Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — AGA Financial Forum 2020
39 slides from Chesapeake Utilities's conference presentation, May 18, 2020
Slide 1: AGA Financial Forum May 18-19, 2020
Exhibit 99.1 Commitment Growth Leadership Safety Sustainability Solutions Driven By Energy Strength Team AGA Financial Forum May 18-19, 2020 Service Performance Community ValueExhibit 99.1 Commitment Growth Leadership Safety Sustainability Solutions Driven By Energy Strength Team AGA Financial Forum
Slide 2: Forward Looking Statements and Other Disclosures
Forward Looking Statements and Other Disclosures COVID-19 Impact: At this time, we cannot quantify the impact that the COVID-19 virus will have on the economy, and more particularly, on Chesapeake Utilities Corporation(“Chesapeake Utilities or the Company”). The earnings and capital estimates we hav
Slide 3: Current Situation: Successful Track Record, Positive Future Outlook
Current Situation Successful Track Record, Positive Future Outlook Long-term Track Record Significant capital investment over the last 10+ years. Top quartile growth in earnings, dividends and total shareholder returns. Doubled our market capitalization twice in the last 10 years. First quarter perf
Slide 4: Business Overview
Business Overview Diversified Energy Delivery Business Natural Gas Distribution Delaware, Maryland, Florida Natural Gas Transmission Delaware, Maryland, Pennsylvania, Florida 81% Electric Distribution Florida Propane Distribution and AutoGas Delaware, Maryland, Pennsylvania, Virginia, Florida Marlin
Slide 5: Solid Track Record of Return on Equity
Solid Track Record of Return on Equity (ROE) th Consistently Exceeding the Peer Median and 75 Percentile th * 10-Year Peer 75 Percentile – 10.08% * 10-Year Peer Median – 8.86% Return on Equity For the periods ending December 31, 2019 1 Year 3 Year 5 Year 10 Year CPK 12.01% 11.89% 11.84% 11.83% Peer
Slide 6: Growth in Earnings per Share
Growth in Earnings per Share 13 Years of Record Earnings st For Periods Ended December 31 Basic GAAP Earnings per Share $4.50 $3.97 $4.00 $3.56 $3.46 $3.50 $2.87 $3.00 $2.73 $2.48 $2.50 $2.27 $2.01 $1.93 $2.00 $1.83 $1.45 $1.50 $1.00 $0.50 $- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 6G
Slide 7: Strong Track Record of Dividend Growth Driven by Earnings Growth
Strong Track Record of Dividend Growth Driven by Earnings Growth $2.00 $1.76 $1.80 $1.62 $1.60 $1.48 $1.40 $1.30 $1.22 $1.15 $1.20 $1.08 $1.03 $0.97 $1.00 $0.92 $0.88 $0.80 $0.60 $0.40 $0.20 $- 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 On May 7, 2020, the Board of Directors increased th
Slide 8: Market Capitalization Increased
As of December 31 Stock Price (except 5/15/2020) $1,373 $1,572 $1,332 $1,284 $1,092 $867 $725 $578 $436 $415 $395 $301 $215 Market Capitalization Increased Performance is Driving Increased Value $1,800 $95.83 $100 $90 $83.56 $1,600 $81.30 $78.55 $80 $1,400 $66.95 $70 $1,200 $56.75 $60 $1,000 $49.66
Slide 9: Total Shareholder Return
Total Shareholder Return Generating Solid Shareholder Returns Over the Long-Term Average Annualized Shareholder Return For Periods Ending April 30, 2020 25% 19% 20% 15% 15% 15% 13% 13% 12% 11% 11% 11% 11% 10% 9% 9% 9% 10% 9% 8% 7% 6% 6% 4% 5% 2% 1% 0% -5% -3% -7% -10% -8% 1 Year 3 Year 5 Year 10 Yea
Slide 10: Chesapeake Utilities' COVID-19 Response: Our Focus and Outcome
Chesapeake Utilities’ COVID-19 Response Our Focus and The Outcome to Date Objective #1 Do whatever it takes to keep our people and our communities as safe as possible We have been successful in achieving both of those objectives. Our results for the first quarter were strong and we are Objective #2
Slide 11: COVID-19 Response: Commitment to Safety
Chesapeake Utilities’ COVID-19 Response An Unwavering Commitment to the Safety of Employees, their Families, our Customers and the Communities we serve Pandemic Action Plan Employees Investors/Financial Customers Communities Community •Executed Chesapeake’s •Employee monitoring by •Our distribution
Slide 12: Key Business Factors: COVID-19 Impact
Key Business Factors: COVID–19 Impact •In March, lower margin of $400,000 was offset by lower costs of $400,000 •In April, lower C&I load has been partially offset with higher residential load driven by colder Margin weather in April •Employee/labor costs: COVID-19 related employee absences have not
Slide 13: Current Regulatory Filing Strategy: COVID-19
Current Regulatory Filing Strategy: COVID-19 Maryland PSC (Maryland Division and Sandpiper Energy) • On April 9, 2020, the Maryland PSC issued Order 89542 authorizing the establishment of a regulatory asset for COVID-19 related incremental costs. • Costs incurred beginning on March 16, 2020 may be r
Slide 14: Strong Performance: First Quarter Results
Chesapeake Utilities’ Strong Performance st 1 Quarter Results § Net Income for the quarter was $28.9 million for the first quarter of 2020 § EPS was $1.76 compared to $1.74 for the first quarter of 2019 § Key Performance Results for the quarter versus the same period in 2019 § Natural gas expansion
Slide 15: Recent Stock Performance
Recent Stock Performance Chesapeake Stock Performance vs. Market and Peers 05/15/2020 05/15/2020 Closing Closing Closing Price as Closing Price Price as of Price as of 52-week a % of 12/31/19 as a % of 52- 05/15/2020 12/31/2019 High Closing Price Percentile week High Percentile CPK US Equity $ 83.56
Slide 16: Long-Term Prospects
Chesapeake Utilities’ Long-Term Prospects We Are Positioned for Continued Growth Long-term Strategy is in Objective #1 Tact Do whatever it takes to keep our people and our communities as safe as possible We have been successful in Business Realignment/ achieving Transformation Underway both of those
Slide 17: Driving Our Actions: Focus on Shareholder Value and Growth
Driving Our Actions Focus on Shareholder Value and Growth • High standards of safety and operational performance. • Optimize growth opportunities within rate, customer demand and market constraints • Maintain a regulated/ unregulated business mix designed to produce better than utility returns and a
Slide 18: Looking Forward 2020-2022 Strategic Growth Initiatives
Looking Forward 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 Elkton Ga
Slide 19: Near-term Focus Aligned with Strategic Growth Initiatives
Near-term Focus Aligned with Our Strategic Growth Initiatives • Complete transmission projects currently underway - Del-Mar Energy Pathway, Callahan Pipeline, West Palm Beach Expansion • DNG and FPU expansion plans will enable us to continue to grow customers at greater than the national average • F
Slide 20: Renewable Natural Gas Proposition
CPK’s Renewable Natural Gas Proposition Presents Multiple Investment Opportunities Distribution Transmission Marlin Operations Operations Potential investment Additional Interstate pipeline Investment in gas processing transportation interconnects for equipment which we equipment to Opportunity rece
Slide 21: Potential RNG Scenario on the Delmarva Peninsula
Potential RNG Scenario on the Delmarva Peninsula Across the CPK Value Chain Composting Plant Organic Fertilizer generates Raw Compost Fertilizer Landfill Poultry Farms processes generate Chicken Waste & Waste Water Biodigester generates Renewable Natural Gas Processed Fertilizer (RNG) can be flared
Slide 22: Capital Expenditures Estimate for 2020
Capital Expenditures Estimate for 2020 Estimate for Fiscal 2020 (dollars in thousands) Low High Regulated Energy: Natural gas distribution $ 72,000 $ 83,000 Natural gas transmission 83,000 96,000 Electric distribution 5,000 7,000 Total Regulated Energy 160,000 186,000 Unregulated Energy: Propane dis
Slide 23: Major Projects and Initiatives
Major Projects and Initiatives Increasing Shareholder Value by Continuously Seeking and Developing Projects and Initiatives We continue to pursue Gross Margin for the Period projects that will further Three Months Ended Year Ended Estimated for March 31, December 31, Fiscal enhance our margin in tho
Slide 24: 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 $1,294,251 $1,294,716 • $95 million incremental liquidity for $1,140,852 2020 capital if needed $269,
Slide 25: 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 26: Reaffirm Current Earnings Guidance
Reaffirm Current Earnings Guidance 2022 EPS Target Range of $4.70 - $4.90 $5.00 $4.90 On February 26, $0.20 2020, we updated our EPS guidance $4.55 based on our $4.50 current strategic $0.35 plan planned investments and growth prospects. $4.00 $4.70 We are continuing to monitor the COVID- $4.20 19 i
Slide 27: 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 28: Our Culture of Sustainability
Our Culture of Sustainability 29 American Gas Named 2019 Recognized Upgrade of our Association Safety Governance Team of as a Top Workplace interconnect and large Achievement Awards the Year by Corporate for 8 Consecutive measurement Earned Over the Past Secretary magazine Years facilities 17 Years
Slide 29: A Responsible Company
A Responsible Company At Chesapeake Utilities, we draw upon our legacy of expertise to conduct business with environmental responsibility. We are strongly committed to operating in an ecologically-aware manner while increasing environmental benefits in our communities. Autogas CHP CNG Solar* Marlin
Slide 30: Our Investment Proposition
Our Investment Proposition Commitment to Superior TSR, EPS & Dividend Growth As of December 31, 2019 Chesapeake Utilities Corporation Total Return (Annualized) EPS Growth (CAGR) Dividend Growth (CAGR) Retention Rate Peer Peer Peer Peer Period CPK Median CPK Average CPK Average CPK Average 3 Year 15%
Slide 31: Thank You!
Thank You! Jeff Householder Beth Cooper Jim Moriarty President & CEO Executive Vice President, Executive Vice President, General jhouseholder@chpk.com CFO and Asst. Secretary Counsel and Corporate Secretary bcooper@chpk.com jmoriarty@chpk.comThank You! Jeff Householder Beth Cooper Jim Moriarty Presi
Slide 32: Appendix: Business Development Projects Driving Growth
Appendix Business Development Projects Driving GrowthAppendix Business Development Projects Driving Growth
Slide 33: Delmarva Natural Gas Distribution Growth
Delmarva Natural Gas Distribution Growth Converted Sandpiper Customers from Propane to Natural Gas 2017 Announcing that natural gas is available in • Final segment in Ocean City, Ocean City, MD MD converted to natural gas in April 2020 • Approximately 10,000 customers have been converted (Berlin, We
Slide 34: Natural Gas Distribution Growth: Acquisition of Propane Distribution Systems
Natural Gas Distribution Growth Acquisition of Propane Distribution Systems • Application was filed with the Delaware PSC seeking approval for regulatory accounting treatment and valuation methodology for the acquisition of propane CGS owned by our affiliate, Sharp, and the conversion of the CGS to
Slide 35: 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 pr
Slide 36: Callahan Pipeline
Callahan Pipeline Nassau County, Florida Peninsula Pipeline is constructing 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) • Initial capacity 148,000 DTs/d • Total project cost
Slide 37: West Palm Beach County, Florida Expansion
West Palm Beach County, Florida Expansion Enhances Reliability and Provides Additional Customer Growth • $33 million capital investment • $1.0 million margin in Q1 2020 • $5.2 million margin in 2020 and beyond • Fully in-service Q3 2020 • Pipeline construction 80% complete • Four PPC projects to ser
Slide 38: Del-Mar Pathway Project Under Development
Del-Mar Pathway Project Under Development Strategic Growth Initiative 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 million
Slide 39: Aspire Energy: Natural Gas Pipeline Project, Guernsey Power Station
Aspire Energy – Natural Gas Pipeline Project Guernsey Power Station, Ohio • 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 exclus