Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q2 2019 Earnings Presentation
22 slides from Chesapeake Utilities's earnings presentation, Aug 9, 2019
Slide 1: A Strong Foundation for Growth: Second Quarter 2019 Earnings Conference Call
A STRONG foundation FOR GROWTH Second Quarter 2019 Earnings Conference Call August 9, 2019 »s SHESAPEAKE
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: Second Quarter 2019 Earnings Summary
Second Quarter 2019 Earnings Summary 8.7 percent growth over prior year (adjusted1) earnings per share • Second quarter 2019 EPS of $0.50 per share (GAAP and Adjusted1) • Natural gas transmission and distribution expansion and growth were the primary drivers of EPS growth • Decreased customer consum
Slide 4: Chesapeake Utilities – First Half 2019 Highlights
Chesapeake Utilities – First Half 2019 Highlights Superior Return Driven by Consistent Above Average Earnings and Dividend Growth • Greater than 15 percent total shareholder return for 1, 3, 5 & 10 years ended June 30, 2019 • 2019 first half Adjusted EPS of $2.19 represents 17.7 percent growth over
Slide 5: First Half 2019 Earnings Summary
First Half 2019 Earnings Summary 17.7 percent growth over prior year (adjusted1) earnings per share • Year-to-date 2019 EPS of $2.25 per share and $2.19 per share (GAAP and Adjusted1,respectively) • Gross margin increased $1.02 per share • The largest EPS drivers were: • Natural gas transmission and
Slide 6: Chesapeake Utilities Positioned for Growth and Total Return
Chesapeake Utilities Positioned for Growth and Total Return $5.00 • Outlook for earnings growth within Earnings per Share $4.50 $4.55 the range of previous guidance (GAAP – Unless Noted) remains strong $4.00 $4.20 Compound Annual EPS Growth • Commitment to achieve the target $3.50 (Adjusted) 2017-20
Slide 7: Reconciliation of Second Quarter Results Key Variances 2019 versus 2018
Reconciliation of Second Quarter Results Key Variances 2019 versus 2018 Increased gross margin of $5.1 million driven by: • Eastern Shore and Peninsula Pipeline expansion projects • Marlin and Ohl acquisitions • Organic growth in natural gas distribution business • Regulatory initiatives in Florida
Slide 8: Key Drivers in Interest Expense
Key Drivers in Interest Expense Six Months Ended June 30, 2019 and 2018 Interest expense increased by $3.8 million for the six months ended June 2019 driven by: Capital Investment - Interest Impact Six Months Ended • $1.8 million in higher interest on short term borrowings • $0.7 million increase du
Slide 9: Capital Capacity to Support Future Growth
Capital Capacity to Support Future Growth Total Capitalization has More Than Doubled in Less Than Five Years (in Stockholders' Equity Long-Term Debt Short-Term Debt * thousands) $1,197,134 $1,140,852 $944,079 $376,826 $1,000,000 $306,393 $805,010 $260,390 $689,692 Target Equity to $556,148 $221,970
Slide 10: Dividend Increased 9.5% in May 2019
Dividend Increased 9.5% in May 2019 Superior Dividend Growth with Retention to Fund Future Earnings and Dividend Growth Annualized Dividends Per Share 100% $1.80 Dividend Payout 90% $1.62 80%76% 75% $1.60 67% 66% 68% $1.48 70% 64% 65% 65% 59% 60% 55% $1.40 48% 48% 49% $1.30 45% 47% 50% 44% 43% 45% 4
Slide 11: Continuing to Build for the Future: 2019 Forecasted Capital Expenditures
Continuing to Build for the Future 2019 Forecasted Capital Expenditures Our team continues to pursue new growth projects that could further increase our 2019 capital projection. 77% Regulated Energy We will selectively, and with our customary discipline, seek to develop projects 18% Unregulated Ener
Slide 12: Capital Projects – High Return / High Investment
Capital Projects – High Return / High Investment Peer ROE vs. Capital Expenditures (April 2016 – March 2019) 20% High Returns/Low Investment High Returns/High Investment Chesapeake Utilities 18% Three Year Performance 16% As of 3/31/19 14% CPK Median 75th CPK Cap Ex/ 12% Total Cap 25.7% 12.0% 14.0%
Slide 13: Major Projects and Initiatives Increasing Shareholder Value
Major Projects and Initiatives Increasing Shareholder Value by Continuously Seeking and Developing Projects and Initiatives Gross Margin for the Period Three Months Six Months Ended Ended Year Ended Estimated for Project/Initiative June 30, June 30, December 31, Fiscal in thousands 2019 2018 2019 20
Slide 14: Recently Completed and Underway Natural Gas Expansion Projects
Recently Completed and Underway Natural Gas Expansion Projects Eastern Shore and Peninsula Pipeline Transmission Expansion Projects Completion Date Investment Amount 2020 Annual Margin (000’s) (000’s) 2017 Eastern Shore System Expansion (1) Q3 - 2019 $132,800 $15,779 Northwest Florida Expansion Q2 -
Slide 15: 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 16: West Palm Beach Expansion Enhances Reliability and Customer Growth
West Palm Beach Expansion Enhances Reliability and Provides Additional Customer Growth • $4.6 MM annual margin • $0.7 million in 2019 • $30 million total capital invested • Approved by the Florida PSC on August 7, 2019 • Mid-2019 initial service; fully in- service in phases through 2020 • Four Penin
Slide 17: Callahan Pipeline, Nassau County, Florida
Callahan Pipeline Nassau County, Florida 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 18: Marlin Gas Services Exceeding Initial Margin Projections
Marlin Gas Services Exceeding Initial Margin Projections Year-to-Date Financial Performance • Marlin generated $3.4 million of gross margin and $1.4 Marlin Gas Services Capabilities million in operating income during the first half of 2019. • Operates a large fleet of 36 tube trailers dedicated to t
Slide 19: Combination of Strategic Focus, Engaged Employees and Innovation
Combination of Strategic Focus, Engaged Employees and Innovation Corporate Governance is the Employee-Centric company focused Connecting with our Customers and foundation of our processes and on sustaining our aspiring and Communities is in our DNA decision making caring culture. • Honored as “2018
Slide 20: ESG at Chesapeake Utilities
ESG at Chesapeake Utilities • Chesapeake Utilities has a long-standing history of ESG practices and our internal working group (Governance, HR, Finance, Operations, and Technology) has been reviewing industry practices and communicating with stakeholders to ensure we provide the most relevant inform
Slide 21: Investment Proposition – Committed to Superior Performance
Chesapeake Utilities Corporation Investment Proposition – Committed to Superior Performance . Providing solutions for more efficient energy use and conducting business with environmental Strong responsibility to yield carbon footprint benefits for our customers and communities Foundation . $1.7 bill
Slide 22: Any Questions?
Any Questions? Jeff Householder Beth Cooper Jim Moriarty President & CEO Executive Vice President, Executive Vice President, jhouseholder@chpk.com CFO and Asst. Secretary General Counsel and bcooper@chpk.com Corporate Secretary jmoriarty@chpk.com Thank You!