Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q2 2023 Earnings Presentation
31 slides from Chesapeake Utilities's earnings presentation, Aug 4, 2023
Slide 1: Second Quarter 2023 Earnings Conference Call
CHESAPEAKE Second Quarter 2023 Ear nings Conference Call UTILITIES C O R P O R AT I O N August 4, 2023 1
Slide 2: Today's Presenters
Today’s Presenters Jeff Householder Chairman of the Board, President, and 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
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 • Diluted EPS of $0.90 and $2.94, respectively, for the quarter and year- to-date periods ended June 30, 2023 • Significantly warmer weather impacted EPS by approximately $0.09 and $0.38, respectively • Exclude a one-time gain of $0.08 per share related to real estate rationaliz
Slide 5: Weather During the Six Months Ended June 30, 2023
Weather During the Six Months Ended June 30, 2023 Six Months Ended Variance Delmarva June 30, Year-over-Year Exceptionally Warm Weather Across 2023 2022 # % Actual HDD 2,050 2,575 (525) -20% All Service Areas 10-yr Avg HDD (“Normal”) 2,693 2,667 26 Variance from # (643) (92) •The effects of warmer t
Slide 6: Key Drivers of Growth
Key Drivers of Growth • 5.5% / 4.0% residential customer growth in Delmarva / Florida for Q2’23 Organic Growth: • Added more than 8,500 residential customers since June 2022 • Natural gas continues to be the preferred energy source for our customers • Completion of Beachside expansion project in Ver
Slide 7: Growing Service Areas – Delmarva and Florida
Growing Service Areas – Delmarva and Florida Well positioned to service concentrated growth areas: Middletown, Delaware • Increased customer base by 71% over last 10 years • Ranked in top five towns in the nation by Fortune.com • Nine schools built in past 10 years to support 30% of population aged
Slide 8: Gas Transmission Expansions to Serve Growing Demand
Gas Transmission Expansions to Serve Growing Demand Eastern Shore - Southern Expansion: increasing capacity in Delaware Delaware to meet growth • Natural gas driven compressor skid at Bridgeville compressor station • Expected to go into service in the fourth quarter of 2023 and provide 7,300 Dts of
Slide 9: Year-to-Date 2023 Financial Performance
Year-to-Date 2023 Financial Performance Key Year-to-Date Earnings Adjusted Gross Diluted Earnings Per Share Margin Drivers $9.2M $5.0M $4.6M $3.04 $2.94 Regulated Pipeline Expansion Higher Fees and Infrastructure and Natural Gas Propane Margins per Programs Organic Growth Gallon and Recovery Mechani
Slide 10: Second Quarter and Year-to-Date 2023 Financial Summary
Second Quarter and Year-to-Date 2023 Financial Summary Solid performance, despite significantly warmer weather and continued inflationary environment Consolidated Second Quarter Change Year to Date Change (in thousands except per share data) 2023 2022 $ % 2023 2022 $ % 1 Total Adjusted Gross Margin
Slide 11: Key Drivers of Performance – Quarter Ended June 30, 2023
Key Drivers of Performance – Quarter Ended June 30, 2023 Q2 2022 Diluted Earnings Per Share $0.96 A Absence of gain from sales of assets -$0.08 B Core business growth (not impacted by weather) $0.42 Lower customer consumption related to C -$0.09 warmer weather D Operating expenses -$0.17 Depreciatio
Slide 12: Key Drivers of Performance – Year-to-Date June 30, 2023
Key Drivers of Performance – Year-to-Date June 30, 2023 YTD 2022 Diluted Earnings Per Share $3.04 A Absence of gain from sales of assets -$0.08 B Reduction in state tax rate $0.07 Lower customer consumption related to C -$0.38 warmer weather D Core business growth (not impacted by weather) $0.84 E O
Slide 13: Regulated Energy Segment – Financial Summary
Regulated Energy Segment – Financial Summary Solid growth, offsetting warmer weather Second Quarter Change Year-to-Date Change (in thousands) 2023 2022 $ % 2023 2022 $ % Adjusted Gross Margin1 $ 77,255 $ 70,620 $ 6,635 9.4% $ 164,237 $ 153,068 $ 11,169 7.3% Dep., amort. & property taxes 18,854 18,38
Slide 14: Unregulated Energy Segment – Financial Summary
Unregulated Energy Segment – Financial Summary Warmer weather partially offset by continued demand for CNG/RNG/LNG services Second Quarter Change Year-to-Date Change (in thousands) 2023 2022 $ % 2023 2022 $ % Adjusted Gross Margin1 $ 22,635 $ 21,762 $ 873 4.0% $ 65,229 $ 65,046 $ 183 0.3% Dep., amor
Slide 15: Capital Structure Overview – Strong Balance Sheet to Support Growth
Capital Structure Overview – Strong Balance Sheet to Support Growth 6/30/2023 12/31/2022 Stockholders' equity $ 864,228 $ 832,801 Long-Term Debt Long-term debt, net of current maturities 645,742 578,388 • Avg. Interest Rate: 3.89% Total permanent capitalization $ 1,509,970 $ 1,411,189 • $80M: 5.43%
Slide 16: Major Projects and Initiatives Update
Major Projects and Initiatives Update Key Projects and Initiatives Driving Adjusted Gross Margin Adjusted Gross Marin Three Months Ended Six Months Ended Year Ended Estimate for Project/Initiative June 30, June 30, December Fiscal (in thousands) 2023 2022 2023 2022 2022 2023 2024 Pipeline Expansions
Slide 17: Key Expansion Projects
Key Expansion Projects Significant activity in 2023 Fully Annual Adjusted Gross Margin Project Capital Investment In Service Estimate Guernsey Power Station $6.4 million Q4 2021 $1.5 million Winter Haven Expansion $3.5 million Q3 2022 $0.6 million North Ocean City Connector* $6.3 million Q2 2023 $0.
Slide 18: Regulatory Initiatives - Rate Case Activity
Regulatory Initiatives - Rate Case Activity •Florida Public Utilities’ natural gas base rate case was approved in February, with an effective date beginning on March 1, 2023 • Included a depreciation study and the consolidation of four natural gas distribution entities in Florida • Provides incremen
Slide 19: Regulatory Initiatives – Infrastructure Programs
Regulatory Initiatives – Infrastructure Programs Florida GUARD Program • In February 2023, Florida Public Utilities filed for petition of the GUARD program (Gas Utility Access and Replacement Directive) • 10-year program to enhance safety, reliability and accessibility of portions of FPU’s natural g
Slide 20: Chesapeake Utilities' Company Culture
Chesapeake Utilities' Company Culture 2022 Sustainability Report 2022 Top Safety Performer • Recognized by the American Gas Association (AGA) • FPU and ESNG earned AGA Safety Achievement Award, demonstrating commitment to employee and vehicular safety • Aspire Energy named an industry leader in acci
Slide 21: Reaffirmation of Guidance
Reaffirmation of Guidance Diluted Earnings Per Share from Continuing Operations Short-term and Long-term Capital Guidance through 2025 Guidance $6.15 $6.35 $900 million to $1.1 billion $5.04 $4.73 $4.21 CPK Guidance – High Range CPK Guidance – Low Range $3.72 $3.47 $200 million to $461 million $230
Slide 22: Historical Earnings and Dividend Performance
Historical Earnings and Dividend Performance Long history of industry leading earnings and dividend growth Diluted Earnings Per Share from Annualized Dividends Continuing Operations Per Share $2.36 $5.04 $2.14 $4.73 $1.92 $1.76 $4.21 $1.62 $3.72 $3.47 2022 2023 +6.6% +10.3% Increase Increase 2018 20
Slide 23: Investment Proposition – Committed to Superior Performance
Investment Proposition – Committed to Superior Performance Sustainability Strategy Track Record Energized Team Strong Foundation for Growth GROW Financial Discipline Platforms for Growth Responsibly grow the Company to achieve long-term, sustainable success for our stakeholders. Financial Objectives
Slide 24: Appendix
CHESAPEAKE UTILITIES Appendix C O R P O R AT I O N 24
Slide 25: GAAP to Non-GAAP Reconciliation – Consolidated Results
GAAP to Non-GAAP Reconciliation – Consolidated Results Second Quarter Change Year-to-Date Change (in thousands) 2023 2022 $ % 2023 2022 $ % Operating Revenues $ 135,593 $ 139,470 $ (3,877) -2.8% $ 353,722 $362,350 $ (8,628) -2.4% Cost of Sales: Natural gas, propane and electric costs (35,793) (47,11
Slide 26: GAAP to Non-GAAP Reconciliation – Regulated Energy Segment
GAAP to Non-GAAP Reconciliation – Regulated Energy Segment Second Quarter Change Year-to-Date Change (in thousands) 2023 2022 $ % 2023 2022 $ % Operating Revenues $ 101,141 $ 92,193 $ 8,948 9.7% $ 243,411 $220,084 $ 23,327 10.6% Cost of Sales: Natural gas, propane and electric costs (23,886) (21,573
Slide 27: GAAP to Non-GAAP Reconciliation – Unregulated Energy Segment
GAAP to Non-GAAP Reconciliation – Unregulated Energy Segment 1 Operations & maintenance expenses within the Consolidated Statements of Income are presented in accordance with regulatory requirements and to provide comparability within the industry. Operations & maintenance expenses which are deemed
Slide 28: Capital Investment Has Driven Our Earnings Growth
Capital Investment Has Driven Our Earnings Growth Long track record of prudent capital investments 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 $240 $200 to $78 $180 $174 $174 $193 $230 $169 $49 $44 $144 $13
Slide 29: Quarterly Earnings Cadence
Quarterly Earnings Cadence Year Q1 EPS Q2 EPS Q3 EPS Q4 EPS FY EPS 2023 $2.04 $0.90 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* % o
Slide 30: 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% 11.7% 11.7% 12% 11.3% 11.3% 11.6% 11.3% 11.2% 11.3% 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