation – Regulated Energy Segment
GAAP to Non-GAAP Reconciliation – Regulated Energy Segment $ in millions Third Quarter Results Year-to-Date Results Regulated Segment Q3 2024 Q3 2023 $ % YTD 2024 YTD 2023 $ % GAAP Operating Revenues $ 130.6 $ 102.4 $ 28.2 28% $ 429.7 $ 345.8 $ 83.9 24% Cost of Sales Nat Gas, Propane, & Electric (28
Slide 35: GAAP to Non-GAAP Reconciliation – Adjusted Net Income and EPS
GAAP to Non-GAAP Reconciliation – Adjusted Net Income and EPS $ in millions except per-share amounts shares in thousands Third Quarter Results Year-to-Date Results Non-GAAP Reconciliation: NI /EPS Q3 2024 Q3 2023 $ % YTD 2024 YTD 2023 $ % GAAP Net Income $ 17.5 $ 9.4 $ 8.1 86% $ 81.9 $ 61.9 $ 20.1 3