Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — FY2021 Earnings Presentation
30 slides from Chesapeake Utilities's earnings presentation, Feb 24, 2022
Slide 1: Full Year and Fourth Quarter 2021 Earnings Conference Call
Full Year and Fourth Quarter 2021 Earnings Conference Call February 24, 2022
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 Head of I
Slide 3: 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 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: 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 6: 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 7: Continued Commitment to ESG
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 8: 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 8 Amounts in chart reflected in millions.
Slide 9: 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 10: 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 11: 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 12: 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 13: Key Drivers of Our Performance: Quarter Ended December 31, 2021
Key Drivers of Our Performance Quarter Ended December 31, 2021 Q4 2020 Diluted Earnings Per Share $1.24 Absence of regulatory deferral of COVID-19 A -$0.06 expenses per PSC’s orders Reduced interest expense related to early B $0.04 extinguishment of FPU mortgage bonds C Contributions from recent acq
Slide 14: Key Drivers of Our Performance: Year Ended December 31, 2021
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 15: 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 16: 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 17: 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 18: 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 19: 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 20: Key Expansion Projects
Key Expansion Projects Pipeline 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 million 2021 West Palm B
Slide 21: 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 22: 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 23: 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 24: 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 25: 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 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 continuing our Business Transformation initiatives Track Record Energized Team • Investi
Slide 27: Appendix
Standing Strong. Embracing Change. Shaping Our Future. Appendix 5 CHESAPEAKE
Slide 28: 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 29: 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 30: 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