Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q4 2022 Earnings Presentation
31 slides from Chesapeake Utilities's earnings presentation, Feb 23, 2023
Slide 1: Fourth Quarter and Full Year 2022 Earnings Conference Call
Fourth Quarter and Full Year 2022 Earnings Conference Call February 23, 2023
Slide 2: Today's Presenters
Today’s Presenters Jeff Householder President, Chief Executive Officer Beth Cooper Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary Jim Moriarty Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer Alex Whitela
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: 2022 Financial Highlights
2022 Financial Highlights • Achieved 16th consecutive year with increased earnings* • Full year Diluted EPS of $5.04, up 6.6% over 2021 • Drove $37 million in adjusted gross margin growth • Deployed approximately $141 million on new capital investments. Approximately $40 million planned for 2022, no
Slide 5: Advancing Sustainable Energy Projects
Advancing Sustainable Energy Projects Recently Announced Projects Planet Found Biogas Facility • First poultry waste-to-energy project on the Delmarva Peninsula, capable of producing RNG Clean Energy Expansion • 2.2-mile pipeline transporting natural gas to support Clean Energy Fuels’ CNG fueling st
Slide 6: Full Circle Dairy
Full Circle Dairy Project Details Madison County, FL • Chesapeake Utilities’ first RNG production facility • 100,000+ Dts of RNG produced from cow manure generated at Full Circle Dairy • Project expected to complete in H1 2024 • Estimated to capture and redirect more than 1,100 metric tons of methan
Slide 7: Growth Platform Focus
Growth Platform Focus • 5.7% residential customer growth on Delmarva in 2022 Organic Growth: • 4.2% residential customer growth in Florida in 2022 • Continued propane CGS conversions to natural gas • FERC approval for Southern Expansion • Other pipeline expansions continue to advance Gas Transmissio
Slide 8: 2022 Financial Performance
2022 Financial Performance Solid Growth Despite Inflationary Pressures Diluted Earnings Per Share 2022 Key Adjusted Gross Margin Drivers $10.6M $8.1M $7.4M $5.04 Contributions Pipeline Regulated from Expansion and Infrastructure Acquisitions Natural Gas Programs Organic Growth and Recovery Mechanism
Slide 9: Fourth Quarter and Full Year 2022 Financial Summary
Fourth Quarter and Full Year 2022 Financial Summary Consolidated Fourth Quarter Change Full Year Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % 1 Total Adjusted Gross Margin $ 115,297 $ 101,779 $ 13,518 13.3% $ 420,198 $ 383,018 $ 37,180 9.7% Operating Income 42,952 36,824 6
Slide 10: Key Drivers of Our Performance (Q4)
Key Drivers of Our Performance Quarter Ended December 31, 2022 Q4 2021 Diluted Earnings Per Share $1.28 Interest income from federal income tax A $0.01 refund B Contributions from recent acquisitions $0.13 C Core business growth $0.39 Operating expenses tied to recent D -$0.10 acquisitions Operating
Slide 11: Key Drivers of Our Performance (Full Year)
Key Drivers of Our Performance Year Ended December 31, 2022 2021 Diluted Earnings Per Share $4.73 A Absence of 2021 non-recurring items -$0.15 B 2022 non-recurring items $0.11 C Contributions from recent acquisitions $0.43 D Core business growth $1.04 Operating expenses tied to recent E -$0.39 acqui
Slide 12: Regulated Energy Segment
Regulated Energy Segment Financial Summary Chesapeake Utilities’ Regulated Energy Segment Drives Sustained Growth Regulated Energy Segment Fourth Quarter Change Year to Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % 1 Adjusted Gross Margin $ 79,452 $ 73,465 $ 5,987 8.1%
Slide 13: Unregulated Energy Segment
Unregulated Energy Segment Financial Summary Strong Unregulated Margin Growth Driving Earnings Growth for the Year Unregulated Energy Segment Fourth Quarter Change Year to Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % 1 Adjusted Gross Margin $ 35,874 $ 28,344 $ 7,530 2
Slide 14: Capital Structure Overview
Capital Structure Overview Strong Balance Sheet to Support Growth 12/31/2022 12/31/2021 Long-Term Debt Stockholders‘ equity $ 832,801 $ 774,130 Long-term debt, net of current maturities 578,388 549,903 • Avg. Interest Rate: 3.38% Total permanent capitalization $ 1,411,189 $ 1,324,033 • $50M: 2.95% i
Slide 15: Major Projects and Initiatives
Major Projects and Initiatives Key Projects Driving Adjusted Gross Margin Adjusted Gross Margin* Year Ended Estimate for Project/Initiative December 31, Fiscal in thousands 2021 2022 2023 2024 Pipeline Expansions: 1 Western Palm Beach County, Florida Expansion $ 4,729 $ 5,227 $ 5,227 $ 5,227 1,2 Del
Slide 16: Key Expansion Projects
Key Expansion Projects Significant Activity in 2023 Capital Fully Annual Adjusted Gross Project Investment In Service Margin Estimate Del-Mar Energy Pathway* $60.1 million Q4 2021 $7.0 million West Palm Beach County* $28.9 million Q4 2021 $5.2 million Guernsey Power Station $6.5 million Q4 2021 $1.5
Slide 17: Regulatory Initiatives
Regulatory Initiatives Florida Natural Gas Base Rate Proceeding • Florida natural gas distribution businesses collectively filed a consolidated natural gas base rate proceeding in May 2022 • In Jan. 2023, the Florida PSC approved an annual rate increase of approximately $17.2 million with an equity
Slide 18: Regulatory Initiatives (continued)
Regulatory Initiatives (continued) 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-
Slide 19: Corporate Culture
Corporate Culture Internal Employee Engagement Investments Top Work Place Award Implemented New Learning Management System Unveiled Chesapeake Total Wellness Named Top Work Places Program in USA for 2023, Third Year in a Row 19
Slide 20: Committed to Our Communities
Committed to Our Communities 2022 Community Engagement of charitable contributions and community sponsorships 20
Slide 21: Historical Capital Expenditures
Historical Capital Expenditures 2023 Estimate Continues Growth Track Record 2013 Last 10 Years: $1.8 Billion 2022 2009 Since FPU Acquisition: $2.1 Billion 2022 $283 $228 $195 $192 $199 $196 $169 $154 $141 $108 $98 $200 $240 to $78 $180 $193 $230 $169 $174 $174 $49 $44 $144 $130 $92 $98 $78 $47 $44 $
Slide 22: Capital Expenditure Guidance Update
Capital Expenditure Guidance Update New 2021-2025 Range: $900M to $1.1B New 2021-2022 2023-2025 Guidance $369M $531M-$731M Previous 2021-2025 Range: $750M to $1.0B Previous 2021-2022 2023-2025 Guidance $369M $381M-$631M Strategic capital investments continue to drive earnings growth 22
Slide 23: Diluted EPS Guidance Update
Diluted EPS Guidance Update New 8-year CAGR: 9.9% to 10.3% Previous 8-year CAGR: 9.7% to 10.1% $6.25 $6.35 $6.05 $6.15 $5.04 $4.73 $4.21 $3.72 $3.47 $2.89 2017* 2018 2019 2020 2021 2022 Previous Previous New New 2025 2025 2025 2025 Low High Low High Note: Historic EPS presented from continuing opera
Slide 24: Investment Proposition
Investment Proposition Committed to Superior Performance Track Record Energized Team Strong Foundation for Growth Sustainable Growth Financial Discipline Platforms for Growth Financial Objectives in Support of Increased Shareholder Value: ESG ✓ Investing $900 million to $1.1 billion through 2025 wit
Slide 25: Appendix
> CHESAPEAKE ORATION Appendix
Slide 26: GAAP to Non-GAAP Reconciliation: Consolidated Results
GAAP to Non-GAAP Reconciliation Consolidated Results Consolidated Results Fourth Quarter Change Year-to-Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % Operating Revenues $ 187,300 $ 160,365 $ 26,935 16.8% $ 680,704 $ 569,968 $ 110,736 19.4% Cost of Sales: Natural gas, p
Slide 27: GAAP to Non-GAAP Reconciliation: Regulated Energy Segment
GAAP to Non-GAAP Reconciliation Regulated Energy Segment Regulated Energy Segment Fourth Quarter Change Year-to-Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % Operating Revenues $ 118,360 $ 101,417 $ 16,943 16.7% $ 429,424 $ 383,920 $ 45,504 11.9% Cost of Sales: Natural
Slide 28: GAAP to Non-GAAP Reconciliation: Unregulated Energy Segment
GAAP to Non-GAAP Reconciliation Unregulated Energy Segment Unregulated Energy Segment Fourth Quarter Change Year-to-Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % Operating Revenues $ 78,081 $ 65,227 $ 12,854 19.7% $ 280,750 $ 206,869 $ 73,881 35.7% Cost of Sales: Natur
Slide 29: Quarterly Earnings Cadence
Quarterly Earnings Cadence Year Q1 EPS Q2 EPS Q3 EPS Q4 EPS FY EPS 2022 $2.08 $0.96 $0.54 $1.46 $5.04 % of FY 41% 19% 11% 29% 2021 $1.96 $0.78 $0.71 $1.28 $4.73 % of FY 41% 16% 15% 27% 2020 $1.77 $0.64 $0.56 $1.24 $4.21 % of FY 42% 15% 13% 29% 2019 $1.75 $0.54 $0.38 $1.04 $3.72* % of FY 47% 15% 10%
Slide 30: Solid Track Record of Return on Equity
Solid Track Record of Return on Equity Consistently exceeding peer median and 75th percentile 14% Return on Equity 12.7% 12.6% 13% 12.2% 12.2% 12.1% 11.8% 11.7% 12.0% 11.6% 11.7% 12% 11.3% 11.3% 11.3% 11.3% 11.2% 11.1% 11.0% 11.0% 11% 10% * 10-Year Peer 75th Percentile – 9.4% 9% * 10-Year Peer Media
Slide 31: 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