Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q2 2020 Earnings Presentation
26 slides from Chesapeake Utilities's earnings presentation, Aug 7, 2020
Slide 1: Second Quarter 2020 Earnings Conference Call
Exhibit 99.1 Commitment Growth Chesapeake Utilities Leadership Safety Corporation Sustainability Solutions Driven By Energy Strength Team Second Quarter 2020 Service Earnings Conference Call August 6, 2020 Performance Community ValueExhibit 99.1 Commitment Growth Chesapeake Utilities Leadership Safe
Slide 2: Presenters
Jeff Householder President & CEO Presenting jhouseholder@chpk.com Today: Beth Cooper Executive Vice President, CFO and Asst. Secretary bcooper@chpk.com Jim Moriarty Executive Vice President, General Counsel , Corporate Secretary and Chief Policy and Risk Officer jmoriarty@chpk.com 2Jeff Householder
Slide 3: 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 4: Commitment to Employees, Customers and Communities
Commitment to Employees, Customers and Communities Investors/Financial Employees Community • Social distancing protocols in effect along with personal protective equipment, where appropriate • Reaffirm 2022 EPS target $4.70 to $4.90 and • Employees working remotely as much as possible Capital invest
Slide 5: Delivering Solid Results in 2020
Delivering Solid Results in 2020 • Achieved strong second quarter results; solid year- to-date operating earnings across all business units • Operational savings and best practices performance improvements being implemented across functional distribution and transmission businesses in all regions •
Slide 6: Second Quarter Overview
Second Quarter Overview Earnings Per Share Second Quarter Year-to-Date 2020 2019 2019 2020 $ 0.66 $ 0.50 $ 2.42 $ 2.25 Strong performance for the first half of 2020 : • Continued growth in the Company's businesses • Addition of the Boulden acquisition • Retail propane margins per gallon • Expense ma
Slide 7: Financial Summary
Financial Summary GAAP Income and Income from Continuing Operations Second Quarter Year-to-Date (in thousands except per share data) 2020 2019 2020 2019 Operating Income $ 17,977 $ 18,165 $ 60,111 $ 62,287 Other income (expense), net (279) (320) 3,039 (380) Interest Charges 5,054 5,552 1 0,868 11,18
Slide 8: Key Drivers of Our Performance
Key drivers of Our Performance Second Quarter of 2020 Compared to Second Quarter of 2019 • Gross Margin increased $5.1 million • Eastern Shore and Peninsula Pipeline service expansions $1.8 million • Increased demand for Marlin Gas Services $1.1 million • Increased retail propane margins per gallon
Slide 9: Key Business Factors: COVID-19 Impact
Key Business Factors: COVID–19 Impact • Chesapeake Utilities is an “essential business” to our customers and communities. As such, our operational activities and construction projects continue; all the while, we are adhering to safety guidelines and social distancing. • The Company’s pandemic respon
Slide 10: Financial Summary: COVID-19 Operating Income Impacts
Financial Summary COVID-19 Operating Income Impacts Second Quarter Year-to-Date 2020 2020 (dollars in thousands) Gross Margin: Regulated Energy Segment $ (2,201) $ (2,430) Unregulated Energy Segment (317) (442) Total Gross Margin Impacts $ (2,518) $ (2,872) Other Operating Expenses: Regulated Energy
Slide 11: COVID-19: Expense Expectations
COVID – 19: Expense Expectations Expenses expected to Expenses expected to Areas unchanged and increase: decrease: managed appropriately: •Capital spending and •Bad debt expense, AR •Administrative costs as aging and collection business development we slow personnel hiring dunning opportunities cont
Slide 12: Capital Expenditures Forecast
Capital Expenditures Forecast Estimate for 2020 Forecast for Fiscal 2020 (dollars in thousands) Low High Regulated Energy: Natural gas distribution $ 75,000 $ 80,000 Natural gas transmission 70,000 80,000 Electric distribution 5,000 7,000 Total Regulated Energy 150,000 167,000 Unregulated Energy: Pr
Slide 13: Capital Capacity to Support Future Growth
Capital Capacity to Support Future Growth Available Financing Capacity (in thousands) • $370 million bank lines of credit through Stockholders' Equity Long-Term Debt Short-Term Debt * * October 2020 $1,500,000 • $95 million incremental liquidity if needed $1,325,388 $1,294,716 through October 2020 $
Slide 14: 2020-2022 Strategic Growth Initiatives
Chesapeake Utilities 2020 – 2022 Strategic Growth Initiatives Complete Develop new transmission transmission projects Earnings infrastructure projects Per Share Growth DNG and FPU gas organic Expand Marlin growth CNG delivery Total Return on Dividend Shareholder Equity Growth RNG and LNG Return Elkt
Slide 15: Recent and Current Pipeline Expansions
Recent and Current Pipeline Expansions Transmission of Natural Gas Services to New Territories Recently Projects Completed Underway Callahan Expansion ESNG 2017 System (FL) Expansion Project Full Service June (Delmarva Peninsula) 2020 West Palm Beach County Expansion Northwest Florida (FL) Expansion
Slide 16: Elkton Gas Company Summary of Transaction
Elkton Gas Company Summary of Transaction Acquisition Completed • Chesapeake Utilities and South Jersey Industries completed the agreement for the acquisition of Elton Gas Company at a price of approximately $15 million on July 31, 2020. • Elkton Gas serves approximately 7,000 customers within a fra
Slide 17: Key Regulatory Initiatives
Key Regulatory Initiatives Hurricane Michael Limited Proceeding • October 2018 Hurricane Michael – Northwest Florida • August 2019 FPU filed limited proceeding with Florida PSC • Fourth Quarter 2019 FPU and the Office of Public Counsel filed a request to approve interim rates • FPU continues to work
Slide 18: Major Projects and Initiatives Gross Margin Contributions
Major Projects and Initiatives Gross Margin Contributions 18Major Projects and Initiatives Gross Margin Contributions 18
Slide 19: Indicative RNG Scenario on the Delmarva Peninsula
Indicative RNG Scenario on the Delmarva Peninsula Across the CPK Value Chain Composting Plant Organic Fertilizer generates Raw Compost Fertilizer Landfill Renewable Natural Gas Poultry Farms processes (RNG) can be flared off, generate or processed and Chicken Waste & Waste Water cleaned and ultimate
Slide 20: CPK's Renewable Natural Gas Proposition
CPK’s Renewable Natural Gas Proposition Presents Multiple Investment Opportunities Distribution Transmission Marlin Operations Operations Potential investment Additional Interstate pipeline in gas processing transportation Investment interconnects for equipment which we equipment to receipt of renew
Slide 21: ESG Stewardship
ESG Stewardship • We remain steadfast in our commitment to environmental, social and governance stewardship, even through challenging times. • The key to our success is our strong culture that fully engages all of our team members across the organization. • We are a responsible company that promotes
Slide 22: ESG At Our Core
ESG At Our Core Women in Utilities Webinar – Be Extraordinary Measures to help keep employees, Everyday by Demonstrating Diversity. customers and communities safe and Equity, Diversity healthy during the COVID-19 pandemic. and Inclusion Council Promotes During these extraordinary times, we are honor
Slide 23: Capital Investment Guidance
Capital Investment Guidance Continued Record Investment in Our Business to Drive Growth $350,000 $303,153 Target 2018 – 2022 : $750 million - $1 billion $300,000 $282,861 $250,000 $215,000* $250,000 Reach $1 billion $198,986 $200,000 $30,000* $150,000 $185,000* $100,000 $50,000 Reach $750 $53,153 $0
Slide 24: Affirm 2022 Earnings per Share Guidance
Chesapeake Utilities Affirm 2022 Earnings per Share Guidance $4.90 $4.70 $4.16 $4.06 $3.96 * $3.72 2019 --------------2020-------------- ---2022--- *Note: 2019 GAAP Diluted EPS ($3.96) – Diluted EPS from Continuing Operations ($3.72) Note: Analyst estimates are through 8/5/2020. CPK does not support
Slide 25: Closing Remarks
Chesapeake Utilities Closing Remarks • Strong earnings for the second quarter despite the uncertain challenges of the COVID-19 pandemic. • Engaged in expense management across the Company and operational efficiency in this new business normal situation. • Excited about our recently completed Elkton
Slide 26: Thank You!
CHESAPEAKE” ‘Thank You!