Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q3 2019 Earnings Presentation
24 slides from Chesapeake Utilities's earnings presentation, Nov 12, 2019
Slide 1: Third Quarter 2019 Earnings Conference Call
Third Quarter 2019 Earnings Conference Call November 8, 2019 Exhibit 99.1
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-looking
Slide 3: Continued Strong Performance
Continued Strong Performance Success in 2019 and Exciting Future Outlook…. Operations Significant gross margin growth for the quarter and year-to-date. Margins are driving strong operating income and EPS growth Financial New projects Several new projects close to finalization Strategic Customer dema
Slide 4: Strategic Exit of Natural Gas Marketing Business (PESCO)
Strategic Exit of Natural Gas Marketing Business (PESCO) Quick and Meaningful Execution Strategic Review The business was not aligned with our long term growth strategy; exceeded our risk tolerance and would have required significant additional investment to ensure profitability. Florida retail oper
Slide 5: Financial Summary
Financial Summary Income from Continuing and Discontinuing Operations (PESCO Impact) The increase in interest charges reflects our growth in capital investments in 2018 and 2019. The average interest rate as of September 30th was 3.58% on total debt. Growth Increases (%)
Slide 6: Major Projects and Initiatives
Major Projects and Initiatives Increasing Shareholder Value by Continuously Seeking and Developing Projects and Initiatives $10.5 MM increase from new pipeline projects - $12.5 MM increase expected for full year Recent acquisitions added $5.0MM ($6.6MM projected for full year) $2.8 MM from regulator
Slide 7: Natural Gas Distribution Margin Growth
Natural Gas Distribution Margin Growth ($000’s) 25% of CPK’s YTD Margin Growth 7 3rd Quarter Year-to-date Nat. gas distribution customer growth (see below) $ 791$3,446 Sandpiper margin (natural gas conversions) 224 837 Florida GRIP (144) 391 Total $871 $4,674 Natural gas distribution customer growth
Slide 8: Unregulated Energy Margin Drivers
Unregulated Energy Margin Drivers ($000’s) Marlin Generated 23% of CPK’s YTD Margin Growth 8 3rd Quarter Year-to-date Marlin gas services margin growth $993$4,353 Increased retail propane margins per gallon 470 1,689 Ohl acquisition 95 683 Aspire Energy rate increases -- 858 Aspire Energy customer g
Slide 9: Successful Regulatory Initiatives
Successful Regulatory Initiatives 9 Florida PSC approved retention of a portion of TCJA tax savings for the Company’s Florida natural gas operations: $1.3 million gain on reversal of 2018 tax reserves $1.9 million incremental benefit annually beginning in 2019 ($1.1 million in first nine months of 2
Slide 10: Reconciliation of Third Quarter Results
Reconciliation of Third Quarter Results Key Variances for the three months ended September 30, 2019 vs. 2018
Slide 11: Reconciliation of Year-to-Date Results
Reconciliation of Year-to-Date Results Key Variances for the nine months ended September 30, 2019 vs. 2018
Slide 12: Long-term Earnings Track Record
Long-term Earnings Track Record Positioned for Growth and Total Return 12 $4.20 $4.55 ¹ 2017 GAAP $3.55; Adjusted $2.89; ² 2018 GAAP $3.45; Adjusted $3.31 Outlook for earnings growth within the range of previous guidance remains strong Commitment to achieve the target range is demonstrated by our lo
Slide 13: Capital Projects – High Return / High Investment
Capital Projects – High Return / High Investment Peer ROE vs. Capital Expenditures (July 2016 – June 2019) 13 Chesapeake Utilities Three Year Performance vs. Peer Group As of 6/30/19 CPK Med 75th Cap EX 25.1% 11.8% 14.3% EPS Growth 10.1% 5.8% 8.5% ROE 11.6% 9.4% 10.9% Dividend Growth 9.9% 6.1% 7.2%
Slide 14: Continuing to Build for the Future: 2019 Forecasted Capital Expenditures
Continuing to Build for the Future 2019 Forecasted Capital Expenditures - $170 million to $185 million 14 Our Team continues to pursue new growth projects. The Company is providing a range of capital expenditures of $170 MM to $185 MM to reflect the timing of the approval of several projects. We wil
Slide 15: Continuing to Build for the Future: Five-Year Cap Ex Plan
Continuing to Build for the Future Organic Growth Opportunities, Supplemented with Targeted Acquisitions Five-Year Cap Ex Plan In Millions Historical Cap Ex & Acquisitions In Millions Our 5-year CapEx plan includes $750 million to $1 billion of capital expenditures, predominantly into our utility &
Slide 16: Capital Capacity to Support Future Growth
Capital Capacity to Support Future Growth Total Capitalization has More Than Doubled in Less Than Five Years 16 Equity/Permanent Capitalization 65.5% 70.6% 76.5% 71.1% 62.1% 59.2% Equity/Total Capitalization 54.0% 51.9% 55.4% 51.5% 45.4% 44.6% $556,148 $689,692 $805,010 $944,079 $1,220,865 Target Eq
Slide 17: Natural Gas Expansion Projects
Natural Gas Expansion Projects Eastern Shore and Florida Transmission 24 9 Expansion Projects Completion Date Investment Amount (000’s) 2020 Annual Margin (000’s) 2017 Eastern Shore System Expansion (1) Q3 - 2019 $132,800 $15,799 Northwest Florida Expansion Q2 - 2018 $ 44,300 $ 6,500 Western Palm Be
Slide 18: Del-Mar Energy Pathway Project
Del-Mar Energy Pathway Project Under Development Strategic Growth Initiative 18 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
Slide 19: West Palm Beach Expansion
West Palm Beach Expansion Enhances Reliability and Provides Additional Customer Growth 19 $5.2MM annual margin $2.3MM in 2019 $30MM total capital invested Mid-2019 initial service; fully in-service Q1 - 2020 Four PPC projects to serve FPU’s natural gas distribution systems expansions in Palm Beach C
Slide 20: Callahan Pipeline
Callahan Pipeline Nassau County, Florida 20 Peninsula Pipeline announced in May 2019 plans to construct 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 Project Cost: $
Slide 21: Guernsey Power Station
Guernsey Power Station New Aspire Energy Expansion in Ohio 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 rights to provi
Slide 22: Commitment to Sustainability and ESG
Commitment to Sustainability and ESG Corporate Governance is the foundation of our processes and decision making - Honored as “2018 Best North American Utility for Corporate Governance”. Connecting with our Customers and Communities - Chesapeake Utilities recognizes that customers expect safe, effic
Slide 23: Committed to Superior Performance
Chesapeake Utilities Corporation Committed to Superior Performance We seek to identify and develop opportunities to drive our future earnings growth and increase shareholder value. Executing on Our Strategy: Seek new development projects to serve new customers, provide new services and expand into n
Slide 24: Thank You!
Thank You! Jeff Householder President & CEO jhouseholder@chpk.com Beth Cooper Executive Vice President, CFO and Asst. Secretary bcooper@chpk.com Any Questions? Jim Moriarty Executive Vice President, General Counsel and Corporate Secretary jmoriarty@chpk.com