Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — AGA Financial Forum 2024
40 slides from Chesapeake Utilities's conference presentation, May 17, 2024
Slide 1: AGA Financial Forum May 19-21, 2024
Exhibit 99.1 AGA Financial Forum MAY 19 - 21, 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: AGA Forum Participants
AGA Forum Participants Jeff Sylvester Jeff Householder Senior Vice President and Chair of the Board, President, and Chief Operating Officer Chief Executive Officer Michael Galtman Senior Vice President and Beth Cooper Chief Accounting Officer Executive Vice President, Chief Financial Officer, Treasu
Slide 4: Growing, Diversified Portfolio of Energy Delivery Solutions
Growing, Diversified Portfolio of Energy Delivery Solutions Chesapeake Utilities Corporation Overview NYSE: CPK $2.5B Market Cap company Total Assets 160+ years providing energy 14% 85% ~1,250 current employees 1% ~440,000 distribution customers Our Business Lines States We Serve $3.3B as of Mar 31,
Slide 5: Track Record of Investment Growth Driving Top-Quartile Performance
Track Record of Investment Growth Driving Top-Quartile Performance $3,500.0 $200.0 Significant capital investment over the last 20 years has driven strong Total $180.0 Assets: >10X Total $3,000.0 financial performance, earnings growth and increased shareholder value, $3.3bn Asset Growth $160.0 while
Slide 6: Well-Positioned for Long-Term Success
Well-Positioned for Long-Term Success Entrepreneurial Strong Customer Significant Capital Proactive Regulatory & Innovative Demand Growth Investment Opportunities Approach Culture • Customer growth of § Strong capital investment § Regulatory agenda is very § Continued focus on 4.2% in Delmarva and g
Slide 7: Executing On Our Long-Term Growth Plan: Investment Capital
Executing On Our Long-Term Growth Plan: Investment Capital Growth in earnings to support dividend growth and increased shareholder value Prudently Proactively Continually deploy manage execute on investment regulatory business capital agenda transformation Foundation of operational excellence across
Slide 8: 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 5-Year Guidance Regulated CapEx – Identified Projects 5-Year Spend Segment Natural Gas LDC Organic Growth $625 million Regulated $600 - $645M Distrib
Slide 9: 2024 Capital Investment On Track to Drive Margin Growth
2024 Capital Investment On Track to Drive Margin Growth Q1 Capital Spend Progress 2024E Capital Expenditures $300 - $360M General Corporate CapEx: $4 - $6M 21% in Q1 Unregulated Energy CapEx: $31 - $36M • Propane Distribution: $13 - $15M • Energy Transmission: $5 - $6M • Other Unregulated: $13 - $15
Slide 10: Organic Growth Driving Florida Infrastructure Investment
Organic Growth Driving Florida Infrastructure Investment Adj. Gross Margin ($M) Regulatory Total # Project Name In-Service Status CapEx 2024E 2025E Q2 2023 1 Approved ~$11M $2.5 $2.4 Beachside Expansion 2 Approved Q3 2023 ~$4M $0.6 $0.6 St. Cloud / Twin Lakes Approved 2024 - 2025 ~$25M $2.0 $2.0 3 W
Slide 11: Organic Growth Driving Investment in Delmarva Projects
Organic Growth Driving Investment in Delmarva Projects Adj. Gross Margin ($M) Regulatory Total # Project Name In-Service Status CapEx 2024E 2025E Q4 2023 1 Approved ~$14M $2.3 $2.3 Southern Expansion North Ocean City 1 1 Approved Q2 2023 ~$6M -- $0.5 2 Connector Worcester Resiliency Under Review Q3
Slide 12: Active Regulatory Schedule Supporting Growth Projects & Customer Programs
Active Regulatory Schedule Supporting Growth Projects & Customer Programs Approved Under Review Three Delaware Energy Projects: $106M Projects: $126M+ Efficiency Programs 7 5 • Home Energy Counseling and Checkup (HEC), Home Newberry Expansion, CapEx: Worcester Resiliency CapEx: Performance with Ener
Slide 13: Significant Capital Investment from Approved Infrastructure Programs
Significant Capital Investment from Approved Infrastructure Programs Gas Electric Eastern Shore Florida City Gas Florida Public Utilities Capital Cost Surcharge SAFE Program GUARD Program Storm Protection 1 5-Year CapEx $50-100M 10-Year CapEx $255M 10-Year CapEx $205M 5-Year CapEx $50-75M ‘24E Gross
Slide 14: Drivers of Unregulated Business Growth
Drivers of Unregulated Business Growth Propane Distribution Marlin Gas Services Sustainable Investments • Strategic acquisitions and • Increased demand for CNG • Construction underway on first expansions within complementary services RNG facility at Full Circle Dairy markets and expansion of Planet
Slide 15: Sustainable Investments to Meet Demand for Energy Delivery
Sustainable Investments to Meet Demand for Energy Delivery Full Circle Dairy RNG Processing Facility • First full-scale RNG processing facility utilizing dairy cow waste as feedstock • Processing and delivering more than 100K Dts per year of RNG In • First injection of RNG is projected to occur in 1
Slide 16: Executing On Our Long-Term Growth Plan: Regulatory Strategy
Executing On Our Long-Term Growth Plan: Regulatory Strategy Growth in earnings to support dividend growth and increased shareholder value Prudently Proactively Continually deploy manage execute on investment regulatory business capital agenda transformation Foundation of operational excellence acros
Slide 17: Constructive Regulatory Environments for Rate Cases
Constructive Regulatory Environments for Rate Cases Complete In Progress Under Consideration Florida Public Florida Maryland LDCs: Chesapeake Utilities, Delaware LDCs Utilities City Gas Sandpiper Energy, & Elkton Gas Company • Submitted an “Intent • Rate case filed January 30, 2024 • Rates became •
Slide 18: Taking a Proactive Approach to Governmental Affairs
Taking a Proactive Approach to Governmental Affairs • Engage in all election cycles at all levels Understand Our • Monitor changes in state and federal legislation, political parties, and constituent sentiment Political Environments • Identify and cultivate connections with key decision makers at th
Slide 19: Executing On Our Long-Term Growth Plan: Business Transformation
Executing On Our Long-Term Growth Plan: Business Transformation Growth in earnings to support dividend growth and increased shareholder value Prudently Proactively Continually deploy manage execute on investment regulatory business capital agenda transformation Foundation of operational excellence a
Slide 20: FCG Integration Fully On-Track
FCG Integration Fully On-Track Accelerating Achieving Optimizing Investment Synergies Operations Opportunities • Reviewing operational • “Best of Both” approach to • Identifying capital projects efficiencies customer care, project to drive growth as one management and combined company • Consolidatin
Slide 21: Technology-Driven Business Transformation Drives Efficiency
Technology-Driven Business Transformation Drives Efficiency Our business is continuing to evolve as demand for our services grows. We are investing in technology to better serve our growing customer base. Our goal is to provide our employees with the tools and capabilities needed to deliver the expe
Slide 22: Working Together to Make Life Better for the Communities We Serve
Working Together to Make Life Better for the Communities We Serve Environmental Stewardship Donating Time & Resources Safety Town Supported the Food Bank of Delaware with Safety and Reliability Report published April 2024 a $50,000 donation and volunteer time Our Employee Resource Groups supported E
Slide 23: Executing On Our Long-Term Growth Plan: Shareholder Return
Executing On Our Long-Term Growth Plan: Shareholder Return Growth in earnings to support dividend growth and increased shareholder value Prudently Proactively Continually deploy manage execute on investment regulatory business capital agenda transformation Foundation of operational excellence across
Slide 24: Driving Increased Shareholder Value; Reaffirming Earnings Guidance
Driving Increased Shareholder Value; Reaffirming Earnings Guidance Earnings Per Share - Diluted 1 • 1Q 2024 Adjusted Earnings Per Share of $2.10 Earnings Growth $8.00 Driven by Capital • 2024 Adj. EPS Guidance of $5.33 to $5.45 +8.4 – 8.7% Investment $7.75 • 2025 EPS Guidance of $6.15 to $6.35 10-Ye
Slide 25: Three Decades of Dividend Growth Drive Shareholder Return
Three Decades of Dividend Growth Drive Shareholder Return Annualized Dividend per Share Quarterly Dividend History Ex-Dividend Amount per 64 Consecutive Years of Dividend Payments – Since 1960 Increase of Date Share 8.5% 21 Consecutive Years of Dividend Increases – Since 2004 2Q 2024 6/14/2024 $0.64
Slide 26: Why Chesapeake?
Why Chesapeake? Chesapeake’s unique combination of operational expertise, growth potential, and focus on long-term shareholder return connects our strong historical track record with the future success we’ll achieve Expertise Growth since 2003: Innovative & diligent Nimble, yet powerful, organizatio
Slide 27: Appendix
CH ESAPEAK E UT IL ITIES Appendix CO RP O RAT IO N 27
Slide 28: Q1 2024 Highlights: Continuing to Build Momentum
Q1 2024 Highlights: Continuing to Build Momentum Operational Accomplishments Strategic Capital Investments • Increasing margin contributions from continued transmission expansions • Reaffirmed 2024 capital • Regulated natural gas distribution customer growth of 2x national average investment guidanc
Slide 29: Q1 2024 Strong Financial Performance
Q1 2024 Strong Financial Performance Key Adjusted Gross Margin Drivers Adjusted Diluted 1 Earnings Per Share $2.10 +3% $25.4M $3.5M $2.8M Contribution from Pipeline Expansions Regulated FCG and other and Natural Gas Infrastructure acquisitions Organic Growth Programs and Recovery $2.04 Mechanisms $1
Slide 30: Increasing Gross Margin Driving Bottom-Line Income Growth
Increasing Gross Margin Driving Bottom-Line Income Growth Gross margin growth drove higher bottom-line net income: both approaching 30% growth 1 1 Adjusted Gross Margin Operating Income Adjusted Net Income +29% $46.8 +27% $164.5 $79.6 +45% $36.3 $129.5 $54.9 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q
Slide 31: Key Drivers of Performance – Three Months Ended March 31, 2024
Key Drivers of Performance – Three Months Ended March 31, 2024 Our core business performance, strong customer demand and recent acquisition of Florida City Gas drove increased earnings per share, only partially offset by financing costs related to the FCG acquisition. 1 Adjusted Diluted Earnings Per
Slide 32: Pathway to 2024 EPS Guidance
1 Pathway to 2024 EPS Guidance Our 2024 target is based on continued growth from our legacy businesses, 2 a full year of contribution from FCG, and additional opportunities we have identified 1 Adjusted Diluted Earnings Per Share Identified Additional Opportunities Range: $0.20 - $0.30 $5.33 - $5.45
Slide 33: Executing on the Identified 2024 Pathway
Executing on the Identified 2024 Pathway Our team has begun to execute on additional opportunities to propel earnings growth in 2024 • Combining natural gas • Expansion of SAFE Regulatory leadership Program strategies & financing • Optimizing support • Alignment on Pipeline opportunities services In
Slide 34: Major Projects and Initiatives Driving Adj. Gross Margin Growth
Major Projects and Initiatives Driving Adj. Gross Margin Growth Our projects and initiatives underway will continue to drive adjusted gross margin growth while new projects and regulatory initiatives will increase earnings across our guidance period Three Months ended Year Ended Estimate for Project
Slide 35: Capital Structure Overview – Strong Balance Sheet to Support Growth
Capital Structure Overview – Strong Balance Sheet to Support Growth (in thousands) 3/31/2024 12/31/2023 Recent Highlights Stockholders' equity $ 1,280,903 $ 1,246,104 Long-term debt, net of current maturities 1,185,166 1,187,075 • March 2023: $80M New Long-Term Debt Total permanent capitalization $
Slide 36: Regulated Energy Segment Generates Strong Margin and Operating Income Growth
Regulated Energy Segment Generates Strong Margin and Operating Income Growth Strong gross margin, coupled with expense management, drove $20M in higher operating income First Quarter Change (in thousands) 2024 2023 $ % 1 Adjusted Gross Margin $ 118,508 $ 86, 982 $ 31,526 36.2% Depreciation, amort. &
Slide 37: Unregulated Energy Segment Drives 24%+ Operating Income Growth
Unregulated Energy Segment Drives 24%+ Operating Income Growth Higher propane margins and fees as well as increased margins for the other unregulated energy businesses drove increased earnings for the quarter. First Quarter Change (in thousands) 2024 2023 $ % 1 Adjusted Gross Margin $ 46, 049 $ 42,
Slide 38: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Consolidated Results Regulated Energy Segment First Quarter Change First Quarter Change (in thousands) 2024 2023 $ % (in thousands) 2024 2023 $ % Operating Revenues $ 245, 744 $ 218,129 $ 27, 615 12.7% Operating Revenues $ 168,426 $ 142, 270 $ 26,156 18.4% Cost of Sa
Slide 39: Weather Impacted Customer Consumption in the First Quarter
Weather Impacted Customer Consumption in the First Quarter Three Months Ended Variance March 31, Year-over-Year Delmarva 2024 2023 # % Moderately Colder Weather Across Actual HDD 1,962 1,774 188 +11% All Service Areas 10-yr Avg HDD (“Normal”) 2,221 2,285 (64) # (259) (511) Variance from Normal % -12
Slide 40: 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