Chesapeake Utilities Corporation press release
CHESAPEAKE UTILITIES CORPORATION REPORTS FISCAL YEAR 2024 RESULTS
NYSE - New York Stock Exchange · Natural Gas · United States
PR Newswire
Net income and earnings per share ("EPS")* were $118.6 million and $5.26 , respectively, for the full year 2024, and $36.7 million and $1.60 , respectively, for the fourth quarter of 2024 Adjusted net income and Adjusted EPS, which exclude transaction and transition-related expenses attributable to the acquisition of Florida City Gas ("FCG"), were $121.5 million and $5.39 , respectively, for the full year 2024, and $37.3 million and $1.63 , respectively, for the fourth quarter of 2024 Adjusted gross margin increased by $113.3 million during the year driven by contributions from FCG, regulatory initiatives and infrastructure programs, natural gas organic growth, continued pipeline expansion projects, and increased demand for virtual pipeline services Achieved earnings guidance while accelerating return to target capital structure range; equity to total capitalization reaches 48.4 percent at December 31, 2024
DOVER, Del. , Feb. 26, 2025 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced financial results for the year and the fourth quarter ended December 31, 2024 .
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For 2024, net income was $118.6 million ( $5.26 per share) compared to $87.2 million ( $4.73 per share) in 2023. Excluding transaction and transition-related expenses related to the acquisition of FCG, adjusted net income was $121.5 million ( $5.39 per share) compared to $97.8 million ( $5.31 per share) in 2023.
The increase in 2024 earnings was driven by incremental contributions from FCG, additional margin from regulatory initiatives and infrastructure programs, growth in the Company's natural gas distribution businesses, continued pipeline expansion projects to support distribution growth, and increased virtual pipeline services. The financing impacts of the FCG acquisition, including increased interest expense related to debt issued and additional shares outstanding, partially offset the increases.
In the fourth quarter of 2024, the Company's net income was $36.7 million ( $1.60 per share) compared to $25.3 million ( $1.26 per share) during the prior-year period. Excluding the transaction and transition-related expenses, adjusted net income was $37.3 million ( $1.63 per share) compared to $33.0 million ( $1.64 per share) reported in the fourth quarter of 2023.
Earnings for the fourth quarter of 2024 were primarily impacted by the factors discussed for the full year.
"2024 has been a transformational year for Chesapeake Utilities – we started the year focused on integrating Florida City Gas and ended the year with substantial progress toward capitalizing on this acquisition as well as expanding opportunities in our legacy operations. We've made significant progress this year, including investing in our new and existing service areas, collaborating with our regulators and ensuring continuous business improvement to meet the needs of our customers and our growing organization," said Jeff Householder , the Company's Chair of the Board, President and Chief Executive Officer.
"In spite of accelerating the return to our target capital structure range and weather that continued to be warmer than normal, we achieved our earnings and capital guidance ranges and generated a top quartile annual shareholder return of 17 percent in 2024; since initiating guidance in 2018, we have consistently met or beat our guidance ranges while significantly growing the Company. This is a testament to our team's persistent focus on delivering top-quartile performance and growth," continued Householder. "Given this performance, I cannot envision a better start to our next phase of growth as we continue to set high expectations for ourselves and remain focused on meeting our promises, delivering with purpose and reaching new heights."
Capital Investment and Earnings Guidance
The Company's performance for 2024 was in line with its previously announced EPS guidance range of $5.33 to $5.45 per share. Additionally, the Company's 2024 capital expenditures totaled $356 million , near the top end of the 2024 capital guidance range of $300 million to $360 million .
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 introduced 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 is 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's and the overall 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 Year Ended December 31, 2024 | | | | | | | | (in millions) | | Regulated Energy | | Unregulated Energy | | Other and Eliminations | | Total | | Operating Revenues | | $ 583.4 | | $ 228.4 | | $ (24.6) | | $ 787.2 | | Cost of Sales: | | | | | | | | | | Natural gas, propane and electric costs | | (144.2) | | (100.2) | | 24.6 | | (219.8) | | Depreciation & amortization | | (48.8) | | (16.9) | | — | | (65.7) | | Operations & maintenance expenses (1) | | (48.6) | | (33.1) | | — | | (81.7) | | Gross Margin (GAAP) | | 341.8 | | 78.2 | | — | | 420.0 | | Operations & maintenance expenses (1) | | 48.6 | | 33.1 | | — | | 81.7 | | Depreciation & amortization | | 48.8 | | 16.9 | | — | | 65.7 | | Adjusted Gross Margin (Non- GAAP) | | $ 439.2 | | $ 128.2 | | $ — | | $ 567.4 | | | | | | | | | | | | | | For the Year Ended December 31, 2023 | | | | | | | | (in millions) | | Regulated Energy | | Unregulated Energy | | Other and Eliminations | | Total | | Operating Revenues | | $ 473.6 | | $ 223.1 | | $ (26.1) | | $ 670.6 | | Cost of Sales: | | | | | | | | | | Natural gas, propane and electric costs | | (140.0) | | (102.5) | | 26.0 | | (216.5) | | Depreciation & amortization | | (48.2) | | (17.3) | | — | | (65.5) | | Operations & maintenance expenses (1) | | (27.5) | | (31.5) | | 0.3 | | (58.7) | | Gross Margin (GAAP) | | 257.9 | | 71.8 | | 0.2 | | 329.9 | | Operations & maintenance expenses (1) | | 27.5 | | 31.5 | | (0.3) | | 58.7 | | Depreciation & amortization | | 48.2 | | 17.3 | | — | | 65.5 | | Adjusted Gross Margin (Non- GAAP) | | $ 333.6 | | $ 120.6 | | $ (0.1) | | $ 454.1 | | | | | | | | | | | | | | For the Three Months Ended December 31, 2024 | | | | | | | | (in millions) | | Regulated Energy | | Unregulated Energy | | Other and Eliminations | | Total | | Operating Revenues | | $ 153.7 | | $ 68.3 | | $ (7.0) | | $ 215.0 | | Cost of Sales: | | | | | | | | | | Natural gas, propane and electric costs | | (38.6) | | (29.2) | | 7.0 | | (60.8) | | Depreciation & amortization | | (9.3) | | (4.6) | | — | | (13.9) | | Operations & maintenance expense (1) | | (12.9) | | (8.8) | | — | | (21.7) | | Gross Margin (GAAP) | | 92.9 | | 25.7 | | — | | 118.6 | | Operations & maintenance expenses (1) | | 12.9 | | 8.8 | | — | | 21.7 | | Depreciation & amortization | | 9.3 | | 4.6 | | — | | 13.9 | | Adjusted Gross Margin (Non- GAAP) | | $ 115.1 | | $ 39.1 | | $ — | | $ 154.2 | | | | | | | | | | | | | | For the Three Months Ended December 31, 2023 | | | | | | | | (in millions) | | Regulated Energy | | Unregulated Energy | | Other and Eliminations | | Total | | Operating Revenues | | $ 127.8 | | $ 64.2 | | $ (6.7) | | $ 185.3 | | Cost of Sales: | | | | | | | | | | Natural gas, propane and electric costs | | (34.3) | | (27.4) | | 6.7 | | (55.0) | | Depreciation & amortization | | (9.0) | | (4.4) | | — | | (13.4) | | Operations & maintenance expenses (1) | | (3.9) | | (7.6) | | — | | (11.5) | | Gross Margin (GAAP) | | 80.6 | | 24.8 | | — | | 105.4 | | Operations & maintenance expense (1) | | 3.9 | | 7.6 | | — | | 11.5 | | Depreciation & amortization | | 9.0 | | 4.4 | | — | | 13.4 | | Adjusted Gross Margin (Non- GAAP) | | $ 93.5 | | $ 36.8 | | $ — | | $ 130.3 |
| | | (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 directly attributable to revenue producing activities have been separately presented above in order to calculate Gross Margin as defined under US GAAP. |
Adjusted Net Income and Adjusted EPS
| | | Year Ended | | Three Months Ended | | | | | | | | December 31, | | December 31, | | | | | | (dollars in millions, shares in thousands (except per share data)) | | 2024 | | 2023 | | 2024 | | 2023 | | Net Income (GAAP) | | $ 118.6 | | $ 87.2 | | $ 36.7 | | $ 25.3 | | FCG transaction and transition-related expenses, net (1) | | 2.9 | | 10.6 | | 0.6 | | 7.7 | | Adjusted Net Income (Non-GAAP) | | $ 121.5 | | $ 97.8 | | $ 37.3 | | $ 33.0 | | | | | | | | | | | | Weighted average common shares outstanding - diluted (2) | | 22,531 | | 18,435 | | 22,914 | | 20,178 | | | | | | | | | | | | Earnings Per Share - Diluted (GAAP) | | $ 5.26 | | $ 4.73 | | $ 1.60 | | $ 1.26 | | FCG transaction and transition-related expenses, net (1) | | 0.13 | | 0.58 | | 0.03 | | 0.38 | | Adjusted Earnings Per Share - Diluted (Non- GAAP) | | $ 5.39 | | $ 5.31 | | $ 1.63 | | $ 1.64 |
| | | (1) Transaction and transition-related expenses represent non-recurring costs attributable to the acquisition and integration of FCG including, but not limited to, transaction costs, transition services, consulting, system integration, rebranding, and legal fees. | | (2) Weighted average shares reflect the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG. |
Operating Results for the Years Ended December 31, 2024 and 2023
Consolidated Results
| | Year Ended December 31, | | | | | | | | (in millions) | 2024 | | 2023 | | Change | | Percent Change | | Adjusted gross margin | $ 567.4 | | $ 454.1 | | $ 113.3 | | 25.0 % | | Depreciation, amortization and property taxes | 101.6 | | 91.2 | | 10.4 | | 11.4 % | | FCG transaction and transition-related expenses | 4.0 | | 10.4 | | (6.4) | | (61.5) % | | Other operating expenses | 233.6 | | 201.7 | | 31.9 | | 15.8 % | | Operating income | $ 228.2 | | $ 150.8 | | $ 77.4 | | 51.3 % |
Operating income during 2024 was $228.2 million , an increase of $77.4 million or 51.3 percent compared to the prior year. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $71.0 million or 44.0 percent compared to the prior year. The increase in adjusted gross margin during 2024 was driven by contributions from the acquisition of FCG, incremental margin from regulatory initiatives and infrastructure programs, natural gas organic growth and continued pipeline expansion projects, increased virtual pipeline services and increased margins from the Company's other unregulated businesses. Higher operating expenses during the year were driven largely by the operating expenses of FCG, increased insurance costs, higher facilities, maintenance and outside services costs, and increased vehicle expenses. Increases in depreciation, amortization and property taxes attributable to growth projects and the FCG acquisition were partially offset by a $15.5 million reserve surplus amortization mechanism ("RSAM") adjustment from FCG and lower depreciation rates that were approved as part of the rate filings for our Florida electric operations and Maryland natural gas utilities.
At December 31, 2024 , the RSAM reserve had been completely utilized. In February 2025 , FCG filed a depreciation study with the Florida PSC. The application is requesting approval of revised annual depreciation rates, as well as a reduction related to a reserve imbalance that would be amortized over a two-year period. The outcome of the application is subject to review and approval by the Florida PSC.
Regulated Energy Segment
| | Year Ended December 31, | | | | | | | | (in millions) | 2024 | | 2023 | | Change | | Percent Change | | Adjusted gross margin | $ 439.2 | | $ 333.6 | | $ 105.6 | | 31.7 % | | Depreciation, amortization and property taxes | 82.5 | | 71.7 | | 10.8 | | 15.1 % | | FCG transaction and transition-related expenses | 4.0 | | 10.4 | | (6.4) | | (61.5) % | | Other operating expenses | 156.5 | | 125.3 | | 31.2 | | 24.9 % | | Operating income | $ 196.2 | | $ 126.2 | | $ 70.0 | | 55.5 % |
The key components of the increase in adjusted gross margin are shown below:
| (in millions) | | | Contribution from FCG | $ 88.6 | | Margin from regulated infrastructure programs | 6.2 | | Natural gas growth including conversions (excluding service expansions) | 5.8 | | Natural gas transmission service expansions, including interim services | 5.2 | | Rate changes associated with Florida natural gas base rate proceeding (1) | 1.6 | | Interim rates from recent rate case activities | 0.9 | | Expiration of regulatory recovery for pandemic-related costs | (1.2) | | Other variances | (1.5) | | Year-over-year increase in adjusted gross margin | $ 105.6 |
| | | (1) Includes adjusted gross margin contributions from permanent base rates that became effective in March 2023. |
The major components of the increase in other operating expenses are as follows:
| (in millions) | | | FCG operating expenses | $ 30.6 | | Facilities expenses, maintenance costs and outside services | 1.3 | | Insurance-related costs | 1.0 | | Payroll, benefits and other employee-related expenses | (1.0) | | Other variances | (0.7) | | Year-over-year increase in other operating expenses | $ 31.2 |
Unregulated Energy Segment
| | Year Ended December 31, | | | | | | | | (in millions) | 2024 | | 2023 | | Change | | Percent Change | | Adjusted gross margin | $ 128.2 | | $ 120.6 | | $ 7.6 | | 6.3 % | | Depreciation, amortization and property taxes | 19.1 | | 19.5 | | (0.4) | | (2.1) % | | Other operating expenses | 77.4 | | 76.7 | | 0.7 | | 0.9 % | | Operating income | $ 31.7 | | $ 24.4 | | $ 7.3 | | 29.9 % |
The major components of the change in adjusted gross margin are shown below:
| (in millions) | | | | Propane Operations | | | | Increased propane customer consumption | | $ 1.8 | | Contributions from acquisition | | 1.0 | | Decreased propane margins and service fees | | (0.3) | | CNG/RNG/LNG Transportation and Infrastructure | | | | Increased demand for virtual pipeline services | | 4.5 | | Aspire Energy | | | | Increased margins - rate changes and gathering fees | | 1.6 | | Changes in customer consumption | | (1.4) | | Other variances | | 0.4 | | Year-over-year increase in adjusted gross margin | | $ 7.6 |
The major components of the increase in other operating expenses are as follows:
| (in millions) | | | | Vehicle expenses | | $ 0.9 | | Insurance-related costs | | 0.6 | | Payroll, benefits and other employee-related expenses | | (1.0) | | Other variances | | 0.2 | | Year-over-year increase in other operating expenses | | $ 0.7 |
Operating Results for the Quarters Ended December 31, 2024 and 2023
Consolidated Results
| | Three Months Ended December 31, | | | | | | | | (in millions) | 2024 | | 2023 | | Change | | Percent Change | | Adjusted gross margin | $ 154.2 | | $ 130.3 | | $ 23.9 | | 18.3 % | | Depreciation, amortization and property taxes | 23.8 | | 20.3 | | 3.5 | | 17.2 % | | FCG transaction and transition-related expenses | 0.9 | | 6.5 | | (5.6) | | (86.2) % | | Other operating expenses | 62.6 | | 56.2 | | 6.4 | | 11.4 % | | Operating income | $ 66.9 | | $ 47.3 | | $ 19.6 | | 41.4 % |
Operating income for the fourth quarter of 2024 was $66.9 million , an increase of $19.6 million or 41.4 percent compared to the same period in 2023. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $14.0 million or 26.0 percent compared to the same period in 2023. The increase in adjusted gross margin during the quarter was driven by contributions from the acquisition of FCG, increased virtual pipeline services, incremental margin from regulated infrastructure programs, continued pipeline expansion projects, and natural gas organic growth. Higher operating expenses were driven largely by the operating expenses of FCG, increased facilities, maintenance and outside services costs, and higher insurance expenses compared to the prior-year period. Increases in depreciation, amortization and property taxes attributable to growth projects and FCG were partially offset by a $6.6 million RSAM adjustment from FCG and lower depreciation rates that were approved as part of the rate filings for our Florida electric operations and Maryland natural gas utilities.
At December 31, 2024 , the RSAM reserve had been completely utilized. In February 2025 , FCG filed a depreciation study with the Florida PSC. The application is requesting approval of revised annual depreciation rates, as well as a reduction related to a reserve imbalance that would be amortized over a two-year period. The outcome of the application is subject to review and approval by the Florida PSC.
Regulated Energy Segment
| | Three Months Ended December 31, | | | | | | | | (in millions) | 2024 | | 2023 | | Change | | Percent Change | | Adjusted gross margin | $ 115.1 | | $ 93.5 | | $ 21.6 | | 23.1 % | | Depreciation, amortization and property taxes | 18.8 | | 15.2 | | 3.6 | | 23.7 % | | FCG transaction and transition-related expenses | 0.9 | | 6.5 | | (5.6) | | (86.2) % | | Other operating expenses | 41.8 | | 37.4 | | 4.4 | | 11.8 % | | Operating income | $ 53.6 | | $ 34.4 | | $ 19.2 | | 55.8 % |