Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — AGA Financial Forum 2013
46 slides from Chesapeake Utilities's conference presentation, May 6, 2013
Slide 1: AGA Financial Forum: One Company, One Team - Moving Forward Together
AGA Financial ForumMay 5 - 7, 2013 One Company, One Team - Moving Forward Together!
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: Business Overview
Business Overview
Slide 4: Florida Public Utilities Company Business Structure
Electric DistributionFlorida Public Utilities Company Business Structure
Slide 5: Regulated Energy: Natural gas distribution in Delaware and Maryland
Chesapeake Utilities distributes natural gas to approximately 55,000 residential and commercial customers in Delaware and Maryland.In Delaware, Chesapeake has extended its system southeastward reaching the Delaware/Maryland state line.In Maryland, during the past year, Chesapeake extended its presen
Slide 6: Eastern Shore Natural Gas interstate pipeline
Eastern Shore Natural Gas Company ("ESNG") owns and operates a 428-mile interstate pipeline that transports natural gas from various points in Pennsylvania to customers in Delaware, Maryland and Pennsylvania.Over the past 15 years, ESNG has extended its pipeline system to Lewes, Delaware, west to Ce
Slide 7: Florida Public Utilities natural gas and electric distribution
Florida Public Utilities distributes natural gas to approximately 69,000 residential and commercial customers and electricity to 31,000 customers across Florida.Peninsula Pipeline Company, Inc. provides natural gas transportation services in Florida. Regulated Energy
Slide 8: Sharp Energy propane distribution
Sharp Energy distributes propane to 35,000 customers in Delaware, the eastern shore of Maryland and Virginia, and southeastern Pennsylvania.Our propane operations have grown organically through our Community Gas Systems ("CGS") strategy, our recent expansions of service into Cecil County, Maryland a
Slide 9: Florida Public Utilities propane distribution
Florida Public Utilities' propane distribution subsidiary provides service to approximately 14,500 customers in various areas of Florida.We purchased the Glades Gas Company operating assets in February of 2013, adding 3,000 customers in South Florida. Unregulated Energy
Slide 10: Xeron and Peninsula Energy Services Company
Xeron Inc., our propane wholesale marketing subsidiary based in Houston, Texas; markets propane to major independent oil and petrochemical companies, wholesale resellers and retail propane companies located primarily in the southeastern United States. Xeron enters contracts to purchase or sell propa
Slide 11: BravePoint information technology services
BravePoint (r), Inc., provides advanced information technology services and solutions for both enterprise and e-business applications.For over 20 years, using technology to drive profits, BravePoint's skilled consultants have been helping clients expand the success of their business through a variet
Slide 12: Investment Mix by Segment, Energy Served and Region
(CHART) By Segment Investment Mix as of December 31, 2012 (CHART) By Energy Served (CHART) By Region
Slide 13: 2012 Margin Contribution
By Segment 2012 Margin Contribution By Energy Served By Region (CHART) (CHART) (CHART)
Slide 14: 2012 Operating Income Contribution
By Segment 2012 Operating Income Contribution By Energy Served By Region (CHART) (CHART) (CHART)
Slide 15: Financial Results: Long-Term Execution
Financial ResultsLong-Term Execution
Slide 16: Investing in Growth
Investing in Growth Capital Expenditures as Percentage of Total Capitalization (CHART) We are aggressively seeking opportunities to invest capital to generate value for our customers and shareholders. *Named Peer Group includes the following companies: AGL Resources, Inc.; Atmos Energy Corporation;
Slide 17: Generating Growth Above Utility Regulated Returns and Superior EPS Growth
(CHART) Generating Growth Above Utility Regulated Returns and Superior EPS Growth Record EPS for 6th Consecutive YearCumulative 5-year growth in diluted EPS of 54.1%5 year compound annual growth rate in EPS of more than 9% Consistent Above Utility Regulated Returns over the last five yearsWhile maki
Slide 18: Peer ROE vs. Capital Expenditures
The returns earned in our unregulated businesses coupled with our returns achieved in our regulated businesses has enabled us to achieve strong consolidated returnsWe will continue to focus on maximizing returns in our existing businesses while investing capital in new opportunities Peer ROE vs. Cap
Slide 19: 2012 Financial Results
For the periods ended December 31,(in thousands except per share amounts) 2012 Financial Results Net income of $28.9 million or $2.99 per share, an increase of 4.2% (9.9% growth rate adjusting for amortization of acquisition adjustment) compared to 2011Growth in natural gas businesses more than offs
Slide 20: Financial Results: Year to Date 2013 Results
Financial ResultsYear to date 2013 Results
Slide 21: First Quarter 2013 Performance Summary
Highlights39% increase in net income and earnings per shareKey Drivers of increased gross margin:Weather returning to normal ($3.2 million)Strong retail propane margins per gallon ($2.1 million)Growth in natural gas businesses ($1.6 million) First Quarter 2013 Performance Summary Year to Date Financ
Slide 22: Reconciliation of EPS
Reconciliation of EPSFor the Three Months Ended March 31, 2013 Return to normal winter weather in 2013 provided $1.9 million or $0.20 per share favorable impact in the first quarter of 2013 compared to the same period last yearNatural gas and propane businesses added increased margins of $2.7 millio
Slide 23: Regulated Energy Segment Results
Regulated Energy Segment Results Highlights17% increase in operating income$3.3 million increase in gross margin due to:More normal temperatures ($1.2 million)Organic customer growth on both the Delmarva Peninsula and in Florida ($801,000)Expansion initiatives in Delaware, Maryland and Florida compl
Slide 24: Unregulated Energy Segment Results
Unregulated Energy Segment Results Highlights82% increase in operating income41% increase in gross margin due to:Return to normal temperatures/timing of deliveries ($2.5 million) Strong retail propane margins per gallon ($2.1 million)Increased operating income as a result of the Glades Gas propane a
Slide 25: Other Segment Results
Other Segment Results HighlightsOperating loss of $125,000 compared to operating income of $121,000 for 1st Quarter 2012 Consistent quarter-over- quarter gross margin at BravePoint$273,000 increase in other operating expenses at BravePoint primarily due to higher payroll and related costs First Quar
Slide 26: Growth Opportunities
GrowthOpportunities
Slide 27: Natural Gas Expected to Have a Sustained Price Advantage
Natural Gas Expected to Have a Sustained Price Advantage(CHART)
Slide 28: Delmarva Growth Opportunities
4 2 3 1 6 5 Delmarva Growth Opportunities New Service in Delaware and Maryland2011 - 2012 ProjectsNatural gas expansion for southeastern DE (Nov - Dec 2011)Annualized gross margin - $1.3 million (Distribution - $391k and Transmission - $935k)Natural gas expansion to serve two new facilities in Easte
Slide 29: Florida Growth Opportunities
2 1 3 Florida Growth Opportunities New Service in Florida2012 ProjectsNatural gas expansion to Nassau County, FL (April 2012)Annualized gross margin - $1.3 million2013 Projects2. Natural gas expansion to an unaffiliated Florida utility (June 2013)Estimated annualized gross margin - $840,000Acquisiti
Slide 30: Major Expansion Initiatives Already Commenced
Major Expansion Initiatives That Have Already Commenced - 2013 and Annualized Financial Impact These services generated $16,000 in gross margin in the first quarter of 2012. (2) These services generated $4,000 in gross margin in the first quarter of 2012.
Slide 31: Upcoming Major Expansion Initiatives with Executed Contracts
Upcoming Major Expansion Initiatives with Executed Contracts - Annualized Financial Impact
Slide 32: 2013 Focus and Beyond
sl ——— 2013 Focus and Beyond + Announced expansions — NRG plant, Delaware City NE C refinery expansion, service to unaffiliated Florida JCUe utility New expansions — both interstate and intrastate * New services to existing customers + Organic growth and conversions facilitated by recent P expansion
Slide 33: 2013 Focus and Beyond (con't)
2013 Focus and Beyond (con't)
Slide 34: Capital Expenditures by Business Segment
Capital Expenditures by Business Segment We make investments that are projected to achieve their return on capital.We have invested approximately $227 million over the last 5 years.Capital expenditures for 2013 are budgeted to be $112 million, which represents the largest capital budget in our histo
Slide 35: Total Capitalization
Total Capitalization For the Years Ended December 31, and Quarter Ended March 31, 2013 Equity/Permanent Capitalization 56.9% 61.0% 69.6% 67.0% 70.0% 70.9% Equity/Total Capitalization 49.4% 56.1% 58.2% 61.1% 60.0% 62.9% Chesapeake has provided 9.0 percent earnings and 4.5 percent dividend growth sinc
Slide 36: Delivering Results
sl ——— Delivering Results 36 SHESAPEAKE
Slide 37: Earnings and Dividend Growth
37 Earnings and Dividend Growth Our Commitment to Dividend Growth Supported by Earnings Growth Chesapeake has paid a consecutive dividend for 52 years.Chesapeake has paid an increasing dividend for the last 10 years.In 2013, the annualized dividend was increased by $0.08 per share, or approximately
Slide 38: Shareholder Return
If an investor made an initial investment of $10,000 in 1993, that investment would represent a value of approximately $92,000 today. (CHART) Over the long-term, our shareholders have earned over 11% annually on their Chesapeake investment. Shareholder ReturnDelivered Results to Chesapeake's Shareho
Slide 39: Our Goals
Continue to operate in a cost effective, safe mannerCreatively develop new growth opportunities and convert into valuable services for our current and new customersFurther invest in our people and processes to set the stage for future growth Our Goals We take our responsibility to our investors very
Slide 40: Regulatory Information
RegulatoryInformation
Slide 41: Regulatory Snapshot
—~s Regulatory Snapshot Natural Gas Natural Gas Natural Gas Beet Naturales Natural Gas Distrib teution tribution Distribution —=—Distrbutlon Transmission ‘Delaware Central rida Gas PU yland Tin Fulltime Ful-Time Full-Time Ful-time Ful-Time ‘Gubernatorial Gubemmatoral Gubernatorial “Gubernatorial «Gu
Slide 42: Strategic Regulatory Initiatives and Benefits
Strategic Regulatory Initiatives and Benefits
Slide 43: Strategic Regulatory Initiatives and Benefits (con't)
Strategic Regulatory Initiatives and Benefits (con't)
Slide 44: Leadership Team
LeadershipTeam
Slide 45: Leadership Team
Michael P. McMasters32 Years of ServicePresident & Chief Executive OfficerPhone: 302.734.6799Email: mmcmasters@chpk.com Stephen C. Thompson30 Years of ServiceSenior Vice President, President, Eastern Shore Natural Gas Company Elaine B. Bittner17 Years of ServiceSenior Vice President of Strategic Dev
Slide 46: Leadership Team
Matthew M. Kim3 Years of ServiceVice President, Controller, Assistant Treasurer & Assistant Secretary Thomas E. Mahn1 Year of ServiceTreasurer Beth W. Cooper23 Years of ServiceSenior Vice President, Chief Financial Officer & Corporate SecretaryPhone: 302.734.6799Email: bcooper@chpk.com