Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q1 2024 Earnings Presentation
33 slides from Chesapeake Utilities's earnings presentation, May 9, 2024
Slide 1: First Quarter 2024 Earnings Conference Call
CHESAPEAKE First Quarter 2024 UTILITIES Earnings Conference Call C O R P O R AT I O N May 9, 2024 1
Slide 2: Today's Presenters
Today’s Presenters Jeff Householder Chair of the Board, President, and Chief Executive Officer Beth Cooper Executive Vice President, Chief Financial Officer, Treasurer, and Assistant Corporate Secretary Jim Moriarty Executive Vice President, General Counsel, Corporate Secretary, and Chief Policy and
Slide 3: Safe Harbor for Forward-Looking Statements
Safe Harbor for Forward-Looking Statements Safe Harbor Statement Some of the statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable law. Such forward--looking statements may be identified by the
Slide 4: Executing On Our Long-Term Growth Plan
Executing On Our Long-Term Growth Plan Growth in earnings to support dividend growth and increased shareholder value Prudently Proactively Continually deploy manage execute on investment regulatory business capital agenda transformation Foundation of operational excellence across the organization 4
Slide 5: Q1 2024 Highlights: Continuing to Build Momentum
Q1 2024 Highlights: Continuing to Build Momentum Operational Accomplishments Strategic Capital Investments • Increasing margin contributions from continued transmission expansions • Reaffirmed 2024 capital • Regulated natural gas distribution customer growth of 2x national average investment guidanc
Slide 6: Q1 2024 Strong Financial Performance
Q1 2024 Strong Financial Performance Adjusted Diluted Key Adjusted Gross Margin Drivers Earnings Per Share1 +3% $2.10 $25.4M $3.5M $2.8M Contribution from Pipeline Expansions Regulated FCG and other and Natural Gas Infrastructure acquisitions Organic Growth Programs $2.04 and Recovery Mechanisms $1.
Slide 7: FCG Integration Fully On-Track
FCG Integration Fully On-Track Accelerating Achieving Optimizing Investment Synergies Operations Opportunities • Reviewing operational • “Best of Both” approach to • Identifying capital projects efficiencies customer care, project to drive growth as one management and combined company • Consolidatin
Slide 8: Major Projects and Initiatives Driving Adj. Gross Margin Growth
Major Projects and Initiatives Driving Adj. Gross Margin Growth Our projects and initiatives underway will continue to drive adjusted gross margin growth while new projects and regulatory initiatives will increase earnings across our guidance period Three Months ended Year Ended Estimate for Project
Slide 9: 2024 Capital Investment On Track to Drive Margin Growth
2024 Capital Investment On Track to Drive Margin Growth Q1 Capital Spend Progress $300 - $360M 2024E Capital Expenditures 21% General Corporate CapEx: $4 - $6M in Q1 Unregulated Energy CapEx: $31 - $36M • Propane Distribution: $13 - $15M • Energy Transmission: $5 - $6M • Other Unregulated: $13 - $15
Slide 10: Key Drivers of Performance – Three Months Ended March 31, 2024
Key Drivers of Performance – Three Months Ended March 31, 2024 Our core business performance, strong customer demand and recent acquisition of Florida City Gas drove increased earnings per share, only partially offset by financing costs related to the FCG acquisition. Adjusted Diluted Earnings Per S
Slide 11: Increasing Gross Margin Driving Bottom-Line Income Growth
Increasing Gross Margin Driving Bottom-Line Income Growth Gross margin growth drove higher bottom-line net income: both approaching 30% growth Adjusted Gross Margin1 Operating Income Adjusted Net Income1 +27% $164.5 +29% $46.8 +45% $79.6 $129.5 $36.3 $54.9 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1
Slide 12: Regulated Energy Segment Generates Strong Margin and Operating Income Growth
Regulated Energy Segment Generates Strong Margin and Operating Income Growth Strong gross margin, coupled with expense management, drove $20M in higher operating income First Quarter Change (in thousands) 2024 2023 $ % Adjusted Gross Margin 1 $ 118,508 $ 86,982 $ 31,526 36.2% Depreciation, amort. &
Slide 13: Unregulated Energy Segment Drives 24%+ Operating Income Growth
Unregulated Energy Segment Drives 24%+ Operating Income Growth Higher propane margins and fees as well as increased margins for the other unregulated energy businesses drove increased earnings for the quarter. First Quarter Change (in thousands) 2024 2023 $ % Adjusted Gross Margin1 $ 46,049 $ 42,594
Slide 14: Earnings Guidance Affirmed; Driving Increased Shareholder Value
Earnings Guidance Affirmed; Driving Increased Shareholder Value Earnings Per Share - Diluted Earnings Growth • 1Q 2024 Adjusted Earnings Per Share of $2.101 $8.00 Driven by Capital • 2024 Adj. EPS Guidance of $5.33 to $5.45 +8.4 – 8.7% Investment 10-Year $7.75 • 2025 EPS Guidance of $6.15 to $6.35 C
Slide 15: Capital Structure Overview – Strong Balance Sheet to Support Growth
Capital Structure Overview – Strong Balance Sheet to Support Growth (in thousands) 3/31/2024 12/31/2023 Recent Highlights Stockholders' equity $ 1,280,903 $ 1,246,104 Long-term debt, net of current maturities 1,185,166 1,187,075 • March 2023: $80M New Long-Term Debt Total permanent capitalization $
Slide 16: Three Decades of Dividend Growth Drive Shareholder Return
Three Decades of Dividend Growth Drive Shareholder Return Annualized Dividend per Share Quarterly Dividend History 64 Consecutive Years of Dividend Payments – Since 1960 Increase of Ex-Dividend Amount per Date S hare 21 Consecutive Years of Dividend Increases – Since 2004 8.5% 2Q 2024 6/14/2024 $0.6
Slide 17: Pathway to 2024 EPS Guidance
Pathway to 2024 EPS1 Guidance Our 2024 target is based on continued growth from our legacy businesses, a full year of contribution from FCG, and additional opportunities we have identified2 Adjusted Diluted Earnings Per Share1 Identified Additional Opportunities Range: $0.20 - $0.30 $5.33 - $5.45 Fu
Slide 18: Executing on the Identified 2024 Pathway
Executing on the Identified 2024 Pathway Our team has begun to execute on additional opportunities to propel earnings growth in 2024 • Expansion of SAFE • Combining natural gas Regulatory leadership Program strategies & financing • Optimizing support • Alignment on Pipeline opportunities services In
Slide 19: Regulatory Strategy Drives Earnings
Regulatory Strategy Drives Earnings Florida Public Utilities Florida Public Utilities and Florida City Gas • Rates became effective March 1, 2023 • GUARD and SAFE: combined projected capital investment of $410 million over a 10-year period; additional $50 • $17.2 million rate increase; allowed ROE o
Slide 20: Significant Regulatory Progress on Recent Florida Transmission Projects
Significant Regulatory Progress on Recent Florida Transmission Projects Est. CapEx Newberry Expansion, Wildlight Phase 2, Boynton 7 Approved Beach Pipeline, New Smyrna Beach Pipeline Lake Mattie Expansion, Plant City Expansion, and St. Cloud Expansion1 ~$106M 4 Under Review by Commission Indian Rive
Slide 21: Worcester Resiliency Upgrade Project Proceeding On Schedule
Worcester Resiliency Upgrade Project Proceeding On Schedule Eastern Shore Natural Gas project designed to meet critical energy service to customers during the peak winter heating season • $80 million planned liquefied natural gas storage facility in Bishopville, MD • Project consists of five low-pro
Slide 22: Working Together to Make Life Better for the Communities We Serve
Working Together to Make Life Better for the Communities We Serve Sustainability Reporting Energy Efficiency Portfolio Full Circle Dairy Received approval to establish first-of-its-kind Progressing on our first full-scale Safety and Reliability Report published April 2024 natural gas energy efficien
Slide 23: Investment Proposition – Committed to Superior Performance
Investment Proposition – Committed to Superior Performance We continually increase shareholder value Our foundation for growth remains strong through our: Over and over, we have proven we get it done; we have a long history of top-tier earnings and dividend growth TRACK RECORD • Consistently beating
Slide 24: Appendix
CHESAPEAKE UTILITIES Appendix C O R P O R AT I O N 24
Slide 25: GAAP to Non-GAAP Reconciliation – Consolidated Results
GAAP to Non-GAAP Reconciliation – Consolidated Results First Quarter Change (in thousands) 2024 2023 $ % Operating Revenues $ 245,744 $ 218,129 $ 27,615 12.7% Cost of Sales: Natural gas, propane and electric costs (81,217) (88,589) 7,372 -8.3% Depreciation & amortization (17,016) (17,183) 167 -1.0%
Slide 26: GAAP to Non-GAAP Reconciliation – Regulated Energy Segment
GAAP to Non-GAAP Reconciliation – Regulated Energy Segment First Quarter Change (in thousands) 2024 2023 $ % Operating Revenues $ 168,426 $ 142,270 $ 26,156 18.4% Cost of Sales: Natural gas, propane and electric costs (49,918) (55,288) 5,370 -9.7% Depreciation & amortization (12,537) (12,952) 415 -3
Slide 27: GAAP to Non-GAAP Reconciliation – Unregulated Energy Segment
GAAP to Non-GAAP Reconciliation – Unregulated Energy Segment First Quarter Change (in thousands) 2024 2023 $ % Operating Revenues $ 83,103 $ 83,165 $ (62) -0.1% Cost of Sales: Natural gas, propane and electric costs (37,054) (40,571) 3,517 -8.7% Depreciation & amortization (4,481) (4,234) (247) 5.8%
Slide 28: GAAP to Non-GAAP Reconciliation – Adjusted Net Income and EPS
GAAP to Non-GAAP Reconciliation – Adjusted Net Income and EPS First Quarter (in thousands, except per share data) 2024 2023 Net Income (GAAP) $ 46,168 $ 36,344 1 FCG transaction and transition-related expenses, net 677 - Adjusted Net Income (Non-GAAP) $ 46,845 $ 36,344 2 Weighted average common shar
Slide 29: Weather Impacted Customer Consumption in the First Quarter
Weather Impacted Customer Consumption in the First Quarter Three Months Ended Variance Delmarva March 31, Year-over-Year 2024 2023 # % Moderately Colder Weather Across Actual HDD 1,962 1,774 188 +11% All Service Areas 10-yr Avg HDD (“Normal”) 2,221 2,285 (64) Variance from # (259) (511) Normal % -12
Slide 30: 5-Year Projected Capital Expenditures Breakdown
5-Year Projected Capital Expenditures Breakdown 89% of our 5-year capital expenditure plan is projected to be invested into our regulated businesses. Key Drivers of Investment Plan Regulated / Unregulated Forecast • Investment in natural gas distribution systems to serve growing customer base and en
Slide 31: Long-Term Debt Profile – Positioned to Execute Growth Plan
Long-Term Debt Profile – Positioned to Execute Growth Plan (In Millions) Minimal maturities over next 2 yrs enables CPK the flexibility to: • Execute on a robust growing organic capital plan • Fully integrate Florida City Gas and capitalize on commercial synergies & opportunities • Navigate through
Slide 32: Quarterly Earnings Cadence
Quarterly Earnings Cadence1 Adjusted EPS Year Q1 Q2 Q3 Q4 FY 2023 $2.04 $0.90 $0.692 $1.64 $5.31 % of FY 38% 17% 13% 31% 2022 $2.08 $0.96 $0.54 $1.47 $5.04 % of FY 41% 19% 11% 29% 2021 $1.96 $0.78 $0.71 $1.28 $4.73 % of FY 41% 16% 15% 27% 2020 $1.77 $0.64 $0.56 $1.24 $4.21 % of FY 42% 15% 13% 29% 20
Slide 33: Mission, Vision and Values
Mission, Vision and Values OUR Mission We deliver energy that makes life better for the people and communities we serve. OUR Vision We will be a leader in delivering energy that contributes to a sustainable future. OUR Values Care Integrity Excellence We put people first. We tell the truth. We achie