Chesapeake Utilities Corporation · NYSE:CPK
Chesapeake Utilities — Q1 2024 Earnings Presentation
33 slides from Chesapeake Utilities's earnings presentation, May 9, 2024
Slide 1: First Quarter 2024 Earnings Conference Call
CHESAPEAKE UTILITIES CORPORATION First Quarter 2024 Earnings Conference Call May 9, 2024 Exhibit 99.1
Slide 2: Today's Presenters
Today’s Presenters Jeff Householder Chair 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 and
Slide 3: Safe Harbor for Forward-Looking Statements
Safe Harbor for Forward-Looking Statements Safe Harbor Statement Some of the statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable law. Such forward--looking statements may be identified by the
Slide 4: Executing On Our Long-Term Growth Plan
Growth in earnings to support dividend growth and increased shareholder value Foundation of operational excellence across the organization Executing On Our Long-Term Growth Plan Continually execute on business transformation Proactively manage regulatory agenda Prudently deploy investment capital
Slide 5: Q1 2024 Highlights: Continuing to Build Momentum
Q1 2024 Highlights: Continuing to Build Momentum 1 See appendix for GAAP to non-GAAP reconciliation for adjusted diluted earnings per share. 2 Excludes TCJA impact in 2017; 2023 excludes transaction-related costs associated with the FCG acquisition. Operational Accomplishments Strategic Capital Inve
Slide 6: Q1 2024 Strong Financial Performance
Q1 2024 Strong Financial Performance $3.5M Pipeline Expansions and Natural Gas Organic Growth $1.0M Increased Gathering Fees for Aspire Energy $2.8M Regulated Infrastructure Programs and Recovery Mechanisms $1.9M Changes in Customer Consumption $0.6M Higher Propane Margins per Gallon and Fees $25.4M
Slide 7: FCG Integration Fully On-Track
FCG Integration Fully On-Track Achieving Synergies Optimizing Operations Accelerating Investment Opportunities Reviewing operational efficiencies Consolidating processes and resources Analyzing technology enhancements “Best of Both” approach to customer care, project management and operations Sharin
Slide 8: Major Projects and Initiatives Driving Adj. Gross Margin Growth
Major Projects and Initiatives Driving Adj. Gross Margin Growth Our projects and initiatives underway will continue to drive adjusted gross margin growth while new projects and regulatory initiatives will increase earnings across our guidance period 1 Includes adjusted gross margin during 2023 compr
Slide 9: 2024 Capital Investment On Track to Drive Margin Growth
2024 Capital Investment On Track to Drive Margin Growth Q1 Capital Spend Progress 21% 79% in Q1 in Q2 – Q4 Quarter-to-date capital expenditures on track, with $70.6M in spending on strategic growth opportunities and technology transformation $300 - $360M 2024E Capital Expenditures Regulated Energy C
Slide 10: Key Drivers of Performance – Three Months Ended March 31, 2024
Key Drivers of Performance – Three Months Ended March 31, 2024 1 See appendix for GAAP to non-GAAP reconciliation for adjusted diluted earnings per share. 2 Includes a benefit from RSAM of $3.4 million, pre-tax, or $0.11 per share. 3 Does not include RSAM benefit, which is included in depreciation e
Slide 11: Increasing Gross Margin Driving Bottom-Line Income Growth
Increasing Gross Margin Driving Bottom-Line Income Growth 1 See appendix for a reconciliation of non-GAAP metrics. 2 Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to transition services, consulti
Slide 12: Regulated Energy Segment Generates Strong Margin and Operating Income Growth
Regulated Energy Segment Generates Strong Margin and Operating Income Growth Operating income up 57% (excluding FCG transaction and transition-related expenses) driven by: Contribution of earnings attributable to Florida City Gas Organic growth in natural gas distribution operations, including propa
Slide 13: Unregulated Energy Segment Drives 24%+ Operating Income Growth
Unregulated Energy Segment Drives 24%+ Operating Income Growth Cooler weather over prior year impacted operating income Increased propane consumption, which was primarily due to colder weather Increased propane margins and service fees Acquisition of J.T. Lee and Son’s, which was completed in Decemb
Slide 14: Best in Class Shareholder Return
Best in Class Shareholder Return Earnings Growth Driven by Capital Investment Earnings Guidance Affirmed; Driving Increased Shareholder Value Earnings Per Share - Diluted 21 Consecutive Years of Dividend Increases Current Annualized Dividend of $2.56/share 9% CAGR over last 10 years Targeting Long-t
Slide 15: Capital Structure Overview – Strong Balance Sheet to Support Growth
Capital Structure Overview – Strong Balance Sheet to Support Growth Stockholders’ Equity increased $35M since the end of 2023 primarily driven by: Strong Net Income performance of ~$46M Dividend Reinvestment and Stock Compensation Plans increases of ~$1M Reduced by Continued Dividend payments of ~$1
Slide 16: Three Decades of Dividend Growth Drive Shareholder Return
Three Decades of Dividend Growth Drive Shareholder Return Annualized Dividend per Share Quarterly Dividend History 1 Calculated through 12/31/2023. 10-Year Dividend CAGR of 9% 64 Consecutive Years of Dividend Payments – Since 1960 21 Consecutive Years of Dividend Increases – Since 2004 Dividend Incr
Slide 17: Pathway to 2024 EPS Guidance
Pathway to 2024 EPS1 Guidance Our 2024 target is based on continued growth from our legacy businesses, a full year of contribution from FCG, and additional opportunities we have identified2 1 Diluted Earnings Per Share Growth from Continuing Operations; 2023 excludes transaction-related costs associ
Slide 18: Executing on the Identified 2024 Pathway
Executing on the Identified 2024 Pathway Our team has begun to execute on additional opportunities to propel earnings growth in 2024 Cost and operating synergies & efficiencies Acceleration of infrastructure programs / new capital projects New margin through the value chain Asset optimization / util
Slide 19: Regulatory Strategy Drives Earnings
Regulatory Strategy Drives Earnings Rate Case Initiatives Rates became effective May 1, 2023 $14.1 million rate increase; allowed ROE of 8.5% -10.5% Reserve surplus amortization mechanism authorizes FCG to earn within its approved ROE range Florida City Gas Rate case filed January 30, 2024 Propose c
Slide 20: Significant Regulatory Progress on Recent Florida Transmission Projects
Significant Regulatory Progress on Recent Florida Transmission Projects Approved Under Review by Commission 7 4 Newberry Expansion, Wildlight Phase 2, Boynton Beach Pipeline, New Smyrna Beach Pipeline Lake Mattie Expansion, Plant City Expansion, and St. Cloud Expansion1 Indian River RNG, Brevard RNG
Slide 21: Worcester Resiliency Upgrade Project Proceeding On Schedule
Worcester Resiliency Upgrade Project Proceeding On Schedule Eastern Shore Natural Gas project designed to meet critical energy service to customers during the peak winter heating season $80 million planned liquefied natural gas storage facility in Bishopville, MD Project consists of five low-profile
Slide 22: Working Together to Make Life Better for the Communities We Serve
Working Together to Make Life Better for the Communities We Serve Safety and Reliability Report published April 2024 Received approval to establish first-of-its-kind natural gas energy efficiency program in Delaware Progressing on our first full-scale RNG production facility Turning recycled pipe in
Slide 23: Investment Proposition – Committed to Superior Performance
Investment Proposition – Committed to Superior Performance Our foundation for growth remains strong PLATFORMS FOR GROWTH FINANCIAL DISCIPLINE ENERGIZED TEAM TRACK RECORD We continually increase shareholder value through our: We identify and execute steady, return-oriented capital investments across
Slide 24: Appendix
Appendix CHESAPEAKE UTILITIES CORPORATION
Slide 25: GAAP to Non-GAAP Reconciliation – Consolidated Results
GAAP to Non-GAAP Reconciliation – Consolidated Results 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 to be
Slide 26: GAAP to Non-GAAP Reconciliation – Regulated Energy Segment
GAAP to Non-GAAP Reconciliation – Regulated 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 to
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: GAAP to Non-GAAP Reconciliation – Adjusted Net Income and EPS
GAAP to Non-GAAP Reconciliation – Adjusted Net Income and EPS 1 Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transition services, consulting, system integration, rebranding and legal fees. 2
Slide 29: Weather Impacted Customer Consumption in the First Quarter
Weather Impacted Customer Consumption in the First Quarter Delmarva Three Months Ended March 31, Variance Year-over-Year 2024 2023 # % Actual HDD 1,962 1,774 188 +11% 10-yr Avg HDD (“Normal”) 2,221 2,285 (64) Variance from Normal # (259) (511) % -12% Ohio Three Months Ended March 31, Variance Year-o
Slide 30: 5-Year Projected Capital Expenditures Breakdown
5-Year Projected Capital Expenditures Breakdown Spend Type 5-Year Projected Capital Investment Range (in millions) Regulated Distribution Growth $600 - $645 Regulated Transmission Growth $435 - $590 Regulated Infrastructure $300 - $340 Unregulated $140 - $165 Technology $70 - $90 89% of our 5-year c
Slide 31: Long-Term Debt Profile – Positioned to Execute Growth Plan
Long-Term Debt Profile – Positioned to Execute Growth Plan Execute on a robust growing organic capital plan Fully integrate Florida City Gas and capitalize on commercial synergies & opportunities Navigate through the uncertain economic environment Minimal maturities over next 2 yrs enables CPK the f
Slide 32: Quarterly Earnings Cadence
Quarterly Earnings Cadence1 Year Q1 Q2 Q3 Q4 FY 2023 $2.04 $0.90 $0.692 $1.64 $5.31 % of FY 38% 17% 13% 31% 2022 $2.08 $0.96 $0.54 $1.47 $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 $0.5
Slide 33: 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 We put people first. Keep them safe. Build trusting relationships. Fo