Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q2 2024 Earnings Presentation
34 slides from Chesapeake Utilities's earnings presentation, Aug 9, 2024
Slide 1: Second Quarter 2024 Earnings Call Presentation
Second Quarter 2024 Earnings Call Presentation August 9, 2024 1
Slide 2: 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 3: Safety Moment: Hurricane & General Emergency Preparedness
Safety Moment: Hurricane & General Emergency Preparedness Personal Emergency Preparedness • Completed its annual Hurricane Season Preparedness Drill in July • Being prepared means having your • Lessons learned were already put to the test own food, water and other supplies this past week with Hurric
Slide 4: Today's Presenters
Today’s Presenters Jeff Householder Beth Cooper Jim Moriarty Lucia Dempsey Chair of the Board, Executive Vice President, Executive Vice President, Head of President & Chief Financial Officer, Treasurer General Counsel, Investor Relations Chief Executive Officer & Asst. Corporate Secretary Corporate
Slide 5: Continued Strong Financial Performance in 2024
Continued Strong Financial Performance in 2024 1 Adjusted Diluted EPS Key Financial Highlights $2.94 $2.96 Q2 2024 Results • Adjusted Gross Margin: $126.6M, up 27% from Q2 2023 Q2 $0.90 $0.86 • Adjusted Net Income: $19.3M, up 19% from Q2 2023 Earnings Guidance Reaffirmed • FY 2024 Adjusted EPS of $5
Slide 6: High-Growth Service Areas Drive Investment Opportunities
High-Growth Service Areas Drive Investment Opportunities Strong Customer Growth Cecil County Case Study Q2 2024 vs Q2 2023 • CPK began gas transmission expansion in 2018 to serve initial commercial growth • To date, at least 28 miles of transmission infrastructure have been installed Delmarva Reside
Slide 7: 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 7
Slide 8: 5-Year Capex Guidance is On-Track and Achievable
5-Year Capex Guidance is On-Track and Achievable ~$1.3 billion of identified capital projects support our 5-year CapEx guidance of $1.5 - $1.8 billion 5-Year Segment 5-Year Guidance Identified Regulated CapEx Spend Regulated Natural Gas LDC Organic Growth $625M $600 - $645M Distribution Newberry, Wi
Slide 9: 2024 Capital Investment On Track to Drive Margin Growth
2024 Capital Investment On Track to Drive Margin Growth YTD 2024 Capital Spend Progress $300 - $360M 2024E Capital Expenditures General Corporate CapEx: $4 - $6M Unregulated Energy CapEx: $31 - $36M 48% ◦ Propane Distribution: $13 - $15M in 1H 2024 ◦ Energy Transmission: $5 - $6M ◦ Other Unregulated
Slide 10: Organic Growth Driving Delmarva + Florida Investments
Organic Growth Driving Delmarva + Florida Investments Total Adj. Gross Margin ($M) # Project Name Status In-Service CapEx 2024E 2025E 1 Southern Expansion In-Service Q4 2023 ~$14M $2.3 $2.3 1 2 North Ocean City Connector In-Service Q2 2023 ~$6M — $0.5 Worcester Resiliency Pending 3 Approval Q3 2025
Slide 11: Making Strides with Business Transformation
Making Strides with Business Transformation We are continually evaluating and improving our people, processes, systems and structures in order to ensure long-term success and growth in an ever-changing environment. Achieving Operational Synergies In August 2024, CPK is implementing an Consolidating
Slide 12: Increasing Adj. Gross Margin Driving Bottom-Line Growth
Increasing Adj. Gross Margin Driving Bottom-Line Growth Gross margin growth drove higher operating income and bottom-line net income, averaging 30%+ growth. 1 1 Adjusted Gross Margin Operating Income Adjusted Net Income +44% $40.8 +27% $126.6 +19% $19.3 $99.8 $16.1 $28.3 Q2 2023 Q2 2024 Q2 2023 Q2 2
Slide 13: Key Drivers of Performance – Three Months Ended June 30, 2024
Key Drivers of Performance – Three Months Ended June 30, 2024 Adjusted EPS for the second quarter benefited from our core business performance and recent acquisition of Florida City Gas; offset primarily by financing costs related to the FCG acquisition. 1 Adjusted Diluted Earnings Per Share $0.09 $
Slide 14: Regulated Energy Segment Generates Operating Income Growth
Regulated Energy Segment Generates Operating Income Growth 1 $103.2 Adj. Gross Margin up 34% & Operating income up 38%, driven by: •$23.4M from FCG operations & growth $77.3 $40.5 •$1.8M from natural gas growth, conversions and service expansions $29.3 •$1.3M from transmission expansions and regulat
Slide 15: Improvement in Unregulated Energy Segment Relative to Q2 2023
Improvement in Unregulated Energy Segment Relative to Q2 2023 1 $23.4 Adjusted Gross Margin up 3%, driven by: $22.6 $0.2 •$0.6M from higher Marlin virtual pipeline services •$0.3M from increased margins for Aspire Energy in Ohio •$0.3M from propane operations Partially offset by $0.5M of increased i
Slide 16: Strong Balance Sheet Supports Growth Plan
Strong Balance Sheet Supports Growth Plan 2 Total Capitalization Total Liquidity $ in millions $2,632 $2,691 Total available 30% liquidity of Equity $1,246 47% $1,291 48% $491M 70% out of Total Capacity Short-Term of $705M 1 $198 8% $226 8% Debt Recent Financing Activity Long-Term $1,187 45% $1,175
Slide 17: Three Decades of Dividend Growth Drive Shareholder Return
Three Decades of Dividend Growth Drive Shareholder Return Annualized Dividend per Share Dividend Increases in 29 of the last 31 Years – Since 1994 Increase of 8.5% 64 Consecutive Years of Dividend Payments – Since 1960 21 Consecutive Years of Dividend Increases – Since 2004 f9 % Ro AG e ndC 12%+ Com
Slide 18: Driving Increased Shareholder Value; Reaffirming Earnings Guidance
Driving Increased Shareholder Value; Reaffirming Earnings Guidance Earnings Per Share - Diluted Earnings Growth Driven by Capital Investment... +8.4 – 8.7% 1 10-Year • YTD 2024 Adjusted Earnings Per Share of $2.96 CAGR • 2024 Adj. EPS Guidance of $5.33 to $5.45 • 2025 Adj. EPS Guidance of $6.15 to $
Slide 19: 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 identified. 1 Adjusted Diluted Earnings Per Share Additional Opportunities $0.20 - $0.30 • Cost & Operating Synergies $0.3
Slide 20: Significant Regulatory Progress on Recent Florida Transmission Projects
Significant Regulatory Progress on Recent Florida Transmission Projects Approved May 2024 Boynton Beach & Lake Mattie, Q4 2023 Q1 2024 Newberry Expansion, CapEx: CapEx: CapEx: New Smyrna Beach Plant City and Wildlight Phase 2 ~$28M ~$36M ~$42M Pipelines St. Cloud Indian River RNG, Q3 2024 Q3 2024 Ca
Slide 21: Worcester Resiliency Upgrade Project Proceeding On Schedule
Worcester Resiliency Upgrade Project Proceeding On Schedule Eastern Shore Natural Gas LNG Storage 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
Slide 22: Approved Infrastructure Programs Support Capital Growth
Approved Infrastructure Programs Support Capital Growth Gas Electric Eastern Shore Florida City Gas Florida Public Utilities Capital Cost Surcharge SAFE Program GUARD Program Storm Protection 1 5-Year CapEx $50-100M 10-Year CapEx $255M 10-Year CapEx $205M 5-Year CapEx $50-75M ‘24E Gross Margin $4.0M
Slide 23: Constructive Regulatory Environments for Rate Cases
Constructive Regulatory Environments for Rate Cases • Rates effective March 1, 2023 • Rates effective May 1, 2023 Florida Public Florida Complete • $17.2 million rate increase; ROE • $14.1 million rate increase; allowed Utilities of 10.25% and equity of 55% City Gas ROE of 8.5% -10.5% In Progress So
Slide 24: Full Circle Dairy in Production & Commissioning Phase
Full Circle Dairy in Production & Commissioning Phase Full Circle Dairy RNG Facility • Project is now producing RNG and in commissioning phase • During June 2024, the first month of production, ~4,700 dekatherms of RNG have been captured and transported for use • This RNG is then transported and inj
Slide 25: Working Toward Excellence on All Fronts: Sustainability
Working Toward Excellence on All Fronts Second Sustainability Reporting Micro-Sustainability Report on Environmental Stewardship to be issued in Q3 2024 Corporate Awards Sharp Energy recognized as For the second time, CPK named Escalent Names Florida City Gas 2024 Best Gas Company Best for Corporate
Slide 26: Why Chesapeake Utilities?
Why Chesapeake Utilities? CPK’s unique combination of operational expertise, growth potential and consistent delivery of long-term shareholder return connects our strong historical track record with our future success. Expertise Growth since 2003: Innovative & diligent • 10x Asset Growth Nimble, yet
Slide 27: Appendix
Appendix Q2 2024 Earnings Call August 9, 2024 27
Slide 28: GAAP to Non-GAAP Reconciliation – Consolidated Results
GAAP to Non-GAAP Reconciliation – Consolidated Results $ in millions Second Quarter Results Year-to-Date Results Consolidated Reconciliation Q2 2024 Q2 2023 $ % YTD 2024 YTD 2023 $ % GAAP Operating Revenues $ 166.3 $ 135.6 $ 30.7 23% $ 412.0 $ 353.7 $ 58.3 16% Cost of Sales Nat Gas, Propane, & Elect
Slide 29: GAAP to Non-GAAP Reconciliation – Regulated Energy Segment
GAAP to Non-GAAP Reconciliation – Regulated Energy Segment $ in millions Second Quarter Results Year-to-Date Results Regulated Segment Q2 2024 Q2 2023 $ % YTD 2024 YTD 2023 $ % GAAP Operating Revenues $ 130.6 $ 101.1 $ 29.5 29% $ 299.1 $ 243.4 $ 55.6 23% Cost of Sales Nat Gas, Propane, & Electric (2
Slide 30: GAAP to Non-GAAP Reconciliation – Adjusted Net Income and EPS
GAAP to Non-GAAP Reconciliation – Adjusted Net Income and EPS $ in millions except per-share amounts shares in thousands Second Quarter Results Year-to-Date Results Non-GAAP Reconciliation: NI /EPS Q2 2024 Q2 2023 $ % YTD 2024 YTD 2023 $ % GAAP Net Income $ 18.3 $ 16.1 $ 2.1 13% $ 64.4 $ 52.5 $ 12.0
Slide 31: Weather Has Generally Been Warmer than Normal
Weather Has Generally Been Warmer than Normal Delmarva Ohio Florida COOLER 7% Second Quarter —% NORMAL (18)% (24)% (32)% (41)% MILDER Q2 2023 Q2 2024 Q2 2023 Q2 2024 Q2 2023 Q2 2024 —% NORMAL Year to Date (13)% (13)% (15)% (24)% MILDER (33)% YTD 2023 YTD 2024 YTD 2023 YTD 2024 YTD 2023 YTD 2024 Note
Slide 32: 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 years $206 enables CPK the $20 flexibility to: • Execute on a robust growing $162 $159 organic capital plan • Fully integrate $135 $137 Florida City Gas $132 and capitalize on commercial synergies
Slide 33: Quarterly Earnings Cadence
Quarterly Earnings Cadence 1 Adjusted EPS Year Q1 Q2 Q3 Q4 FY 2 2023 $2.04 $0.90 $0.69 $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%
Slide 34: Aligning our Work with a Higher-Level Purpose
Aligning our Work with a Higher-Level Purpose Our Mission Our Vision We deliver energy We will be a leader in that makes life better delivering energy that for the people and contributes to a communities we serve. sustainable future. Our Values Care We put people first. Integrity We tell the truth.