Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — FY2018 Earnings Presentation
30 slides from Chesapeake Utilities's earnings presentation, Mar 1, 2019
Slide 1: Fourth Quarter and Fiscal Year 2018 Earnings Conference Call
Fourth Quarter and Fiscal Year 2018 Earnings Conference Call Friday March 1, 2019 Dover, DE energized … 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: Performance Overview
Performance Overview yz CHESAPEAKE
Slide 4: Continuing to Deliver Top Performance
Chesapeake Utilities Corporation Continuing to Deliver Top Performance Engaged employees continually identify new opportunities for sustainable growth. Invested over $600 million in capital expenditures over the past three years; represents top quartile performance in regards to capital expenditures
Slide 5: 2018 Noteworthy Performance
Chesapeake Utilities Corporation 2018 Noteworthy Performance Continue to generate superior growth in earnings per share Net income totaled $56.6 million or $3.45 per share in 2018 compared to $3.55 reported earnings for 2017, which included a one time tax benefit from TCJA of $0.87 per share 19.4% E
Slide 6: Continuing to Build for the Future
Continuing to Build for the Future Capital Expenditures We have invested $1.37 billion in capital expenditures from 2009 to 2018 which has propelled our growth. Capital expenditures for 2019 currently budgeted at $168MM. *Excluding Hurricane Michael restoration cost which will be allocated between c
Slide 7: Superior Earnings per Share Growth
Superior Earnings per Share Growth Ten Years of Strong Growth Growth in 2018 and over the past 10 years reflects successful execution of our disciplined growth strategy, and achieving top quartile performance in terms of capital invested (as a percent of capitalization), by: Cultivating project deve
Slide 8: Delivering Consistent and Higher Returns
Delivering Consistent and Higher Returns Return on Equity We have delivered top quartile ROEs over the long-term. 8 *Peer Median for 2018 represents the peer median for the trailing 12 months ended 9/30/18 Historical ROE 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Regulated Energy 11.40%
Slide 9: Peer ROE vs. Capital Expenditures
Chesapeake CPK Performance Peer Group Electric & Combination Groups Median 9.14% Median 12.63% Capital Projects - High Return / High Investment Peer ROE vs. Capital Expenditures (October 2015 – September 2018) 9
Slide 10: Financial Review
Financial Review > CHESAPEAKE
Slide 11: Consolidated Financial Results
Consolidated Financial Results Fourth Quarter Performance 11 19% Growth 2018 gross margin increased by $36.6 million or 13% before TCJA - the largest increase in our history Adjusting for TCJA, gross margin increased by $27.1 million, or 9.7% Margin, operating income and net income were up in 2018 f
Slide 12: Reconciliation of GAAP to Adjusted Earnings
Reconciliation of GAAP to Adjusted Earnings 12 $3.31 Adjusted (Non-GAAP) earnings in 2018 represents 14.5% growth over 2017adjusted earnings 14.5% Growth 18.3% Growth $1.10 Adjusted (Non-GAAP) earnings in 2018 fourth quarter represents 18.3% over 2017 fourth quarter
Slide 13: Reconciliation of 2018 Results
Reconciliation of 2018 Results Key variances for the year ended December 31, 2018 vs. 2017 included: 13 * 2018 EPS of $3.45 is an increase of $0.56 per share or 19% compared to $2.89 adjusted 2017 EPS * Increase in Margin: Eastern Shore and Peninsula Pipeline expansion projects Organic growth in nat
Slide 14: Natural Gas Distribution Margin Growth
Natural Gas Distribution Margin Growth For the Periods Ended December 31st 14 Natural gas distribution operations generated $5.9MM and $1.6MM of additional margin YTD and QTD, respectively. For 2018, total customer growth generated $3.9MM YTD and $1.1MM QTD in additional margin. 3.3 percent resident
Slide 15: Strong Balance Sheet to Support Future Growth
Strong Balance Sheet to Support Future Growth Total Capitalization has More Than Doubled in Five Years Equity/Permanent Capitalization 70.3% 65.5% 70.6% 76.5% 71.1% 62.1% Equity/Total Capitalization 54.3% 54.0% 51.9% 55.4% 51.5% 45.4% * Short-Term Debt includes Current Portion of Long-Term Debt $1,1
Slide 16: Dividend Growth Continues
Dividend Growth Continues Above Average Dividend Growth and Dividend Payout Ratio 16 Chesapeake’s five-year annualized dividend growth rate is 7.6 percent – in line with our five-year CAGR in earnings through 2018 of 8.8 percent. Our goal remains to provide above average growth in dividends, support
Slide 17: Regulatory Liabilities related to Excess ADIT
Regulatory Liabilities related to Excess ADIT Approved customer rate reductions effective March 1, 2019 Customer Rate reduction related to 35% to 21% Rate Change Refunded and Rates Adjusted April 2018 Refunded and Rates adjusted May 1, 2018 Customer Rates to be adjusted March 1, 2019 FERC will addre
Slide 18: Hurricane Michael Update
Hurricane Michael Update Florida Public Utilities Impact and Restoration Inflicted heavy damage throughout northwest Florida and adversely impacted our electric distribution system and knocked out power to 100% of our 13,000 electric customers in Northwest Florida. Restored power to all customers wh
Slide 19: Chesapeake's Performance Metrics (Relative to Peers)
19 Chesapeake’s Performance Metrics (Relative to Peers) Financial Discipline of Capital Investment to Increase ROE, EPS and Shareholder Return For periods ending 9/30/18 unless otherwise noted due to availability of peer data. 22 of 24 Top Quartile Performance of Larger Peer Group including Electric
Slide 20: Major Projects and Initiatives Expected to Produce $40 Million in Incremental Margin
Major Projects and Initiatives Expected to Produce $40 Million in Incremental Margin (2018 through 2019) 20 $20,951 $19,267 Key project table does not include Chesapeake’s regulatory initiatives related to the Florida TCJA tax recovery, and new projects under development which should be forthcoming
Slide 21: Looking Forward
Looking Forward > CHESAPEAKE
Slide 22: Natural Gas Transmission Growth
Natural Gas Transmission Growth Current Eastern Shore Natural Gas Large Projects 22 Combined Projects Estimated Capital Investment of $166MM Years: 2017-2021 Combined Projects Incremental Margin: up to $20.9MM 2017 Expansion Project ~23 miles of pipeline looping in PA, MD and DE Total of 61,162 dt/d
Slide 23: Florida Natural Gas Transmission and Distribution
Florida Natural Gas Transmission and Distribution Three Significant Expansions PPC - 12” transmission pipeline to expand distribution service to Escambia County, Florida Anchor loads - City of Pensacola and Ascend Performance Materials Capacity-115,500 dts/day; Contracted-105,500 dts/day Opportunity
Slide 24: Marlin Gas Services Capabilities
Marlin Gas Services Capabilities One of the largest fleets of tube trailers dedicated to transportation of compressed natural gas (“CNG”) Nationwide service with primary focus on Gulf Coast Over 7 billion cubic feet of natural gas transported Provides temporary and emergency natural gas services Mar
Slide 25: Sharp Energy Growth
Sharp Energy Growth Initiatives beyond Organic Growth Maintain and develop builder relationships via dedicated staff to ensure seamless implementation Autogas Strategic partners have been key Autogas technical services team is very capable Created a multi-fleet fueling station network to support ref
Slide 26: Strong Culture for Sustainable Growth
Strong Culture for Sustainable Growth Energized Employees Financial Discipline Maximize Growth Opportunities Financial Results Unified Brand Culture Customer and Community Focused Top Workplace, Community Service Employee Safety Strategic Thinking Analytical Decision-making Return on Investment Grow
Slide 27: Capital Spending Forecast
Capital Spending Forecast Five year projection of up to $1B We now expect to invest $750MM-$1B over 5 years New projection has same $1B top range, however due to recent investments being developed we are raising the low range from $600MM to $750MM $600 MM $1 Billion
Slide 28: Earnings Outlook: Expect Growth Well Above Industry
*Based on 2017 Adjusted Earnings per Share Key Assumptions: Capital Expenditures total target approximately $750MM-$1B Normal weather conditions Maintain target equity to total capitalization ratio of 50% to 60% Dividend Payout Ratio approximates 45% Dividend per share growth supported by earnings p
Slide 29: Total Shareholder Return Comparison
Total Shareholder Return (TSR) Comparison to Broader Market – S&P 500 Companies and Peer Group Chesapeake is driven to increase shareholder value…. Our compound annual return has exceeded 15% for all periods shown through January 31, 2019. Chesapeake has approximated or exceeded the peer group 75th
Slide 30: Thank You
Thank You Jeff Householder President & CEO jhouseholder@chpk.com 302.734.6799 Beth Cooper Executive Vice President, CFO and Asst. Secretary bcooper@chpk.com 302.734.6022