Chesapeake Utilities Corporation press release

CHESAPEAKE UTILITIES CORPORATION REPORTS FIRST QUARTER 2025 RESULTS

2025-05-07

NYSE - New York Stock Exchange · Natural Gas · United States

PR Newswire

Net income and earnings per share ("EPS")* were $50.9 million and $2.21 , respectively, for the first quarter of 2025 compared to $46.2 million and $2.07 , respectively, for the first quarter of 2024 Adjusted net income and Adjusted EPS, which exclude transaction and transition-related expenses attributable to the acquisition and integration of Florida City Gas ("FCG"), were $51.1 million and $2.22 , respectively, for the first quarter of 2025 compared to $46.8 million and $2.10 , respectively for the first quarter of 2024 Adjusted gross margin growth of $17.9 million during the first quarter of 2025 driven by customer consumption, regulatory initiatives and infrastructure programs, increased demand for virtual pipeline services, natural gas organic growth and transmission expansion projects Significant regulatory activity to date that will help drive the Company's results for the remainder of the year The Company continues to affirm 2025 and 2028 EPS and capital expenditure guidance

DOVER, Del. , May 7, 2025 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced financial results for the three months ended March 31, 2025.

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Net income for the first quarter of 2025 was $50.9 million ( $2.21 per share) compared to $46.2 million ( $2.07 per share) in the first quarter of 2024. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, adjusted net income was $51.1 million , or $2.22 per share compared to $2.10 per share reported in the same prior-year period.

Adjusted earnings for the first quarter of 2025 were largely driven by increased customer consumption resulting from year-over-year colder temperatures experienced primarily in our Mid-Atlantic and Ohio service territories, contributions from regulatory initiatives and infrastructure programs, increased demand for virtual pipeline services, organic growth in the natural gas distribution businesses and pipeline expansion projects to support growth.

"Our results for the quarter are in line with our expectations and demonstrate approximately 11 percent growth in adjusted gross margin and approximately 6 percent growth in adjusted EPS relative to the first quarter of 2024. For the full year, we expect that the timing of our capital projects and regulatory initiatives, including the Florida City Gas depreciation study, will drive incremental earnings to be more heavily weighted toward the fourth quarter of 2025," said Jeff Householder , the Company's Chair of the Board, President and Chief Executive Officer. "We have already made significant progress driving value through our three growth pillars: prudently deploying capital, proactively managing our regulatory agenda and continuously driving business transformation. In the first quarter, we invested nearly $113 million in new transmission and reliability infrastructure projects, significantly advanced our three rate cases and finalized preparations for the implementation of 1CX at Florida City Gas, another phase within our consolidated technology roadmap. Our performance thus far positions us to meet our targets and reach new heights in 2025."

Earnings and Capital Investment Guidance

The Company continues to re-affirm its 2025 EPS guidance range of $6.15 to $6.35 per share, as well as the 2028 EPS guidance range of $7.75 to $8.00 per share. The 2028 guidance implies an annual EPS growth rate of approximately 8 percent from the 2025 EPS guidance, or since 2018, an 8.5 percent growth rate.

These earnings projections are based upon the Company's previously announced capital expenditure guidance for the five-year period ended 2028 of $1.5 billion to $1.8 billion . The Company continues to re-affirm this five-year capital guidance and projects capital expenditures of $325 million to $375 million for 2025.

_*Unless otherwise noted, EPS and Adjusted EPS information are presented on a diluted basis. _

Non-GAAP Financial Measures

This press release including the tables herein, include references to both Generally Accepted Accounting Principles ("GAAP") and non-GAAP financial measures, including Adjusted Gross Margin, Adjusted Net Income and Adjusted EPS. A "non-GAAP financial measure" is generally defined as a numerical measure of a company's historical or future performance that includes or excludes amounts, or that is subject to adjustments, so as to be different from the most directly comparable measure calculated or presented in accordance with GAAP. Our management believes certain non-GAAP financial measures, when considered together with GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period.

The Company calculates Adjusted Gross Margin by deducting the purchased cost of natural gas, propane and electricity and the cost of labor spent on direct revenue-producing activities from operating revenues. The costs included in Adjusted Gross Margin exclude depreciation and amortization and certain costs presented in operations and maintenance expenses in accordance with regulatory requirements. The Company calculates Adjusted Net Income and Adjusted EPS by deducting costs and expenses associated with significant acquisitions that may affect the comparison of period-over-period results. These non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures. The Company believes that these non-GAAP measures are useful and meaningful to investors as a basis for making investment decisions, and provide investors with information that demonstrates the profitability achieved by the Company under allowed rates for regulated energy operations and under the Company's competitive pricing structures for unregulated energy operations. The Company's management uses these non-GAAP financial measures in assessing a business unit and Company performance. Other companies may calculate these non-GAAP financial measures in a different manner.

The following tables reconcile Gross Margin, Net Income, and EPS, all as defined under GAAP, to our non-GAAP measures of Adjusted Gross Margin, Adjusted Net Income and Adjusted EPS for each of the periods presented.

Adjusted Gross Margin

| | | For the Three Months Ended March 31, 2025 | | | | | | | | (in millions) | | Regulated Energy | | Unregulated Energy | | Other Businesses and Eliminations | | Total | | Operating Revenues | | $ 199.6 | | $ 106.7 | | $ (7.6) | | $ 298.7 | | Cost of Sales: | | | | | | | | | | Natural gas, propane and electric costs | | (71.5) | | (52.2) | | 7.4 | | (116.3) | | Depreciation & amortization | | (17.6) | | (4.9) | | — | | (22.5) | | Operations & maintenance expenses (1) | | (13.3) | | (9.7) | | 0.3 | | (22.7) | | Gross Margin (GAAP) | | 97.2 | | 39.9 | | 0.1 | | 137.2 | | Operations & maintenance expenses (1) | | 13.3 | | 9.7 | | (0.3) | | 22.7 | | Depreciation & amortization | | 17.6 | | 4.9 | | — | | 22.5 | | Adjusted Gross Margin (Non-GAAP) | | $ 128.1 | | $ 54.5 | | $ (0.2) | | $ 182.4 |

| | | For the Three Months Ended March 31, 2024 | | | | | | | | (in millions) | | Regulated Energy | | Unregulated Energy | | Other Businesses and Eliminations | | Total | | Operating Revenues | | $ 168.4 | | $ 83.1 | | $ (5.8) | | $ 245.7 | | Cost of Sales: | | | | | | | | | | Natural gas, propane and electric costs | | (49.9) | | (37.1) | | 5.8 | | (81.2) | | Depreciation & amortization | | (12.5) | | (4.5) | | — | | (17.0) | | Operations & maintenance expenses (1) | | (12.7) | | (8.4) | | — | | (21.1) | | Gross Margin (GAAP) | | 93.3 | | 33.1 | | — | | 126.4 | | Operations & maintenance expenses (1) | | 12.7 | | 8.4 | | — | | 21.1 | | Depreciation & amortization | | 12.5 | | 4.5 | | — | | 17.0 | | Adjusted Gross Margin (Non-GAAP) | | $ 118.5 | | $ 46.0 | | $ — | | $ 164.5 |

| | | (1) Operations & maintenance expenses within the condensed 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 directly attributable to revenue producing activities have been separately presented above in order to calculate Gross Margin as defined under GAAP. |

Adjusted Net Income and Adjusted EPS

| | | Three Months Ended | | | | | | March 31, | | | | (dollars in millions, shares in thousands (except per share data)) | | 2025 | | 2024 | | Net Income (GAAP) | | $ 50.9 | | $ 46.2 | | FCG transaction and transition-related expenses, net (1) | | 0.2 | | 0.6 | | Adjusted Net Income (Non-GAAP) | | $ 51.1 | | $ 46.8 | | | | | | | | Weighted average common shares outstanding - diluted | | 23,041 | | 22,306 | | | | | | | | Earnings Per Share - Diluted (GAAP) | | $ 2.21 | | $ 2.07 | | FCG transaction and transition-related expenses, net (1) | | 0.01 | | 0.03 | | Adjusted Earnings Per Share - Diluted (Non-GAAP) | | $ 2.22 | | $ 2.10 |

| | | (1) Transaction and transition-related expenses represent non-recurring costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transition services, consulting, system integration, rebranding, and legal fees. |

Operating Results for the Quarters Ended March 31, 2025 and 2024

Consolidated Results

| | Three Months Ended | | | | | | | | | March 31, | | | | | | | | (in millions) | 2025 | | 2024 | | Change | | Percent Change | | Adjusted gross margin | $ 182.4 | | $ 164.5 | | $ 17.9 | | 10.9 % | | Depreciation, amortization and property taxes | 31.3 | | 26.1 | | 5.2 | | 19.9 % | | Other operating expenses | 64.0 | | 57.9 | | 6.1 | | 10.5 % | | FCG transaction and transition-related expenses | 0.3 | | 0.9 | | (0.6) | | (66.7) % | | Operating income | $ 86.8 | | $ 79.6 | | $ 7.2 | | 9.0 % |

Operating income for the first quarter of 2025 was $86.8 million , an increase of $7.2 million or 9.0 percent compared to the same period in 2024. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $6.6 million or 8.2 percent compared to the prior-year period. The increase in adjusted gross margin in the first quarter of 2025 was driven by increased customer consumption resulting from year-over-year colder temperatures in our Mid-Atlantic and Ohio service territories, incremental margin from regulatory initiatives and infrastructure programs, increased demand for virtual pipeline services, natural gas organic growth and pipeline expansion projects. Higher operating expenses were driven largely by the absence of a reserve surplus amortization mechanism ("RSAM") adjustment from FCG, higher depreciation attributable to growth projects, and increased payroll, benefits and other employee-related expenses. Additional expenses associated with facilities, maintenance and outside services, and higher insurance costs also contributed to the increase compared to the prior-year period.

Regulated Energy Segment

| | Three Months Ended | | | | | | | | | March 31, | | | | | | | | (in millions) | 2025 | | 2024 | | Change | | Percent Change | | Adjusted gross margin | $ 128.1 | | $ 118.5 | | $ 9.6 | | 8.1 % | | Depreciation, amortization and property taxes | 25.9 | | 21.0 | | 4.9 | | 23.3 % | | Other operating expenses | 41.4 | | 38.5 | | 2.9 | | 7.5 % | | FCG transaction and transition-related expenses | 0.3 | | 0.9 | | (0.6) | | (66.7) % | | Operating income | $ 60.5 | | $ 58.1 | | $ 2.4 | | 4.1 % |

The key components of the increase in adjusted gross margin are shown below:

| (in millions) | | | Margin from regulated infrastructure programs | $ 3.4 | | Natural gas growth including conversions (excluding service expansions) | 2.2 | | Natural gas transmission service expansions, including interim services | 2.2 | | Interim rates from recent rate case activities | 1.5 | | Changes in customer consumption | 0.7 | | Other variances | (0.4) | | Quarter-over-quarter increase in adjusted gross margin | $ 9.6 |

The major components of the increase in other operating expenses are as follows:

| (in millions) | | | Payroll, benefits and other employee-related expenses | $ 2.5 | | Insurance related costs | 0.6 | | Credit, collections, and customer service related expenses | 0.5 | | Facilities expenses, maintenance costs and outside services | (0.7) | | Quarter-over-quarter increase in other operating expenses | $ 2.9 |

Unregulated Energy Segment

| | Three Months Ended March 31, | | | | | | | | (in millions) | 2025 | | 2024 | | Change | | Percent Change | | Adjusted gross margin | $ 54.5 | | $ 46.0 | | $ 8.5 | | 18.5 % | | Depreciation, amortization and property taxes | 5.5 | | 5.2 | | 0.3 | | 5.8 % | | Other operating expenses | 22.7 | | 19.4 | | 3.3 | | 17.0 % | | Operating income | $ 26.3 | | $ 21.4 | | $ 4.9 | | 22.9 % |

The major components of the increase in adjusted gross margin are shown below:

The major components of the increase in other operating expenses are as follows:

| (in millions) | | | | Payroll, benefits and other employee-related expenses | | $ 2.0 | | Facilities expenses, maintenance costs and outside services | | 1.2 | | Other variances | | 0.1 | | Quarter-over-quarter increase in other operating expenses | | $ 3.3 |

Forward-Looking Statements

Matters included in this release may include forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements. Please refer to the Safe Harbor for Forward-Looking Statements in the Company's 2024 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the first quarter of 2025 for further information on the risks and uncertainties related to the Company's forward-looking statements.

Conference Call

Chesapeake Utilities (NYSE: CPK) will host a conference call on Thursday, May 8, 2025, at 8:00 a.m. Eastern Time to discuss the Company's financial results for the three months ended March 31, 2025. To listen to the Company's conference call via live webcast , please visit the Events & Presentations section of the Investors page on www.chpk.com/ . For investors and analysts that wish to participate by phone for the question and answer portion of the call, please use the following dial-in information:

Toll-free: 800.579.2543 International: 785.424.1789 Conference ID: CPKQ125

A replay of the presentation will be made available on the previously noted website following the conclusion of the call.

About Chesapeake Utilities Corporation

Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange. Chesapeake Utilities Corporation offers sustainable energy solutions through its natural gas transmission and distribution, electricity generation and distribution, propane gas distribution, mobile compressed natural gas utility services and solutions, and other businesses.

For more information, contact:

Beth W. Cooper Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary 302.734.6022

Michael D. Galtman Senior Vice President and Chief Accounting Officer 302.217.7036

Lucia M. Dempsey Head of Investor Relations 347.804.9067

Financial Summary Highlights

Key variances between the first quarter of 2024 and 2025 included:

| (in millions, except per share data) | | Pre-tax

Income | | Net

Income | | Earnings

Per Share | | First Quarter of 2024 Adjusted Results (1) | | $ 63.7 | | $ 46.8 | | $ 2.10 | | | | | | | | | | Increased Adjusted Gross Margins: | | | | | | | | Changes in customer consumption | | 5.5 | | 4.1 | | 0.18 | | Increased demand for virtual pipeline services | | 3.6 | | 2.6 | | 0.11 | | Contributions from regulated infrastructure programs (2) | | 3.4 | | 2.5 | | 0.11 | | Natural gas growth (excluding service expansions) | | 2.2 | | 1.6 | | 0.07 | | Natural gas transmission service expansions, including interim services (2) | | 2.2 | | 1.6 | | 0.07 | | Interim rates from recent rate case activities (2) | | 1.5 | | 1.1 | | 0.05 | | Increased propane margins and fees | | 0.4 | | 0.3 | | 0.01 | | | | 18.8 | | 13.8 | | 0.60 | | | | | | | | | | Increased Operating Expenses (Excluding Natural Gas, Propane, and Electric Costs): | | | | | | | | Depreciation, amortization and property tax costs | | (5.2) | | (3.8) | | (0.17) | | Payroll, benefits and other employee-related expenses | | (4.5) | | (3.3) | | (0.14) | | Credit, collections and customer service expenses | | (0.7) | | (0.5) | | (0.02) | | Facilities expenses, maintenance costs and outside services | | (0.5) | | (0.4) | | (0.02) | | Insurance related costs | | (0.4) | | (0.3) | | (0.01) | | | | (11.3) | | (8.3) | | (0.36) | | | | | | | | | | Interest charges | | (1.1) | | (0.8) | | (0.04) | | Increase in shares outstanding due to 2024 and 2025 equity offerings (3) | | — | | — | | (0.07) | | Net other changes | | (0.5) | | (0.4) | | (0.01) | | | | (1.6) | | (1.2) | | (0.12) | | First Quarter of 2025 Adjusted Results (1) | | $ 69.6 | | $ 51.1 | | $ 2.22 |

| | | | (1) | Transaction and transition-related expenses attributable to the acquisition and integration of FCG have been excluded from the Company's non-GAAP measures of adjusted net income and adjusted EPS. See reconciliations above for a detailed comparison to the related GAAP measures. | | (2) | Refer to Major Projects and Initiatives Table for additional information. | | (3) | Reflects the impact of common shares issued under the DRIP and ATM program. |

Recently Completed and Ongoing Major Projects and Initiatives

The Company continuously pursues and develops additional projects and regulatory initiatives to serve existing and new customers, further grow its businesses and earnings, and increase shareholder value. The following table includes all major projects and initiatives that are currently underway or recently completed. The Company's practice is to add incremental margin associated with new projects and regulatory initiatives to this table once negotiations or details are substantially final and/or the associated earnings can be estimated. Major projects and initiatives that have generated consistent year-over-year adjusted gross margin contributions are removed from the table at the beginning of the next calendar year.

The related descriptions of projects and initiatives that accompany the table include only new items and/or items where there have been significant developments, as compared to the Company's prior quarterly filings. A comprehensive discussion of all projects and initiatives reflected in the table below can be found in the Company's first quarter 2025 Quarterly Report on Form 10-Q.

| | Adjusted Gross Margin | | | | | | | | | | | Three Months Ended | | Year Ended | | Estimate for | | | | | | | March 31, | | December 31, | | Fiscal | | | | | | (in millions) | 2025 | | 2024 | | 2024 | | 2025 | | 2026 | | Pipeline Expansions: | | | | | | | | | | | St. Cloud / Twin Lakes Expansion | $ 0.1 | | $ 0.1 | | $ 0.6 | | $ 2.8 | | $ 3.8 | | Wildlight | 0.5 | | 0.2 | | 1.5 | | 3.0 | | 4.3 | | Newberry | 0.6 | | — | | 1.4 | | 2.6 | | 2.6 | | Worcester Resiliency Upgrade | — | | — | | — | | — | | 9.1 | | Boynton Beach | 0.5 | | — | | — | | 3.0 | | 3.4 | | New Smyrna Beach | — | | — | | — | | 1.7 | | 2.6 | | Central Florida Reinforcement | 0.3 | | — | | 0.1 | | 2.0 | | 4.3 | | Warwick | 0.5 | | — | | 0.4 | | 1.9 | | 1.9 | | Renewable Natural Gas Supply Projects | — | | — | | — | | 4.5 | | 6.7 | | Miami Inner Loop | — | | — | | — | | 0.6 | | 3.6 | | Total Pipeline Expansions | 2.5 | | 0.3 | | 4.0 | | 22.1 | | 42.3 | | | | | | | | | | | | | CNG/RNG/LNG Transportation and Infrastructure | 7.0 | | 3.4 | | 16.4 | | 20.0 | | 20.7 | | | | | | | | | | | | | Regulatory Initiatives: | | | | | | | | | | | Florida GUARD program | 1.5 | | 0.6 | | 3.6 | | 6.9 | | 9.9 | | FCG SAFE Program | 1.7 | | 0.4 | | 3.8 | | 8.5 | | 12.0 | | Capital Cost Surcharge Programs | 1.5 | | 0.8 | | 3.2 | | 5.7 | | 7.1 | | Electric Storm Protection Plan | 1.1 | | 0.6 | | 3.2 | | 5.9 | | 8.8 | | Maryland Rate Case | — | | — | | — | | 2.0 | | 3.5 | | Delaware Rate Case (1) | 0.8 | | — | | 0.6 | | 4.7 | | 6.1 | | Electric Rate Case (1) | 0.7 | | — | | 0.3 | | 7.1 | | 8.6 | | Total Regulatory Initiatives | 7.3 | | 2.4 | | 14.7 | | 40.8 | | 56.0 | | | | | | | | | | | | | Total | $ 16.8 | | $ 6.1 | | $ 35.1 | | $ 82.9 | | $ 119.0 |