Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q3 2021 Earnings Presentation
27 slides from Chesapeake Utilities's earnings presentation, Nov 5, 2021
Slide 1: Third Quarter 2021 Earnings Conference Call
Exhibit 99.1 Third Quarter 2021 Earnings Conference Call November 4, 2021
Slide 2: Today's Presenters
Jeff Householder President, Chief Executive Officer Today’s Presenters Beth Cooper Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary Jim Moriarty Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer Alex Whitelam Go Paperl
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: Third Quarter 2021 Financial Performance
Third Quarter 2021 Financial Performance Continued Profitable Growth Driving Results Key Gross Margin Contributions to Earnings Growth Diluted Earnings Per Share +$1.4M +$1.0M +$0.9M $3.45 Pipeline Expansion Higher Contributions and Natural Gas Propane from $2.97 Organic Growth Performance Acquisiti
Slide 5: Third Quarter and Year-to-Date Financial Summary
Third Quarter and Year-to-Date Financial Summary Financial results for the quarters and nine months ended September 30, 2021 and 2020 Third Quarter Year-to-Date (in thousands except per share data) 2021 2020 2021 2020 Total Gross Margin $ 79,971 $ 79,508 $ 281,241 $ 253,418 Operating Income $ 20,113
Slide 6: Segment Quarterly Financial Summary
Segment Quarterly Financial Summary Chesapeake Utilities is Committed to Gross Margin Growth and Efficient Operations Consolidated Results Third Quarter Highlights Three Months Ended Hurricane Michael September 30, 2020 Timing Difference Gross Margin increased $6.0M or 8.1% Percent Percent 2021 2020
Slide 7: Key Drivers of Our Performance: Quarter Ended September 30
Key Drivers of Our Performance Quarter Ended September 30, 2021 Q3 2020 Diluted Earnings Per Share $0.56 Timing difference of Hurricane Michael relief A -$0.08 from Q1 and Q2 recognized in Q3 2020 Regulatory deferral of COVID-19 expenses B $0.10 per PSC’s orders Favorable income tax impact associate
Slide 8: Key Drivers of Our Performance: Year-to-Date
Key Drivers of Our Performance Year-to-Date Ended September 30, 2021 YTD 2020 Diluted Earnings Per Share from $2.96 Continuing Operations A Gain on sale of assets in 2020 -$0.07 B Net impact of CARES Act items -$0.06 Regulatory deferral of COVID-19 expenses C $0.14 per PSC’s orders D Contributions f
Slide 9: 2021 Capital Expenditures Forecast
2021 Capital Expenditures Forecast Forecast 2021 Year-to-date through Sept. 30, 2021 (dollars in thousands) Low High Capital expenditures Regulated Energy: were $151.4 million Natural gas distribution $ 76,000 $ 79,000 Natural gas transmission 58,000 63,000 2021 Key Projects: Electric distribution 8
Slide 10: Capital Structure Overview
Capital Structure Overview Strong Balance Sheet to Support Growth Long-Term Debt 09/30/21 12/31/2020 Avg. Interest Rate: 3.55% $50 Million: 2.49% Stockholders‘ equity $ 750,962 $ 697,085 Funding 1/25/2022 Long-term debt, net of current maturities 505,459 508,499 Total permanent capitalization $ 1,25
Slide 11: Platforms for Growth
Platforms for Growth Organic Growth Optimize the earnings potential of our existing businesses through organic growth and business transformation initiatives. Gas Transmission Pursue intrastate and interstate gas transmission projects in selected markets. Propane Expand the propane wholesale, retail
Slide 12: Major Initiatives
Major Initiatives DISTRIBUTION SYSTEM COMMUNITY GAS SYSTEM DELMARVA AND FLORIDA IMPROVEMENT PROJECTS CONVERSIONS ORGANIC GROWTH AND CUSTOMER GROWTH, PIPELINE EXPANSIONS AUTOGAS AND ACQUISITIONS RNG SAFETY TOWN RNG INVESTMENTS INFRASTRUCTURE STATE OF THE ART INVESTMENT MARLIN TRANSPORT TRAINING CENTE
Slide 13: Gross Margin from Major Projects and Initiatives
Gross Margin from Major Projects and Initiatives Gross margin expected to increase by $15.4 million in 2021 and $10.1 million in 2022 for a total of $25.5 million from 2020 Gross Margin for the Period Three Months Ended Nine Months Ended Year Ended Estimate for September 30, September 30, December 3
Slide 14: Active Renewable Natural Gas Transportation Projects
Active Renewable Natural Gas Transportation Projects Recently Completed • Noble Road Landfill Project: Aspire Energy completed construction of a 33.1 mile pipeline to inject RNG developed at the landfill for distribution to its end use customers. In Progress • BioEnergy Devco and CleanBay: RNG sourc
Slide 15: Key Expansion Projects
Key Expansion Projects Pipeline Growth and Margin Contribution Capital Fully In Annual Gross Project Investment Service Margin Estimate 2021 West Palm Beach County $28.9 million $5.2 million Fourth Quarter 2021 Del-Mar Energy Pathway* $63.4 million $6.7 million Third Quarter $33.5 million 2020 Calla
Slide 16: Recent State Level Governmental Affairs Activities
Recent State Level Governmental Affairs Activities Florida Activity Ohio Activity Energy Preemption Bill Renewable Energy Bill Energy Preemption Bill •Filed by Chesapeake Utilities. •Filed by a utility coalition, led by •Filed by the Florida Natural Gas Dominion Energy Association (FNGA). •Passed an
Slide 17: Regulatory Initiatives
Regulatory Initiatives Florida GRIP • Natural gas pipe replacement program approved by the Florida PSC. • Since inception in August 2012, invested $183.6 million of capital expenditures to replace 337 miles of qualifying distribution mains, including $17.7 million of new pipes during the first nine
Slide 18: Regulatory Initiatives (cont.)
Regulatory Initiatives (cont.) Elkton Gas STRIDE Plan • Settlement reached with the Maryland PSC Staff and the Maryland Office of the Peoples Counsel. • Aldyl-A pipeline replacement program which enables recovery of the capital investment in the form of a fixed charge rider through a proposed 5-year
Slide 19: ESG Stewardship
ESG Stewardship • We take seriously our responsibility to be a good, trusted and ethical corporate citizen, and doing all we can to contribute, through investment, charitable contributions and volunteerism, to greater sustainability, environmental benefits and societal advancement. • For more than 1
Slide 20: ESG Stewardship (cont.)
ESG Stewardship (cont.) Together, the Chesapeake Utilities Team PROUDLY DELIVERS UNINTERRUPTED ENERGY SERVICES TO OUR CUSTOMERS • We have an unwavering focus on advancing initiatives that are consistent with our long-history of growth, upper-quartile performance, and the reduction of greenhouse gas
Slide 21: Corporate Culture
Corporate Culture Internal Employee Resource Groups Recent Awards and Recognitions Named Top Work Place in US for 2021, Top Work Place in Delaware for 10 Years in a Row Chesapeake Utilities named 2021 Best Company with Over 50 People. Sharp Energy named 2021 Best Propane Company. Chesapeake Cares CP
Slide 22: Solid Track Record of Return on Equity
Solid Track Record of Return on Equity Consistently Exceeding Peer Median and 75th Percentile Return on Equity 14% 12.7% 13% 12.6% 12.2% 12.2% 12.1% 12.0% 11.8% 11.7% 11.7% 12% 11.6% 11.3% 11.3% 11.3% 11.2% 11.0% 11.0% 11% th * 10-Year Peer 75 Percentile – 10.09% 10% 9% * 10-Year Peer Median – 8.59%
Slide 23: Capital Investment Guidance
Capital Investment Guidance Continued Record Investment in Our Business Growth 5-year capital expenditure guidance 2021 thru 2025 up to $1 billion $750 million to $1.0 billion $185 million to $200 million $151 million Target 2021-2025 Forecast 2021 YTD Capital Expenditures as of 9/30/2021 2021 Capit
Slide 24: Diluted Earnings per Share Guidance from Continuing Operations
Diluted Earnings per Share Guidance from Continuing Operations Diluted Earnings Per Share from Continuing Operations Guidance through 2025 $6.25 $6.05 $4.21 $3.72 $3.68 $3.47 $2.77 2016 2017* 2018 2019 2020 2025 2025 Strategic capital investments continue to drive earnings growth. 24 * 2017 Includes
Slide 25: In Memory of Eugene (Gene) H. Bayard
In Memory of Eugene (Gene) H. Bayard • Was nominated to Chesapeake Utilities Corporation’s Board of Directors in 2006 • Served as member of Corporate Governance Committee • Extensive expertise in the Delaware legal community, home of the nation’s preeminent forum for Delaware corporations and other
Slide 26: Investment Proposition
Investment Proposition Committed to Superior Performance We seek to identify and develop opportunities to drive our future earnings growth and increase shareholder value. • Capitalizing on new organic growth and operational Track Record Energized Team efficiencies Strong Foundation for • Investing i
Slide 27: Thank You
Standing Strong. Embracing Change. Shaping Our Future. Thank You 5 SHESAPEAKE