Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Investor Presentation (March 2022)
36 slides from Chesapeake Utilities's investor presentation, March 2022
Slide 1: Investor Presentation March 2022
Investor Presentation March 2022
Slide 2: Forward Looking Statements and Other Statements
Forward Looking Statements and Other Statements 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 s
Slide 3: Mission, Vision and Values
Mission, Vision and Values OUR Mission We deliver energy that makes life better for the people and communities we serve. OUR Vision We will be a leader in delivering energy that contributes to a sustainable future. OUR Values Care Integrity Excellence We put people first. We tell the truth. We achie
Slide 4: Financial Highlights
Financial Highlights • Achieved 15th consecutive year of earnings growth* • Increased full-year 2021 Diluted EPS from continuing operations by 12.4% • Doubled Net Income over last 6 years • Drove $33 million in adjusted gross margin growth • Deployed approximately $228 million on new capital investm
Slide 5: Financial Metrics Performance
Financial Metrics Performance Chesapeake Percentiles Compared CPK Results to Performance Peer Group Performance Metrics 1yr 3yr 5yr 10yr 1yr 3yr 5yr 10yr CapEx / Total Capitalization 13.3% 14.9% 18.1% 19.9% 81% 92% 100% 100% EPS Growth (CAGR) 11.0% 11.1% 10.5% 9.4% 83% 90% 92% 90% Return on Equity 1
Slide 6: Business Overview: Strong Base of Regulated Utilities
Business Overview Strong Base of Regulated Utilities Natural Gas Transmission States Served DE, MD, PA FL Natural Gas Distribution States Served DE, MD 2021 Operating Income MD MD FL Electric Distribution States Served Regulated FL 81% 6
Slide 7: Business Overview: Growing Set of Complementary Unregulated Businesses
Business Overview Growing Set of Complementary Unregulated Businesses Propane Distribution States Served PA, DE, MD, VA, NC, SC, FL FL Natural Gas Pipeline System States Served OH 2021 Operating CNG Virtual Pipeline States Served Income Unregulated Multiple 19% CHP Generation States Served FL RNG Op
Slide 8: Growth Platform Accomplishments
Growth Platform Accomplishments • 4.5% residential customer growth on Delmarva • 4.7% residential customer growth in Florida Organic Growth: • New customers from CGS conversions • Escambia Meter Station acquisition • Completed Somerset, MD pipeline expansion • First pipeline expansion in Ohio (Guern
Slide 9: Organic Growth Opportunities
Organic Growth Opportunities Sustainable Growth Trajectory In Existing Service Territories • Sustained natural gas distribution growth expected in planned and developments under construction in Delaware and Florida • Examples: • Wildlight community in Yulee, Florida • 24,000 new homes • Plantation L
Slide 10: Key Expansion Projects: Transmission Infrastructure Growth Contribution
Key Expansion Projects Transmission Infrastructure Growth Contribution Annual Adjusted Capital Fully In Project Gross Margin Investment Service Estimate $33.5 million 2020 Callahan Pipeline (JV)* $7.6 million CPK 50% Second Quarter 2021 Del-Mar Energy Pathway* $60.1 million Fourth Quarter $6.9 milli
Slide 11: Diversified Energy Acquisition
Diversified Energy Acquisition • ~19,000 – Residential, commercial and agricultural propane customers • ~10 million – Gallons distributed annually • 4 States – Serving customers in North Carolina, South Carolina, Virginia and Pennsylvania • 65 – Employees nationwide • ~80 – Fleet vehicles • $11.3 mi
Slide 12: Marlin Gas Services: Conduit to Expanding RNG Value Chain
Marlin Gas Services Conduit to Expanding RNG Value Chain In Progress • BioEnergy Devco and CleanBay: RNG source created from poultry waste. Services include the transport of RNG by Marlin Gas Services to Eastern Shore Natural Gas (our interstate pipeline) which is ultimately distributed to our natur
Slide 13: Noble Road RNG Project
Noble Road RNG Project Foundation for Sustainable Investments Platform • $7.1 million capital investment • 33.1-mile pipeline from Noble Road Landfill to Aspire Energy gathering system • ~2,500 Dts of RNG transported per day • Increasing percentage of Aspire Energy’s volume, displacing traditional n
Slide 14: Expanding Our Service Territory With Sustainable Investments
Expanding Our Service Territory With Sustainable Investments Noble Road Landfill RNG Pipeline • 33-mile pipeline transporting RNG to Aspire Energy’s gathering system Diversified Energy Propane Acquisition • $37.5 million purchase price • ~19,000 new customers • ~10 million gallons distributed annual
Slide 15: Published Inaugural Sustainability Report
Published Inaugural Sustainability Report Established ESO and ESG Committee Our ESG Commitments • Chesapeake Utilities will be a leader in the transition to a lower-carbon future. • We will continue to promote a diverse and inclusive workplace and further the sustainability of the communities we ser
Slide 16: Capital Investment Has Driven Our Earnings Growth
Capital Investment Has Driven Our Earnings Growth Historical Capital Expenditures and Acquisitions Last 10 Years: $1.75 Billion Since FPU Acquisition: $1.99 Billion 283 228 195 192 199 196 169 154 108 98 78 49 44 Cap Ex Acquisitions Hurricane Michael 16 Amounts in chart reflected in millions.
Slide 17: Historical Earnings and Dividend Growth
Historical Earnings and Dividend Growth Earnings and Dividend Performance for Periods Ended December 31st Diluted Earnings Per Share from Annualized Dividends Per Share Continuing Operations $4.73 $1.92 $4.21 $1.76 $1.62 $3.68 $3.72 $1.48 $3.47 $1.30 $1.22 $2.77 2016 2017* 2018 2019 2020 2021 2016 2
Slide 18: 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% 13% 12.7% 12.6% 12.2% 12.2% 12.1% 12.0% 11.8% 12% 11.7% 11.6% 11.7% 11.3% 11.3% 11.3% 11.3% 11.2% 11.0% 11.0% 11% * 10-Year Peer 75th Percentile – 9.9% 10% 9% * 10-Year Peer Median – 8.
Slide 19: Total Shareholder Return
Total Shareholder Return Average Annualized Shareholder Return for Periods Ended December 31, 2021 40% 37% 35% 30% CPK Guidance – High Range CPK Guidance – Low Range 24% Analyst Estimate - Average 25% 20% 20% 19% CPK 2019 GAAP EPS 16% 15% 10% 5% 0% 1 Year 3 Year 5 Year 10 Year 20 Year CPK Peer Media
Slide 20: 2021 Financial Performance: Record Earnings Growth
2021 Financial Performance Record Earnings Growth Diluted Earnings Per Share Key Drivers of Earnings Growth1 from Continuing Operations $4.73 $10.3M $8.9M $4.8M Pipeline Expansion Increased Contributions $4.21 and Natural Gas Customer from Organic Growth Consumption Acquisitions $3.6M $3.2M $1.0M $1
Slide 21: Fourth Quarter and Full Year Financial Summary
Fourth Quarter and Full Year Financial Summary Financial results for the quarters and full years ended December 31, 2021 and 2020 Fourth Quarter Change Full Year Change (in thousands except per share data) 2021 2020 $ % 2021 2020 $ % Total Adjusted Gross Margin 1 $ 101,779 $ 96,841 $ 4,938 5.1% $ 38
Slide 22: Key Drivers of Our Performance
Key Drivers of Our Performance Year Ended December 31, 2021 FY 2020 Diluted Earnings Per Share from $4.21 Continuing Operations A Gain on sale of assets in 2020 -$0.04 B Net impact of CARES Act items -$0.05 Regulatory deferral of COVID-19 expenses C $0.10 per PSC’s orders Reduced interest expense re
Slide 23: Regulated Energy Segment Financial Summary
Regulated Energy Segment Financial Summary Chesapeake Utilities’ Regulated Energy Segment Drives Sustained Growth Regulated Energy Segment Fourth Quarter Percent Full Year Percent C hange C hange (in thousands except per share data) 2021 2020 C hange 2021 2020 C hange Adjusted gross margin $ 73,465
Slide 24: Unregulated Energy Segment Financial Summary
Unregulated Energy Segment Financial Summary Chesapeake Utilities Driving Higher Returns with Complementary Unregulated Energy Segment Unregulated Energy Segment Fourth Quarter Percent Full Year Percent C hange C hange (in thousands except per share data) 2021 2020 C hange 2021 2020 C hange Adjusted
Slide 25: Capital Expenditures
Capital Expenditures 2021 F o r e cast 2022 2021 Capital Expenditures (dollars in thousands) Actual Lo w Hi gh were $227.8 million R e gul ate d Ene r gy : Natural gas distribution $ 78,084 $ 87,000 $ 92,000 2021 Key Projects: Natural gas transmission 55,149 60,000 67,000 Electric distribution 6,500
Slide 26: Capital Structure Overview
Capital Structure Overview Strong Balance Sheet to Support Growth Long-Term Debt Avg. Interest Rate: 3.45% 12/31/21 12/31/2020 $50M: 2.49% Dec. 2021 Stockholders‘ equity $ 774,130 $ 697,085 $50M: 2.95% March 2022 Long-term debt, net of current maturities 549,903 508,499 Total permanent capitalizatio
Slide 27: Major Projects and Initiatives
Major Projects and Initiatives Key Projects Driving Adjusted Gross Margin Growth Adjusted Gross Margin for the Period Year Ended December 31, Estimate for Fiscal (in thousands) 2020 2021 2022 2023 Pipeline Expansions: Western Palm Beach County, Florida Expansion $ 4,167 $ 4,729 $ 5,227 $ 5,227 Del-M
Slide 28: Regulatory Initiatives
Regulatory Initiatives Florida GRIP • Natural gas pipe replacement program approved by the Florida PSC. • Since inception in August 2012, invested $189.5 million of capital expenditures to replace 348 miles of qualifying distribution mains, including $23.6 million of new pipes throughout 2021. • Ann
Slide 29: ESG Stewardship
ESG Stewardship Committed to Strong Corporate Citizenship • Published inaugural sustainability report • Established Environmental Sustainability Office and internal ESG Committee to advance our ESG strategy • Greenhouse gas emissions reduced by 3,760 mtCO2e from 2019 to 2020 • Robust employee and co
Slide 30: Corporate Culture
Corporate Culture Internal Employee Resource Groups Recent Awards and Recognitions Named Top Work Place in US for 2022, 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 31: Guidance Update
Guidance Update Diluted Earnings Per Share from Continuing Operations Capital Expenditures Guidance through 2025 Guidance through 2025 and for 2022 $750 million $6.05 $6.25 to $1.0 billion CPK Guidance – High Range CPK Guidance – Low Range $4.73 $4.21 $3.68 $3.47 $3.72 $2.77 $175 million to $200 mil
Slide 32: 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 continuing our Business Transformation initiatives Track Record Energized Team • Investi
Slide 33: Appendix
Standing Strong. Embracing Change. Shaping Our Future. Appendix 5 CHESAPEAKE
Slide 34: Non-GAAP Reconciliation: Consolidated Results
Non-GAAP Reconciliation Consolidated Results Consolidated Results Fourth Quarter Full Year (in thousands except per share data) 2021 2020 2021 2020 Operating Revenues $ 160,365 $ 137,037 $ 569,968 $ 488,198 Cost of Sales: Natural gas, propane and electric costs (58,586) (40,196) (186,950) (137,938)
Slide 35: Non-GAAP Reconciliation: Regulated Energy Segment Results
Non-GAAP Reconciliation Regulated Energy Segment Results Regulated Energy Segment Results Fourth Quarter Full Year (in thousands except per share data) 2021 2020 2021 2020 Operating Revenues $ 101,417 $ 93,511 $ 383,920 $ 352,746 Cost of Sales: Natural gas and electric costs (27,952) (24,504) (100,7
Slide 36: Non-GAAP Reconciliation: Unregulated Energy Segment Results
Non-GAAP Reconciliation Unregulated Energy Segment Results Unregulated Energy Segment Results Fourth Quarter Full Year (in thousands except per share data) 2021 2020 2021 2020 Operating Revenues $ 65,227 $ 48,060 $ 206,869 $ 152,526 Cost of Sales: Natural gas and propane costs (36,883) (20,196) (106
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