Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Non-Deal Roadshow (January 2019)
40 slides from Chesapeake Utilities's roadshow presentation, Jan 14, 2019
Slide 1: Northeast Road Show January 14 and 15, 2019
Exhibit 99.1 energized … Northeast Road Show January 14 and 15, 2019 New York, NY and Boston, MA
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: Overview
Overview yxy
Slide 4: Looking Forward
Chesapeake Utilities Corporation Looking Forward - Jeff Householder, President & CEO • Chesapeake is well positioned and we see more opportunities than ever • We will build on the strong foundation our team has created, by: • Continuing to focus on identifying and executing on growth opportunities •
Slide 5: 2018 Noteworthy Events
Chesapeake Utilities Corporation 2018 Noteworthy Events • Continue to generate superior growth in earnings per share • Affirm previous guidance of 17% plus growth in 2018 over adjusted 2017 EPS • 5-year compound annual growth in earnings per share would be 8.4% • Provided superior dividend growth wi
Slide 6: Superior Earnings per Share Growth
Superior Earnings per Share Growth Eleven Years of Consistent Growth Diluted Earnings Per Share $4.00 Long-term EPS Growth Rates Through 2018 Estimated $3.38 $3.50 EPS of $3.38 $2.86 $2.89 $3.00 Reported $2.72 Earnings $2.47 $2.50 5-year EPS CAGR 8.4% $2.26 10-year EPS CAGR 9.9% $1.99 $1.91 $1.82 $2
Slide 7: Delivering Consistent and Higher Returns
Delivering Consistent and Higher Returns Return on Equity Historical ROE 2017 - 2017 - Before After Tax 2008 2009 2010 2011 2012 2013 2014 2015 2016 Tax 2018* Reform & Reform & MTM MTM Regulated Energy 11.40% 10.17% 11.16% 10.73% 10.47% 10.48% 9.09% 10.62% 10.96% 9.66% 9.98% 10.76% Unregulated Energ
Slide 8: Above Average Dividend Growth Continues
Above Average Dividend Growth Continues Dividend Growth Driven by Earnings Growth Annualized Dividend and Payout Ratio • 5-year annualized dividend growth rate is $1.60 45% 44% 50% 44% 43% 44%* $1.48 7.6 percent – in line $1.40 42% 45% $1.30 with our 5-year CAGR $1.22 40% $1.15 in earnings through $
Slide 9: Relentlessly Executing Our Strategy with Financial Discipline
Chesapeake Utilities Corporation Relentlessly Executing Our Strategy with Financial Discipline • Seek new development projects to serve new customers, provide new services and expand into new service areas. • Invest in pipeline systems that provide natural gas service to downstream customers such as
Slide 10: Cultivating Profitable Growth
Cultivating Profitable Growth
Slide 11: Delmarva Natural Gas Distribution Growth and Expansion
Natural Gas Transmission and Distribution Delmarva Natural Gas Distribution Growth and Expansion Past . Organic growth focused on Kent/New Castle Counties, DE Present . Growth into eastern Sussex County, DE and Cecil County, MD . Conversion of existing propane customers in Worcester County, MD Futur
Slide 12: Natural Gas Transmission Growth
Natural Gas Transmission Growth Current Eastern Shore Natural Gas Large Projects Piped natural gas would be available in Somerset County for the first time in history 2017 System Expansion Project Summary Del-Mar Energy Pathway Project Summary $117MM Est. Capital Investment $37.1MM Est. Capital Inve
Slide 13: Converting Sandpiper Customers from Propane to Natural Gas
Natural Gas Distribution Growth Converting Sandpiper Customers from Propane to Natural Gas • Approximately 6,800 customers have been converted (Berlin, West Ocean City, Ocean Pines, and Ocean City). Ocean City • A bay crossing from West Ocean City to Ocean City completed in 2017 • Conversions in Oce
Slide 14: Florida Growth and Expansion
Florida Growth and Expansion Looking Back and Looking Forward 2012 2019 Past Present Future • Growth focused on existing service territory for • Pipeline project to serve customers outside of the • Additional pipeline opportunities to serve high Natural Gas and Propane existing distribution area gro
Slide 15: Gas Reliability Infrastructure Program (GRIP)
Gas Reliability Infrastructure Program (GRIP) Investment Spending and Timeline Total Cumulative Investment $140 $126 $114 $120 Miles of Mains $103 250 $100 200 57 $76 150 $80 22 100 141 $60 128 $44 50 $’s in in Millions $’s $40 - $20 FPUC CFG $20 $3 Replaced Remaining $- 2012 2013 2014 2015 2016 201
Slide 16: Florida Natural Gas Transmission and Distribution Three Significant Expansions
Florida Natural Gas Transmission and Distribution Three Significant Expansions Northwest FL Expansion New Smyrna Beach Project Western Palm Beach County Expansion • $6.5MM annual margin • $1.4MM annual margin • $5.4MM annual margin • $44.3MM total capital invested • $9MM total capital invested • $1.
Slide 17: Marlin CNG Services Acquisition
Unregulated Energy Growth Marlin CNG Services Acquisition Transaction Highlights • Expect purchase to be accretive in 2019 • $4.3 million in margin expected in 2019 • Significant growth potential from existing equipment and investment in fleet expansion will accelerate future growth Marlin CNG Capab
Slide 18: Aspire Energy – Growth Initiatives
Unregulated Energy Growth Aspire Energy – Growth Initiatives Consumers Gas Cooperative . Focus on agricultural sector primarily in Western Ohio which is home to the largest corn production in the state. Areas also have large poultry facilities with year-round usage. . Pursue commercial loads and oth
Slide 19: Sharp Energy Growth Story and Geographic Focus
Sharp Energy Growth Story and Geographic Focus 2011) – (2001 (2001 Historic Service Territories HistoricServiceTerritories 2001 2006 2011 . Sharp continues to grow organically within existing (2018) territories as well as expand geographically, with a focus on markets on the western shore of MD (Ann
Slide 20: Sharp Energy Growth Initiatives beyond Organic Growth
Sharp Energy Growth Initiatives beyond Organic Growth Community Gas Systems …And Acquisitions . Timely execution and communication have been our core . Most recent acquisition….acquired the propane operating attributes assets from R.F. Ohl Fuel Oil, Inc. a family run oil, propane . Maintain and deve
Slide 21: Major Projects and Initiatives Expected to Produce $37.9 Million in Incremental Margin
Major Projects and Initiatives Expected to Produce $37.9 Million in Incremental Margin (2017 vs. 2019) Growth Projects Gross Margin for the Period (in thousands) Fiscal 2019 Fiscal 2018 Fiscal 2017 Estimate Estimate Florida GRIP $ 13,454 $ 14,731 $ 16,276 Eastern Shore Rate Case (1) 3,693 9,800 9,80
Slide 22: Financial Review
Financial Review yxy
Slide 23: Year to Date 2018 Highlights
Year to Date 2018 Highlights Earnings for the First Nine Months of 2018 up 21% over 2017 Key Drivers of Growth Year-to-Date: • Regulated Energy Net Income Up $7.5MM, or approximately 29% year-to-date • Eastern Shore Rate Case and 2017 System Expansion Project • Northwest Pipeline Project and other P
Slide 24: Status of Tax Rate Reserves for Refunds to Rate payers
Status of Tax Rate Reserves for Refunds to Rate payers Customer Rate reduction Regulatory Liabilities related to 35% to 21% related to Excess ADIT Rate Change FERC $33.3M, FERC will address Refunded $902K, (ESNG) in next rate case filing. Rates Adjusted April 2018 Delaware $13.2M, DPSC is reviewing
Slide 25: 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 13,000 customers. • More than 1,200 employees, contractors and volunteers worked to rebuild
Slide 26: Continuing to Build for the Future Capital Expenditures
Continuing to Build for the Future Capital Expenditures Percentages Shown - CapEx/Capitalization Cumulative Expenditures and Acquisitions of $1 Billion (2013 through 2018 Forecast) $260,000 25% Capital Expenditures have averaged 25% $240,000 $234,898 of Total Capitalization over six years. $18,500 $
Slide 27: Capital Discipline and Efficiency
Capital Discipline and Efficiency Peer ROE vs. Capital Expenditures (October 2015 – September 2018) 20% High Returns/Low Investment High Returns/High Investment 18% 16% 14% CPK 12% 10% 9.14% 8% Median Median 6% Weighted Average ROE 4% Cap Ex ROE 2% CPK 22.73% 11.33% Median 12.63% 9.14% th 0% 75 Perc
Slide 28: Strong Balance Sheet to Support Future Growth
Strong Balance Sheet to Support Future Growth Total Capitalization has Nearly Doubled in Five Years Target Equity to Total (in Stockholders' Equity Long-Term Debt Short-Term Debt * thousands) Capitalization Ratio of $1,027,801 $944,079 50% - 60% $1,000,000 $805,010 $277,906 November 2018 $50 MM LTD
Slide 29: Looking Forward
Looking Forward yxy
Slide 30: Capital Spending Forecast
Capital Spending Forecast Five year projection of up to $1B $1,200 We previously indicated We now expect to invest $600MM-$1B of capital $750MM-$1B over 5 investments over 5 years years $1,000 $800 $600 In Millions In $1,000 $1,000 $923 $400 $200 $0 Historical Capital (2012-2017) Projected Capital (
Slide 31: Earnings Outlook: Expect Growth Well Above Industry
Chesapeake Utilities Corporation Earnings Outlook: Expect Growth Well Above Industry $5.00 Key Assumptions: $4.15-$4.55 $4.50 • Capital Expenditures total $4.00 target approximately $750MM-$1B $3.50 $2.89* • Normal weather conditions $3.00 $2.50 • Maintain target equity to total capitalization ratio
Slide 32: Total Shareholder Return (TSR) Comparison
Total Shareholder Return (TSR) Comparison to Broader Market – S&P 500 Companies and Peer Group Chesapeake’s compound annual return has exceeded 14% for the past 3, 5, 10 and 20 years (through December 31, 2018) TSR - CPK Percentiles Amongst All S&P 500 TSR - Annualized CPK Shareholder Returns compan
Slide 33: Investment Proposition
Chesapeake Utilities Corporation Investment Proposition . $1.4 billion in assets (also market capitalization): 84% regulated Strong and 16% in unregulated complementary businesses Foundation . Strong balance sheet and high retention rate for reinvestment . CAGR in EPS of 8.4% (5 years) and 9.9% (10
Slide 34: Committed to Superior Performance
Chesapeake Utilities Corporation Committed to Superior Performance Chesapeake is a $1.4B market capitalization energy delivery company committed to: • Providing superior care and service to customers • Generating superior earnings and dividend growth • Finding, cultivating and developing excellent o
Slide 35: Thank You
Jeff Householder Beth Cooper President & CEO Senior Vice President & CFO jhouseholder@chpk.com bcooper@chpk.com 302.734.6799 302.734.6022 Thank You
Slide 36: Appendices
Appendices yxy
Slide 37: Northwest FL Expansion
Peninsula Pipeline and Central Florida Gas Northwest FL Expansion • $6.5MM annual margin • $44.3MM total capital invested • In-service: May 2018 • PPC - 12” transmission pipeline to expand distribution service to Escambia County, Florida • Anchor loads: - City of Pensacola - Ascend Performance Mater
Slide 38: New Smyrna Beach Pipeline Expansion
Peninsula Pipeline New Smyrna Beach Pipeline Expansion • $1.4MM annual margin • $9 MM total capital invested • Partially in service; fully in-service during the 1st quarter of 2019 • PPC 14-mile transmission pipeline project serves FPU. • Increased pressure and volume for FPU growing distribution sy
Slide 39: Western Palm Beach County Pipeline Expansion
Peninsula Pipeline Western Palm Beach County Pipeline Expansion • $5.4MM annual margin; • $1.2MM margin in 2019 • $30MM total capital invested • Mid-2019 in service. • Four PPC projects to serve FPU’s natural gas distribution systems expansions in Palm Beach County. • Resolves a pipeline capacity co
Slide 40: Sharp Energy – Ohl Propane Acquisition Folds In Nicely
Unregulated Energy Growth Sharp Energy – Ohl Propane Acquisition Folds In Nicely 40
Chesapeake Utilities — Non-Deal Roadshow (January 2019) on 6ix