Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — 2012 AGA Financial Forum
37 slides from Chesapeake Utilities's conference presentation, May 8, 2012
Slide 1: 2012 AGA Financial Forum
CHESAPEAKE ” \ : 2012 AGA Financial Forum
Slide 2: 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 statements, and you should refer to the addition
Slide 3: Chesapeake values
CHESAPEAKE IS UNITED. CHESAPEAKE IS HONEST. CHESAPEAKE FINDS CREATIVE SOLUTIONS. CHESAPEAKE IS INSPIRING. CHESAPEAKE DOES THE RIGHT THING. CHESAPEAKE IS RESULTS- ORIENTED. 3
Slide 4: 2011 Financial Results
2011 Financial Results Net Income of $27.6 million compared to $26.1 million Earnings Per Share of $2.87 compared to $2.73 Growth in the energy businesses overcame lower energy consumption, as a result of warmer temperatures: Continued growth and expansion of the natural gas distribution systems Nat
Slide 5: Reconciliation of 12/31/2011 Performance
5 Based upon adjusted EPS, year-to- date earnings growth is 5.4%. Reconciliation of 12/31/2011 Performance 5
Slide 6: Record EPS for 5th Consecutive Year
Record EPS for 5th Consecutive Year Cumulative 5-year growth in diluted EPS of 63.1% 5 year compound annual growth rate in EPS of more than 10% Long-term Sustained Performance Consistent Returns over the last five years While making investments and acquiring FPU, we have maintained ROEs between 11.2
Slide 7: Delmarva Natural Gas Distribution - Track Record of Success
Growth fueled by commercial and industrial customer conversions and supplemented by residential customer growth Added 20 large commercial and industrial customers since July 2010 with estimated annual gross margin of $2.1 million Annualized margin from large commercial and industrial customers added
Slide 8: Florida Regulated Energy Distribution - Track Record of Success
Increased presence in Florida as a result of Chesapeake's Florida division, acquisition of Florida Public Utilities in 2009, and acquisition of Indiantown in 2010 Operating income increased more than 300% from 2009 to 2010 Margin growth is being driven by commercial and industrial growth $771,000 in
Slide 9: Natural Gas Transmission - Track Record of Success
New expansion projects and transportation services generated $3.0 million in additional gross margin in 2011 Significant accomplishment - Eastern Shore Natural Gas commenced new transportation service to provide access to new supply with TETLP for a 3-year phase in of 20,000 to 40,000 dekatherms of
Slide 10: Unregulated Energy - Track Record of Success
Unregulated Energy - Track Record of Success Efficiencies and Performance Improvements New propane manager hired in Florida Migrating to one billing system for all propane operations Routing efficiencies Acquisitions Purchased operating assets of Crescent Propane in December 2011 - included approxim
Slide 11: Advanced Information Services - Our Track Record
Advanced Information Services - Our Track Record Application Evolution (tm) is a software development platform and methodology for companies who want to modernize their Progress applications using browser-based technology. 11
Slide 12: First Quarter 2012 Results
First Quarter 2012 Results Warmer weather on the Delmarva Peninsula and in Florida reduced margin by $4.0 million A decline in other volumes for propane distribution further lowered margin by $587,000 Eastern Shore's expansion projects and new services generated additional margin of $553,000 Custome
Slide 13: Magnitude of Warmer Weather
Magnitude of Warmer Weather Delmarva Warmest first quarter in last 10 years 2nd warmest first quarter in last 40 years Florida Warmest first quarter in last 20 years 3rd warmest first quarter in last 40 years * 12 months ended March 31, 2012 13
Slide 14: Reconciliation of 3/31/12 Earnings Per Share
Reconciliation of 3/31/12 Earnings Per Share Growth in our businesses continues to be strong 7% growth was not sufficient to overcome 25% warmer temperatures 14
Slide 15: Reconciliation of 3/31/2012 Performance
15 Reconciliation of 3/31/2012 Performance 15
Slide 16: Continuous Dividend Growth
5 year CAGR Dividend Growth = 3.5% We are committed to dividend growth that is supported by earnings growth. Continuous Dividend Growth Chesapeake has paid a dividend for 51 consecutive years Over the last five years, our annual earnings growth of 9.6% has exceeded our compound average annual divide
Slide 17: Total Capitalization
We are strongly capitalized, enabling us to make the capital investments to continue to capture new growth. 17 Total Capitalization *$29.1 million of FPU's long-term debt was redeemed and was temporarily financed with short-term debt. This short-term debt was refinanced with CPK unsecured senior deb
Slide 18: Delmarva Regulated Energy Opportunities
Delmarva Regulated Energy Opportunities New Service to Southern Delaware and Maryland System expansions to serve two new facilities in Eastern Sussex County (1Q2012 & 2Q2012) Annual gross margin equals 415 residential customers, or $156k annually System expansions to serve Cecil County, MD (3Q2012)
Slide 19: Florida Regulated Energy Opportunities
Florida Regulated Energy Opportunities New commercial and industrial customers Natural gas expansion to new areas of the state Nassau County represents one such opportunity Annual transportation margin of $2.1 million Additional margin from new natural gas distribution customers Small industrial bas
Slide 20: Unregulated Energy Opportunities
Unregulated Energy Opportunities Continued growth via start-ups and expansion into new areas Growth in propane distribution wholesale division Expansion of CGS into other markets Continuing to design a variety of programs based on our customers' needs and preferences Potential CNG and LNG projects,
Slide 21: Advanced Information Services Opportunities
Advanced Information Services Opportunities Our Objectives Provide growth to the unregulated sector of business Transition from a volatile services-for-hire model to a more stable recurring revenues model Provide IT and integration support to the Company Develop more synergies with an energy focus a
Slide 22: Capital Expenditures
Capital Expenditures We have invested approximately $179 million over the last 5 years We are budged to invest $88.5 million in capital expenditures in 2012 We make investments that are projected to achieve their return on capital. Everyone matters, every day. Aspiring to new opportunities every day
Slide 23: Our Disciplined Approach, Every Day
Our Disciplined Approach, Every Day. From 2008-2011, we invested more than $118 million to grow our businesses The returns earned in our unregulated businesses coupled with our returns achieved in our regulated businesses has enabled us to achieve consolidated returns greater than regulatory commiss
Slide 24: Delivered Results to Chesapeake's Shareholders
Delivered Results to Chesapeake's Shareholders If an investor made an initial investment of $10,000 in 1992, that investment would represent a value of over $85,000 today. Over the long-term, our shareholders have earned over 11% annually on their Chesapeake investment. 24
Slide 25: Continuing to Drive Shareholder Value
Continuing to Drive Shareholder Value Everyone matters, every day. We deliver results every day. Track Record Opportunities for Growth Solutions Financial Discipline Strategic Planning Engagement We strive each day to do our best for each other, our customers, our communities, our business partners,
Slide 26: Thank you. Questions?
Thank you. Questions? 26
Slide 27: Appendices
Appendices
Slide 28: Business Overview
Business Overview A-1
Slide 29: Business Structure
Business Structure Electric Distribution Florida Public Utilities Company A-2
Slide 30: Business Diversity
Business Diversity 30 The core of our business is regulated energy. In addition to growth in this area, we also continue to explore ways to increase our earnings through unregulated energy and other areas - the areas that provide opportunities to achieve returns greater than those of a traditional u
Slide 31: Business Diversity: Energy Served
Business Diversity 31 Investment by Energy Served as of 12/31/11 2011 Margin by Energy Served 2011 Operating Income by Energy Served Energy Diversity Our natural gas operations represent the largest portion of our business. Our propane and electric businesses expand our energy footprint and they pro
Slide 32: Business Diversity: Geographic Diversity
Business Diversity 32 Investment by Region as of 12/31/11 2011 Margin by Region 2011 Operating Income by Region Geographic Diversity We have sizable operations in two different geographic areas - on the Delmarva Peninsula and in Florida. Having multiple geographic areas has benefited the Company thr
Slide 33: Regulatory Information
Regulatory Information A-6
Slide 34: Regulatory Snapshot
Regulatory Snapshot Natural Gas ra Natural Gas ectrie NaturatGas Natural Gas Distribution _—Distbution——istrbution—«—‘stibuton «tribution Transmission ware” Central ora Gas FPU. PU FERC ‘Appointment Appoinment_ Appointment Appointment Appointment Appointment Regulatory Juriseetion: Delaware PSC Flor
Slide 35: ESNG Rate Case Settlement
ESNG Rate Case Settlement Key Events Eastern Shore filed a base rate case with the FERC on December 30, 2010 The parties reached an agreement in principle related to the settlement of the rate case Eastern Shore filed the settlement agreement with the FERC on November 7, 2011 FERC approved the rate
Slide 36: Florida acquisition premium recovery
Chesapeake requested the recovery of approximately $34.2 million in acquisition premium and $2.2 million in merger-related costs Chesapeake had to satisfy the PSC's five-factor test In January of 2012, the Public Service Commission approved recovery of the acquisition premium and merger-related cost
Slide 37: 2011 Florida Merger Benefits
Customer Experience initiative setting service quality standards: 70% reduction in pre-merger PSC complaints Customer satisfaction ratings are above industry norm and improving Process re-engineering is on-going Synergies to support the come-back filing were achieved; O&M costs per customer continue