Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q3 2022 Earnings Presentation
29 slides from Chesapeake Utilities's earnings presentation, Nov 3, 2022
Slide 1: Third Quarter 2022 Earnings Conference Call
Third Quarter 2022 Earnings Conference Call November 3, 2022
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: Financial Highlights
Financial Highlights • Increased Diluted EPS by $0.13 or 3.8% year-to-date over the same period in 2021 • Third quarter diluted EPS of $0.54, impacted by absence of one-time, non-recurring items in Q3 2021 and increased interest expense due to higher interest rates in 2022. • Generated $6.9 million
Slide 5: Planet Found Energy Development: Acquisition Details
Planet Found Energy Development Acquisition Details • Located in Somerset County, Maryland • Foundational acquisition for poultry-based waste-to-energy platform • Farm scale Anaerobic Digestion and Nutrient Recovery (ADNR) facility producing biogas for electric generation and can be upgraded for ren
Slide 6: Planet Found Energy Development: Acquisition Strategy
Planet Found Energy Development Acquisition Strategy • Secures in-house knowledge, expertise and technology to scale poultry-based waste-to- energy projects • Allows Chesapeake Utilities to be less dependent on project developers • Provides an outlet to trial and produce real data for analysis of bi
Slide 7: Growth Platform Focus
Growth Platform Focus • 5.8% residential customer growth on Delmarva Organic Growth: • 4.4% residential customer growth in Florida • Continued propane CGS conversions to natural gas • Continuing with Beachside, Winter Haven and Southern expansion projects Gas Transmission: • Margin from Escambia Met
Slide 8: Year-to-Date 2022 Financial Performance
Year-to-Date 2022 Financial Performance Solid Growth Despite Inflationary Pressures Diluted Earnings Per Share Key Drivers of Year-to-Date Earnings Performance $3.58 $7.4M $6.6M $4.1M Contributions Pipeline Regulated from Expansion and Infrastructure Acquisitions Natural Gas Programs Organic Growth
Slide 9: Third Quarter and Year-to-Date 2022 Financial Summary
Third Quarter and Year-to-Date 2022 Financial Summary Consolidated Third Quarter Change Year to Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % Total Adjusted Gross Margin1 $ 86,848 $ 79,969 $ 6,879 8.6% $ 304,901 $ 281,239 $ 23,662 8.4% Operating Income $ 18,648 $ 20,11
Slide 10: Key Drivers of Our Performance (Quarter)
Key Drivers of Our Performance Quarter Ended September 30, 2022 Q3 2021 Diluted Earnings Per Share $0.71 Absence of Regulatory deferral of COVID-19 A -$0.08 expenses in per PSC’s orders Absence of favorable income tax impact B -$0.05 associated with the CARES Act Interest income from Federal Income
Slide 11: Key Drivers of Our Performance (Year-to-Date)
Key Drivers of Our Performance Year-to-date Ended September 30, 2022 YTD 2021 Diluted Earnings Per Share $3.45 Absence of Regulatory deferral of COVID-19 A -$0.10 expenses in per PSC’s orders Absence of favorable income tax impact B -$0.05 associated with the CARES Act Interest income from Federal I
Slide 12: Regulated Energy Segment
Regulated Energy Segment Financial Summary Chesapeake Utilities’ Regulated Energy Segment Drives Sustained Growth Regulated Energy Segment Third Quarter Change Year to Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % 1 Adjusted Gross Margin $ 69,732 $ 65,102 $ 4,630 7.1%
Slide 13: Unregulated Energy Segment
Unregulated Energy Segment Financial Summary Strong Unregulated Margin Growth Overshadowed by Fixed Operating Costs Unregulated Energy Segment Third Quarter Change Year to Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % Adjusted Gross Margin1 $ 17,146 $ 14,897 $ 2,249 15
Slide 14: Capital Structure Overview
Capital Structure Overview Strong Balance Sheet to Support Growth 9/30/2022 12/31/2021 Long-Term Debt Stockholders‘ equity $ 814,438 $ 774,130 • Avg. Interest Rate: 3.38% Long-term debt, net of current maturities 583,833 549,903 • $50M: 2.95% issued in March 2022 Total permanent capitalization $ 1,3
Slide 15: Major Projects and Initiatives
Major Projects and Initiatives Key Projects Driving Adjusted Gross Margin Adjusted Gross Margin Three Months Ended Six Months Ended Year Ended Estimate for Project/Initiative September 30, September 30, December 31, Fiscal in thousands 2022 2021 2022 2021 2021 2022 2023 Pipeline Expansions: Western
Slide 16: Key Expansion Projects
Key Expansion Projects Pipeline Growth Contribution 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 jointly filed a consolidated natural gas base rate proceeding on May 24, 2022 • The Company is seeking approval for approximately $24.1 million in permanent relief • $7.7 million (annualized
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 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 Best Corporate Governance in the U.S. for 2022 World News Media Ltd.’s World Finance Magazine Chesapeake Utilities named 2022 Best
Slide 20: Hurricane Ian
Hurricane Ian Thank You to all of Chesapeake Utilities’ Employees Who Supported the Preparation and Response to Hurricane Ian 20
Slide 21: Guidance Update
Guidance Update Diluted Earnings Per Share from Continuing Operations Capital Expenditures Guidance through 2025 Guidance through 2025 and for 2022 $750 million to $1.0 billion $6.05 $6.25 CPK Guidance – High Range CPK Guidance – Low Range $4.73 $4.21 $3.68 $3.47 $3.72 $2.77 $140 million to $175 mil
Slide 22: 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 23: Appendix
> CHESAPEAKE ORATION Appendix
Slide 24: GAAP to Non-GAAP Reconciliation: Consolidated Results
GAAP to Non-GAAP Reconciliation Consolidated Results Consolidated Results Third Quarter Change Year-to-Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % Operating Revenues $ 131,053 $ 107,335 $ 23,718 22.1% $ 493,403 $ 409,604 $ 83,799 20.5% Cost of Sales: Natural gas, pro
Slide 25: GAAP to Non-GAAP Reconciliation: Regulated Energy Segment
GAAP to Non-GAAP Reconciliation Regulated Energy Segment Regulated Energy Segment Third Quarter Change Year-to-Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % Operating Revenues $ 90,980 $ 80,396 $ 10,584 13.2% $ 311,064 $ 282,503 $ 28,561 10.1% Cost of Sales: Natural ga
Slide 26: GAAP to Non-GAAP Reconciliation: Unregulated Energy Segment
GAAP to Non-GAAP Reconciliation Unregulated Energy Segment Unregulated Energy Segment Third Quarter Change Year-to-Date Change (in thousands except per share data) 2022 2021 $ % 2022 2021 $ % Operating Revenues $ 47,914 $ 32,110 $ 15,804 49.2% $ 202,669 $ 141,642 $ 61,027 43.1% Cost of Sales: Natura
Slide 27: 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 27 Amounts in chart reflected in mil
Slide 28: 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 13% 12.7% 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% 11.3% 11.0% 11.0% 11% * 10-Year Peer 75th Percentile – 9.9% 10% 9% * 10-Year Peer Median – 8.
Slide 29: 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