Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Non-Deal Roadshow (December 2019)
42 slides from Chesapeake Utilities's roadshow presentation, Dec 17, 2019
Slide 1: Midwest Road Show
Midwest Road Show Sponsored by Janney Montgomery Scott Chicago, Milwaukee/Madison and Kansas City December 17-18, 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: Investor Overview
Investor Overview Soro APEAKE
Slide 4: Business Overview
Business Overview Diversified Energy Delivery Business Natural Gas Distribution Delaware, Maryland, Florida Electric Distribution Florida Propane Distribution and AutoGas Delaware, Maryland, Pennsylvania, Virginia, Florida Natural Gas Transmission Delaware, Maryland, Pennsylvania, Florida Mobile CNG
Slide 5: Long-term Earnings Track Record
Long-term Earnings Track Record Positioned for Growth and Total Return 5 $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 lon
Slide 6: Market Capitalization Increased
Market Capitalization Increased Performance is Driving Increased Value
Slide 7: Dividend Increased 9.5% in May 2019
Dividend Increased 9.5% in May 2019 Superior Dividend Growth with Retention to Support Future Earnings and Dividend Growth CPK’s one-year and five-year dividend growth of 9.5% and 8.4%, respectively, leads our peer group. Strong EPS Growth drives Dividend Growth and Dividend payout allows for reinve
Slide 8: Return on Equity
Return on Equity Delivering Consistent, High Returns 8 Chesapeake Utilities has delivered top quartile ROEs over the long-term. Our return on equity has been driven by our (i) innovative approach to cultivate, develop and consummate growth projects and initiatives, and (ii) generating higher returns
Slide 9: Continuing to Build for the Future
Continuing to Build for the Future Organic Growth Opportunities, Supplemented with Targeted Acquisitions Five-Year Cap Ex Plan Historical Cap Ex & Acquisitions In Millions Our 5-year CapEx plan includes $750 million to $1 billion of capital expenditures, predominantly into our utility & pipeline bus
Slide 10: Capital Projects – High Return / High Investment
Capital Projects – High Return / High Investment Peer ROE vs. Capital Expenditures (Three Year Performance - October 2016 – September 2019) 10 Chesapeake Utilities Three Year Performance vs. Peer Group As of 9/30/19 CPK Med 75th Cap EX 24.5% 12.6% 13.9% EPS Growth 10.7% 8.7% 9.9% ROE 11.4% 9.8% 10.5
Slide 11: Key Projects Driving Growth
Key Projects Driving Growth Elkton Gas Acquisition Organic Natural Gas Growth Pipeline Expansions Marlin Gas Services Boulden Propane Acquisition 11
Slide 12: Elkton Gas Company
Elkton Gas Company Strategic Acquisition for Delmarva Natural Gas Summary of Transaction: On December 5, 2019, Chesapeake Utilities and South Jersey Industries entered into an agreement under which Chesapeake will acquire Elkton Gas Company for approximately $15 million The transaction is expected t
Slide 13: Existing Cecil County Operations
Existing Cecil County Operations Elkton Gas and Chesapeake Utilities Current SJI – Elkton Cecil County Operations Leased Administrative Office Space Owned Operations Facilities Nine Local Employees 7,000 Customers, Primarily Residential Current CPK - Cecil County Operations No Office or Operations F
Slide 14: Elkton Gas Company Strategic Fit
Elkton Gas Company Strategic Fit Elkton Gas gives CPK an operational platform in Cecil County including personnel, a contractor pool and an operations center which will enable Chesapeake to more quickly expand our footprint in Cecil County Additional growth is expected in the area, due to its proxim
Slide 15: Elkton Gas Company Financial Impact
Elkton Gas Company Financial Impact Historic Results 2018 EBITDA, adjusted $1,240,201 EBIT, adjusted $738,135 Net Income, adjusted $446,317 Total Assets $15.6 million Net Plant $12.7 million Implied Rate Base from Case No. 9488: $9,188,725 (12 months ended 12/31/2017) Note: The 2018 results have bee
Slide 16: Delmarva Natural Gas Distribution
Delmarva Natural Gas Distribution Organic Growth and Expansion Across the Peninsula 1 1 2 3 3 2 2 Legacy Organic growth focused on Kent and New Castle Counties, DE Present Growth into eastern Sussex County, DE and Cecil County, MD Growth in Middletown, DE Conversion of existing propane customers in
Slide 17: Del-Mar Energy Pathway Project
Del-Mar Energy Pathway Project Under Development Strategic Growth Initiative 17 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 18: West Palm Beach Expansion
West Palm Beach Expansion Enhances Reliability and Provides Additional Customer Growth 18 $5.2MM annual margin $2.3MM in 2019 $30MM total capital invested Q4 - 2018 initial service; fully in-service Q1 - 2020 Four PPC projects to serve FPU’s natural gas distribution systems expansions in Palm Beach
Slide 19: Callahan Pipeline
Callahan Pipeline Nassau County, Florida 19 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 20: Marlin Gas Services – Engine for Growth
Marlin Gas Services – Engine for Growth and Customer Service Exceeding Initial Margin Projections Year-to-Date Financial Performance Marlin generated $3.4 million of gross margin and $1.4 million in operating income during the first half of 2019. Based on results to date and the outlook going forwar
Slide 21: Aspire Energy – Natural Gas Pipeline Project
Aspire Energy – Natural Gas Pipeline Project Guernsey Power Station 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
Slide 22: Sharp Energy Propane Business Growth Initiatives
Sharp Energy Propane Business Growth Initiatives Maintain and develop residential builder relationships via dedicated staff to capitalize on new development opportunities and for seamless implementation These relationships are translating into new CGS in non-core markets AutoGas Fueling Stations Str
Slide 23: Boulden Acquisition – Delmarva Propane Service Territory
Boulden Acquisition – Delmarva Propane Service Territory 23
Slide 24: Benefits of Boulden Acquisition
Benefits of Boulden Acquisition 25 24 Ohl Acquisition December 2018 Added 5,200 customers in five counties in Delaware, Maryland and Pennsylvania effective 12/16/19 Solid customer base with opportunities for future growth Operational synergies, including supply, for northern Delmarva Additional serv
Slide 25: Financial Update
Financial Update 25
Slide 26: 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 demand
Slide 27: 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.
Slide 28: 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 thru 9/30 - $12.5 MM increase expected for full year Recent acquisitions added $5.0MM thru 9/30 ($6.6MM projected for full year) $2
Slide 29: Successful Regulatory Initiatives
Successful Regulatory Initiatives 29 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 $2.4 million incremental benefit annually beginning in 2019 ($1.1 million in first nine months of
Slide 30: Strategic Exit of Natural Gas Marketing Business (PESCO)
Strategic Exit of Natural Gas Marketing Business (PESCO) 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 operations sold to Gas South LLC. B
Slide 31: Capital Capacity to Support Future Growth
Capital Capacity to Support Future Growth Total Capitalization has More Than Doubled in Less Than Five Years 31 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 32: Commitment to Sustainability and ESG
Commitment to Sustainability and ESG Corporate Governance is the foundation of our processes and decision making - Recently Honored by Corporate Secretary as “Governance Team of the Year” among small and mid-cap companies - Honored as “2018 Best North American Utility for Corporate Governance” Conne
Slide 33: 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 development projects to serve new customers, provide new services and expand into new s
Slide 34: Thank You!
Thank You! Beth Cooper Executive Vice President, CFO and Asst. Secretary bcooper@chpk.com Any Questions? Thomas E. Mahn Vice President and Treasurer tmahn@chpk.com Michael Galtman Vice President and Chief Accounting Officer mgaltman @chpk.com
Slide 35: Appendices
Appendices 35
Slide 36: Eastern Shore Natural Gas Transmission
Eastern Shore Natural Gas Transmission Pipeline Infrastructure KEY FACTS Description FERC regulated interstate natural gas transmission system operating under long-term firm contracts Miles of Pipeline 486 Delivery Points 96 Delivery Points within 16 Delivery Point Areas Compression 17,745 hp at 3 s
Slide 37: Natural Gas Distribution
Natural Gas Distribution Delaware, Maryland, and Florida Growth is Strong KEY FACTS Natural Gas Customers > 158,000 customers Physical System > 4,300 miles of distribution mains 2018 Volume (Dts) > 48,000,000 Gas Supply Eastern Shore Columbia Gas Transco Texas Eastern Gulfstream FGT Peninsula Pipeli
Slide 38: Florida Business Unit Profile
Florida Business Unit Profile Opportunities for Pipeline Growth Throughout the State 38 Northwest Florida In-Service Q2 - 2018 New Smyrna Beach In-Service Q2 - 2018 Western Palm Peach County In-Service Q4 – 2018 to Q1 - 2020 Callahan Pipeline – Nassau County In-Service Q3 - 2020 Florida Pipeline Exp
Slide 39: Florida Public Utilities - Electric Distribution
Florida Public Utilities - Electric Distribution Serving Northwest and Northeast Florida with Electricity KEY FACTS Florida Electric Customers > 32,000 customers Physical System ~905 miles of electric distribution line ~16 miles of electric transmission line 2018 Volume (Kwh) > 632,500 Electric Supp
Slide 40: Florida Energy Delivery – Marlin Gas Services
Florida Energy Delivery Leveraging Our Core Competencies MARLIN GAS SERVICES Growth Forecast and Ongoing Initiatives Trailers and compressors on order Offload regulators under construction Further territorial expansion in Southeast, Mid-Atlantic, and Gulf Coast 2 additional planned CNG stations Prob
Slide 41: Aspire Energy of Ohio
Aspire Energy of Ohio Natural Gas Transmission ASPIRE ENERGY OF OHIO KEY FACTS Description Gathering, processing, and wholesale delivery of local natural gas to local utilities under long-term supply agreements Miles of Pipeline 2,700 Major Customers Columbia Gas of Ohio (NiSource) Consumers Gas Coo
Slide 42: Sharp Propane and AutoGas
Sharp Propane and AutoGas Leveraging Our Core Competencies to Provide New Offerings KEY FACTS Description Delivery of propane to residential, commercial, industrial, wholesale and AutoGas customers Customers ~66,000 (Mid-Atlantic and Florida) Platforms Sharp Energy, Sharpgas, FPU, and Flo-gas Fuelin
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