Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q1 2022 Earnings Presentation
28 slides from Chesapeake Utilities's earnings presentation, May 4, 2022
Slide 1: First Quarter 2022 Earnings Conference Call
First Quarter 2022 Earnings Conference Call MAY 4, 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 6.1% over Q1 2021 • Drove $8.8 million in adjusted gross margin growth, despite mixed weather results during the quarter • Remain on track for 2022 capital expenditure guidance of $175 million to $200 million • Issued $50 million of 2.95% Senior Notes
Slide 5: Growth Platform Focus
Growth Platform Focus • 5.3% residential customer growth on Delmarva • 4.0% residential customer growth in Florida Organic Growth: • New customers from propane CGS conversions • Announced Northern Ocean City Connector project • Continuing with Beachside, Winter Haven and Southern Gas Transmission: e
Slide 6: Expanding Our Service Territory
Expanding Our Service Territory With Sustainable Investments • Noble Road → 33-miles pipeline carrying RNG to Aspire system • Diversified Energy → Acquisition of propane assets, with opportunity to expand AutoGas services • Port of Savannah CNG Filling Station → Opened in March 2022, with RNG fuelin
Slide 7: First Quarter 2022 Financial Performance
First Quarter 2022 Financial Performance Solid Earnings Growth Diluted Earnings Per Share Key Drivers of Earnings Performance $4.2M $2.4M $0.9M Contributions Pipeline Regulated from Expansion and Infrastructure $2.08 Acquisitions Natural Gas Programs Organic Growth $1.96 $0.9M $0.7M ($0.4M) Higher H
Slide 8: First Quarter 2022 Financial Summary
First Quarter 2022 Financial Summary First Quarter Change (in thousands except per share data) 2022 2021 $ % 1 Total Adjusted Gross Margin $ 125,700 $ 116,890 $ 8,810 7.5% Operating Income $ 54,865 $ 51,597 $ 3,268 6.3% Other Income, Net 913 375 538 143.5% Interest Charges 5,339 5,105 234 4.6% Pre-t
Slide 9: Key Drivers of Our Performance
Key Drivers of Our Performance Quarter Ended March 31, 2022 Q1 2021 Diluted Earnings Per Share $1.96 A Contributions from recent acquisitions $0.17 B Core business growth $0.19 Operating expenses tied to recent C -$0.10 acquisitions Depreciation, amortization and property D -$0.07 tax costs due to n
Slide 10: Regulated Energy Segment
Regulated Energy Segment Financial Summary Chesapeake Utilities’ Regulated Energy Segment Drives Sustained Growth Regulated Energy Segment First Quarter Percent Change (in thousands except per share data) 2022 2021 Change Adjusted gross margin $ 82,449 $ 78,154 $ 4,295 5.5% Dep., amort. & property t
Slide 11: Unregulated Energy Segment
Unregulated Energy Segment Financial Summary Chesapeake Utilities’ Driving Higher Returns With Complementary Unregulated Energy Segment Unregulated Energy Segment First Quarter Percent Change (in thousands except per share data) 2022 2021 Change Adjusted gross margin $ 43,284 $ 38,776 $ 4,508 11.6%
Slide 12: Capital Structure Overview
Capital Structure Overview Strong Balance Sheet to Support Growth 3/31/2022 12/31/2021 Long-Term Debt Stockholders‘ equity $ 805,512 $ 774,130 Avg. Interest Rate: 3.41% Long-term debt, net of current maturities 597,878 549,903 $50M: 2.95% issued in Total permanent capitalization $ 1,403,390 $ 1,324,
Slide 13: Major Projects and Initiatives
Major Projects and Initiatives Key Projects Driving Adjusted Gross Margin Adjusted Gross Margin Three Months Ended Year Ended Estimate for Project/Initiative March 31, December 31, Fiscal in thousands 2022 2021 2021 2022 2023 Pipeline Expansions: Incremental Western Palm Beach County, Florida Expans
Slide 14: Key Expansion Projects
Key Expansion Projects Pipeline Growth Contribution Capital Annual Adjusted Gross Project Fully In Service Investment Margin Estimate 2021 Del-Mar Energy Pathway* $60.1 million $7.0 million Fourth Quarter 2021 West Palm Beach County* $28.9 million $5.2 million Fourth Quarter 2021 Guernsey Power Stat
Slide 15: North Ocean City Connector
North Ocean City Connector • Chesapeake Utilities plans to construct an approximate six-mile pipeline that will connect the Company’s Ocean City, MD system to its existing infrastructure in Sussex County, DE. • Second connection into Ocean City, supporting capacity of the Sandpiper Energy natural ga
Slide 16: Regulatory Initiatives
Regulatory Initiatives Florida Natural Gas Base Rate Proceeding • Florida natural gas distribution businesses jointly filed notification with Florida PSC on March 24, 2022, stating intent to file a consolidated natural gas base rate proceeding as soon as practicable following notification period, bu
Slide 17: ESG Initiatives
ESG Initiatives 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, with independent verifi
Slide 18: 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. CPK Named 2021 Best
Slide 19: Earnings Growth Supporting Our Dividend Growth
Earnings Growth Supporting Our Dividend Growth Chesapeake’s Board Approved an 11.5% Increase to the Annualized Dividend Per Share Diluted Earnings Per Share Annualized Dividends from Continuing Operations Per Share +12.4% +11.5% Increase Increase $2.14 $4.73 $1.92 $1.76 $4.21 $1.62 $1.48 $3.68 $3.72
Slide 20: 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 $175 million to $200 mil
Slide 21: 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 22: Appendix
> CHESAPEAKE ORATION Appendix
Slide 23: GAAP to Non-GAAP Reconciliation: Consolidated Results
GAAP to Non-GAAP Reconciliation Consolidated Results Consolidated Results First Quarter (in thousands except per share data) 2022 2021 Operating Revenues $ 222,880 $ 191,187 Cost of Sales: Natural gas, propane and electric costs (97,180) (74,297) Depreciation & amortization (16,977) (15,365) Operati
Slide 24: GAAP to Non-GAAP Reconciliation: Regulated Energy Segment
GAAP to Non-GAAP Reconciliation Regulated Energy Segment Results Regulated Energy Segment Results First Quarter (in thousands except per share data) 2022 2021 Operating Revenues $ 127,891 $ 121,197 Cost of Sales: Natural gas and electric costs (45,442) (43,043) Depreciation & amortization (13,086) (
Slide 25: GAAP to Non-GAAP Reconciliation: Unregulated Energy Segment
GAAP to Non-GAAP Reconciliation Unregulated Energy Segment Results Unregulated Energy Segment Results First Quarter (in thousands except per share data) 2022 2021 Operating Revenues $ 101,292 $ 74,759 Cost of Sales: Natural gas and propane costs (58,008) (35,983) Depreciation & amortization (3,881)
Slide 26: 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 26 Amounts in chart reflected in mil
Slide 27: 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 28: 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