Chesapeake Utilities Corp
Company Summary
Financial Data:
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Related Entities
Firm Transport Commitments
Project: Eastern Shore 2017 Expansion Project
Firm Commitment: 16,500 Dth/d
Firm Commitment: 3,000 Dth/d
Recent news
- 10/20/2023 - Chesapeake Utilities... (subscriber access)
- 9/27/2023 - NextEra Selling Florida... (subscriber access)
- 2/21/2023 - Chesapeake Utilities... (subscriber access)
- 11/12/2020 - Chesapeake Utilities... (subscriber access)
- 11/4/2020 - Chesapeake Utilities... (subscriber access)
Company Transactions
Date: 3/31/2020
Type: Acquisition
REGIONS:
Northeast
Date: 12/20/2018
Type: Acquisition
NOTES:
Chesapeake Utilities acquired Marlin CNG Services, a premier North American supplier of mobile compressed natural gas utility and pipeline solutions.
Chesapeake Utilities acquired Marlin CNG Services, a premier North American supplier of mobile compressed natural gas utility and pipeline solutions.
News & Press Releases
Criterion News
- 10/20/2023 - Chesapeake Utilities... (subscriber access)
- 9/27/2023 - NextEra Selling Florida... (subscriber access)
- 2/21/2023 - Chesapeake Utilities... (subscriber access)
- 11/12/2020 - Chesapeake Utilities... (subscriber access)
- 11/4/2020 - Chesapeake Utilities... (subscriber access)
- 8/18/2020 - Chesapeake Utilities... (subscriber access)
- 8/3/2020 - Chesapeake Utilities... (subscriber access)
- 12/9/2019 - Chesapeake Utilities... (subscriber access)
- 10/9/2019 - Chesapeake Utilities... (subscriber access)
- 5/8/2019 - FERC Issues Positive EA... (subscriber access)
- 12/20/2018 - Chesapeak Utilities... (subscriber access)
- 9/22/2016 - Chesapeake Utilities... (subscriber access)
- 9/1/2016 - Chesapeake Utilities... (subscriber access)
- 8/5/2016 - FERC Approves Eastern... (subscriber access)
- 8/1/2016 - Chesapeake Utilities'... (subscriber access)
Press Releases
- Chesapeake Utilities - 1.800.427.2883
- Florida Public Utilities Company (FPUC) - 1.800.427.7712 or visit www.fpuc.com for your local propane office direct phone number.
- Sandpiper Energy - 1.800.427.0015
- Elkton Gas - 1.866.281.6483
- Sharp Energy - 1.800.742.7740
- Direct employment - individuals who are directly associated with the construction project
- In-direct employment - companies that benefit from increased demand and sales of their local services
- Induced employment – increased revenue for local employers and more discretionary spending for local residents
- PESCO's Florida retail operations were sold to Gas South LLC. The initial closing for the transaction was completed in November 2019 with subsequent closings expected in December 2019 and January 2020.
- PESCO's other non-Florida retail operations and contracts were sold to United Energy Trading, LLC in October 2019.
- PESCO's Mid-Atlantic wholesale contracts and Chesapeake Utilities' Delaware division, Maryland division and Sandpiper Energy Asset Management agreements were sold to NJR Energy Services Company in October 2019.
- PESCO's Florida retail operations will be sold to Gas South LLC.
- PESCO's other non-Florida retail operations and contracts were sold to United Energy Trading, LLC (UET).
- PESCO's Mid-Atlantic wholesale contracts and Chesapeake Utilities' Delaware division, Maryland division and Sandpiper Energy Asset Management agreements were sold to NJR Energy Services Company (NJRES).
- state and federal legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rate structures, and affect the speed and the degree to which competition enters the electric and natural gas industries;
- the outcomes of regulatory, environmental and legal matters, including whether pending matters are resolved within current estimates and whether the related costs are adequately covered by insurance or recoverable in rates;
- the impact of significant changes to current tax regulations and rates;
- the timing of certification authorizations associated with new capital projects and the ability to construct facilities at or below estimated costs;
- changes in environmental and other laws and regulations to which we are subject and environmental conditions of property that we now, or may in the future, own or operate;
- possible increased federal, state and local regulation of the safety of our operations;
- the economy in our service territories or markets, the nation, and worldwide, including the impact of economic conditions (which we do not control ) on demand for electricity, natural gas, propane or other fuels;
- risks related to cyber-attacks or cyber-terrorism that could disrupt our business operations or result in failure of information technology systems;
- the weather and other natural phenomena, including the economic, operational and other effects of hurricanes, ice storms and other damaging weather events;
- customers' preferred energy sources;
- industrial, commercial and residential growth or contraction in our markets or service territories;
- the effect of competition on our businesses;
- the timing and extent of changes in commodity prices and interest rates;
- the effect of spot, forward and future market prices on our various energy businesses;
- the extent of our success in connecting natural gas and electric supplies to transmission systems, establishing and maintaining key supply sources; and expanding natural gas and electric markets;
- the creditworthiness of counterparties with which we are engaged in transactions;
- the capital-intensive nature of our regulated energy businesses;
- the results of financing efforts, including our ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general economic conditions;
- the ability to successfully execute, manage and integrate a merger, acquisition or divestiture of assets or businesses and the related regulatory or other conditions associated with the merger, acquisition or divestiture;
- the impact on our costs and funding obligations, under our pension and other post-retirement benefit plans, of potential downturns in the financial markets, lower discount rates, and costs associated with health care legislation and regulation;
- the ability to continue to hire, train and retain appropriately qualified personnel; and
- the effect of accounting pronouncements issued periodically by accounting standard-setting bodies.
- Reversal of MTM loss recorded during the fourth quarter of 2017 as contracts settled, as well as $300,000 of unrealized gains at the end of March 31, 2018;
- Absence of revenues from a supplier agreement in the first quarter of 2017, which was not renewed; and
- Extraordinary costs of meeting demand requirements in the Mid-Atlantic region due to pipeline capacity constraints experienced due to the 2018 Bomb Cyclone, followed by unseasonably warm weather in February.
- $3.7 million of incremental revenue from the implementation of new base rates for Eastern Shore, which were effective August 1, 2017;
- $2.8 million in additional margin from customer growth in the Company's natural gas distribution businesses (excluding service expansions);
- $2.1 million generated from recently completed natural gas transmission expansions, which are more fully discussed in the "Major Projects and Initiatives" section later in this press release;
- $1.9 million generated from additional GRIP investments in the Florida natural gas distribution operations;
- $831,000 generated as a result of the rate case settlement by the Company's Delaware natural gas distribution operations; and
- $537,000 from new natural gas transmission and distribution services provided to Eight Flags' CHP plant.
- $4.1 million in higher depreciation, asset removal and property tax costs associated with recent capital investments;
- $3.6 million in higher payroll expenses for additional personnel to support growth;
- $1.0 million in regulatory expenses, due primarily to costs associated with Eastern Shore's rate case filing in 2017; partially offset by
- $529,000 in reduced credit, collection and customer services expenses.
- $4.4 million in additional margin from Eight Flags' CHP plant, reflecting a full year of operations in 2017 compared to slightly more than six months in 2016;
- $3.4 million in margin growth for PESCO, generated primarily from natural gas sales to end users within one Columbia Gas of Ohio customer pool under a supplier agreement, which expired on March 31, 2017, as well as increased margin from commercial and industrial customers served in Florida;
- $2.8 million in additional margin from the propane distribution operations, composed of:
- $951,000 from higher propane sales, due to colder weather in December;
- $678,000 of additional gross margin from wholesale propane sales, due to increased volumes and favorable supply management activities by the Company's Delmarva propane operations and higher throughput margins from the Florida propane operations; and
- $645,000 of additional retail gross margin, also attributable to favorable supply management activities.
- $2.3 million of additional margin from Aspire Energy as a result of:
- $1.2 million associated with higher volumes, primarily as a result of customer growth for the local distribution companies served and colder temperatures in December; and
- $1.1 million of additional gross margin as a result of pricing amendments to long-term gas sales agreements.
- $658,000 of gross margin due to the absence of Xeron Inc.'s ("Xeron") operating loss recorded in 2016; partially offset by
- $5.8 million associated with PESCO's unrealized MTM loss, which was based upon fair value accounting at year end. A more detailed discussion of the unrealized MTM loss is provided in the Major Projects and Initiatives Section under "PESCO".
- $2.9 million in higher operating expenses for Eight Flags' CHP plant in support of the higher margin generated;
- $2.9 million in higher payroll costs for additional personnel to support growth;
- $1.0 million in higher depreciation, amortization and property taxes expense, of which $476,000 relates to lower depreciation recorded in 2016 as a result of the final accounting valuation for Aspire Energy;
- $1.0 million in higher benefits and employee-related costs in 2017; and
- $594,000 in higher taxes other than property and income taxes.
- $2.7 million generated from implementation of new base rates for Eastern Shore;
- $840,000 in increased customer consumption of energy as a result of colder weather experienced during the fourth quarter of 2017;
- $791,000 in additional margin from customer growth in our natural gas distribution businesses (excluding service expansions);
- $639,000 generated from recently completed natural gas transmission expansions;
- $413,000 in margin recognized from the settled Delaware division rate case and the absence of the associated rate refund reserve recorded in the fourth quarter of 2016; and
- $283,000 generated by additional GRIP investments in the Florida natural gas distribution operations.
- $2.0 million in higher staffing and associated costs for additional personnel to support growth;
- $649,000 in higher depreciation expense, amortization, asset removal and property tax costs associated with capital investments; offset by
- $459,000 in lower outside services expenses; and
- $254,000 in lower benefits and employee-related costs during the quarter.
- $1.6 million in margin growth from PESCO, generated primarily from sales in the Appalachian Basin;
- $1.4 million in higher gross margin from the propane operations, consisting primarily of:
- $694,000 from higher customer consumption of propane due to colder temperatures; and
- $527,000 in higher gross margin from retail propane sales, due primarily to favorable supply management activities.
- $1.2 million from Aspire Energy, primarily as a result of:
- $750,000 in higher volumes of natural gas delivered due to colder temperatures in December 2017; and
- $351,000 in additional gross margin as a result of pricing amendments to long-term gas sales agreements and additional management fees.
- $590,000 of gross margin due to the absence of Xeron's operating loss recorded in the fourth quarter of 2016; offset by
- $5.8 million for PESCO's unrealized MTM loss, based upon fair value accounting at year end.
- $1.5 million in higher staffing and associated costs for additional personnel to support growth; and
- $353,000 in higher depreciation, amortization and property tax costs due to increased capital investments and amortization of intangible assets acquired as part of acquisitions consummated in 2017.
- $1.0 million of incremental revenue from the implementation of new rates for Eastern Shore, which were effective August 1, 2017.
- $406,000 generated from additional GRIP investments in the Florida natural gas distribution operations; and
- $566,000 increase from customer growth in the natural gas distribution businesses (excluding service expansions) which was partially offset by a $219,000 decrease in interruptible margin from Eastern Shore.
- $1.6 million in lower outside services and facilities and maintenance costs, due primarily to lower consulting and service contractor costs;
- $437,000 in lower benefits and employee-related costs in 2017 (since the Company is self-insured for healthcare, benefits costs fluctuate depending upon claims filed);
- $1.4 million in higher depreciation, asset removal and property tax costs associated with recent capital investments.
- $1.2 million of additional gross margin from increased sales volumes of propane to wholesale and retail customers on the Delmarva Peninsula and in Florida as well as higher sales of natural gas by Aspire Energy;
- $440,000 and $271,000 of additional gross margin from retail and wholesale propane margins, respectively, due primarily to favorable supply management activities;
- $297,000 of additional gross margin from Eight Flags operations, which was fully on-line in the third quarter of 2017;
- $291,000 of additional gross margin from Aspire Energy as a result of pricing amendments to long-term sales agreements; and
- $233,000 in increased gross margin due to the absence of the loss for Xeron recorded in the third quarter of 2016.
- $1.6 million generated by additional GRIP investments in the Florida natural gas distribution operations;
- $1.6 million from growth in natural gas distribution and transmission services (excluding service expansions);
- $1.4 million generated from recently completed natural gas transmission expansions, which are more fully discussed in the "Major Projects and Initiatives" section later in this press release;
- $1.0 million from the implementation of Eastern Shore's new rates, as discussed previously;
- $534,000 from new natural gas transmission and distribution services provided to Eight Flags' CHP plant; and
- $249,000 generated as a result of the rate case settlement by the Company's Delaware natural gas distribution operations.
- $3.5 million in higher depreciation, asset removal and property tax costs associated with recent capital investments;
- $1.6 million in higher payroll costs for additional personnel to support growth;
- $855,000 in increased regulatory expenses, due primarily to Eastern Shore's rate case; and
- $722,000 in higher benefits and employee-related costs in 2017 (since the Company is self-insured for healthcare, benefits costs fluctuate depending upon filed claims).
- $4.2 million of additional gross margin from Eight Flags' CHP plant, which commenced operations in June 2016;
- $1.8 million from PESCO, due to an increase in the number of contracts and customers served as well as additional revenue in the first quarter from providing natural gas to a customer in Ohio under a supplier agreement, which expired on March 31, 2017;
- $1.1 million of additional gross margin from Aspire Energy as a result of pricing amendments to long-term gas sales agreements;
- $728,000 of additional gross margin from wholesale propane sales, due primarily to favorable supply management activities; and
- $168,000 of additional gross margin, due primarily to higher sales of propane in Florida, a portion of which was associated with the timing of deliveries due partially to weather conditions in the third quarter of 2017, offset by the impact of warmer weather during the first six months of 2017.
- $2.8 million in higher operating expenses by Eight Flags' CHP plant in support of the margin generated;
- $1.5 million in higher payroll costs for additional personnel to support growth;
- $950,000 in higher benefits and employee-related costs in 2017 (since the Company is self-insured for healthcare, benefits costs fluctuate depending upon claims filed);
- $800,000 in higher depreciation expense, of which $424,000 relates to a credit adjustment in 2016 recorded in conjunction with the final valuation for Aspire Energy; and
- $350,000 in higher outside services costs associated primarily with growth and ongoing compliance activities.
- $532,000 generated from additional GRIP investments in the Florida natural gas distribution operations;
- $478,000 generated from recently completed natural gas transmission expansions, which are more fully discussed in the "Major Projects and Initiatives" section later in this press release; and
- $325,000 from customer growth in natural gas distribution and transmission services over and above recent service expansions.
- $1.2 million in higher depreciation, asset removal and property tax costs associated with recent capital investments;
- $358,000 in higher outside services to support growth and higher facility maintenance costs to maintain system integrity;
- $295,000 in increased regulatory expenses, due primarily to costs associated with Eastern Shore's rate case filing in 2017; and
- $255,000 in higher benefits and employee-related costs, while payroll costs remained flat in the second quarter of 2017. As the Company is self-insured, benefits costs will fluctuate depending upon actual claims experience.
- $2.1 million of additional gross margin from Eight Flags' CHP plant, which commenced operations in June 2016; and
- $271,000 of additional gross margin from Aspire Energy as a result of pricing amendments to long-term gas sales agreements.
- $450,000 of lower margin from PESCO, due primarily to a customer supply agreement that expired on March 31, 2017; and
- $368,000 from lower customer consumption of energy for the Company's propane distribution operations in Florida and on the Delmarva Peninsula.
- $1.3 million incurred by Eight Flags' CHP plant, which commenced operations in June 2016; and
- $645,000 in higher staffing and associated costs for additional personnel to support growth. As the Company is self-insured, benefits costs will fluctuate depending upon actual claims experience.
- $1.2 million generated from recently completed natural gas transmission expansions, which are more fully discussed in the "Major Projects and Initiatives" section later in this press release;
- $1.2 million generated by additional GRIP investments in the Florida natural gas distribution operations;
- $1.1 million from customer growth in natural gas distribution and transmission services over and above the growth attributable to recent service expansions;
- $535,000 from new natural gas transmission and distribution services provided to Eight Flags' CHP plant; and
- $417,000 generated as a result of the settlement of the Company's Delaware division's rate case.
- $2.1 million in higher depreciation, asset removal and property tax costs associated with recent capital investments;
- $1.5 million in higher outside services to support growth and higher facility maintenance costs to maintain system integrity;
- $1.3 million in higher payroll costs for additional personnel to support growth;
- $1.2 million in higher benefits and employee-related costs in 2017 (as the Company is self-insured, benefits costs will fluctuate depending upon actual claims experience); and
- $664,000 in increased regulatory expenses, due primarily to costs associated with Eastern Shore's rate case filing in 2017.
- $3.9 million of additional gross margin from Eight Flags' CHP plant, which commenced operations in June 2016;
- $1.7 million from PESCO, due to an increase in the number of contracts and customers served as well as additional revenue from providing natural gas to a customer in Ohio under a supplier agreement, which expired on March 31, 2017; and
- $844,000 of additional gross margin from Aspire Energy as a result of pricing amendments to long-term gas sales agreements.
- $836,000 of lower gross margin due to warmer than normal temperatures in Ohio and on the Delmarva Peninsula, resulting in less consumption of propane and lower sales of natural gas by Aspire Energy; and
- $305,000 of lower gross margin from the Company's propane distribution operations as propane retail margins per gallon were slightly lower than 2016 levels.
- $2.5 million incurred by Eight Flags' CHP plant, which commenced operations in June 2016;
- $935,000 in higher payroll costs for additional personnel to support growth;
- $809,000 in higher benefits and employee-related costs in 2017 (as the Company is self-insured, benefits costs will fluctuate depending upon actual claims experience);
- $609,000 in higher depreciation expense, of which $382,000 relates to a credit adjustment in 2016 recorded in conjunction with the final valuation for Aspire Energy;
- $514,000 in higher outside services costs associated primarily with growth and ongoing compliance activities; and
- $355,000 in higher operating expenses associated with the wind-down of Xeron's operations.
- $831,000 from customer growth in natural gas distribution and transmission services over and above the growth attributable to recent service expansions;
- $759,000 generated from natural gas transmission expansions completed recently, as well as interim services provided pending completion of new facilities, which are more fully discussed in the "Major Projects and Initiatives" section later in this press release;
- $680,000 generated by additional GRIP investments in the Florida natural gas distribution operations;
- $546,000 generated from the implementation of new rates for the Company's Delaware natural gas distribution division; and
- $491,000 from new natural gas transmission and distribution services provided to Eight Flags' CHP plant.
- $2.1 million in higher staffing and associated costs for additional personnel to support growth;
- $1.2 million in higher outside services and facility maintenance costs to support growth; and
- $901,000 in higher depreciation, asset removal and property tax costs associated with recent capital investments to support growth and system integrity.
- $2.2 million from PESCO, due to an increase in the number of contracts and customers served as well as additional revenue from providing natural gas to a customer in Ohio under a supplier agreement;
- $1.8 million of additional gross margin from Eight Flags' CHP plant, which commenced operations in June 2016; and
- $526,000 from Aspire Energy of Ohio, LLC ("Aspire Energy") as a result of pricing amendments to long-term gas sales agreements and a rate increase, offset by the absence of a one-time additional management fee received in 2016.
- $581,000 of lower gross margin from the Company's propane distribution operations as propane retail margins per gallon continued to return to more normal levels; and
- $414,000 of lower gross margin due to warmer than normal temperatures in Ohio and on the Delmarva Peninsula, resulting in lower customer consumption of propane and lower deliveries of natural gas by Aspire Energy.
- $1.3 million incurred by Eight Flags' CHP plant, which commenced operations in June 2016;
- $1.1 million in higher staffing and associated costs for additional personnel to support growth;
- $581,000 in higher outside services costs associated primarily with growth and ongoing compliance activities;
- $458,000 in higher depreciation expense due to increased capital investments primarily for Aspire Energy; and
- $438,000 in higher operating expenses associated with the winding down of operations by Xeron.
- $7.2 million generated from natural gas transmission expansions completed in 2014 and 2015, as well as interim services provided pending completion of new facilities, which are more fully discussed in the "Major Projects and Initiatives" section later in this press release;
- $4.0 million generated by additional GRIP investments in the Florida natural gas distribution operations;
- $2.7 million from customer growth in natural gas distribution and transmission services over and above the growth attributable to recent service expansions;
- $1.5 million generated from the partial year implementation of new rates for the Company's Delaware natural gas distribution division;
- $1.4 million from new natural gas transmission and distribution services provided to Eight Flags Energy, LLC's ("Eight Flags") CHP plant; and
- $736,000 from higher margins generated by Sandpiper Energy, Inc. ("Sandpiper") associated with the continued conversion of its distribution system from propane to natural gas.
- $3.6 million in higher staffing and associated costs for additional personnel to support growth;
- $2.6 million in higher depreciation, asset removal and property tax costs associated with recent capital investments to support growth and system integrity; and
- $1.4 million due to the absence of a $1.5 million gain from a customer billing system settlement in 2015.
- $4.2 million from Aspire Energy, due to the fact that 2015 reflected only nine months of margin for Aspire Energy, which became a wholly-owned subsidiary of Chesapeake Utilities on April 1, 2015;
- $1.7 million from Aspire Energy as a result of pricing amendments to long-term gas sales agreements, additional management fees and higher volumes of natural gas delivered to or on behalf of certain of its customers;
- $3.6 million from Eight Flags' CHP plant, which commenced operations in June 2016; and
- $1.0 million from PESCO due to an increase in the number of contracts and customers served.
- $2.8 million of lower gross margin for the Company's propane distribution operations as propane retail margins per gallon returned to more normal levels;
- $1.4 million of lower gross margin due to lower customer consumption of propane mainly as a result of warmer than normal temperatures on the Delmarva Peninsula, primarily during the first quarter of 2016 compared to colder than normal temperatures during the first quarter of 2015; and
- $847,000 of lower gross margin from Xeron.
- $2.8 million incurred by Aspire Energy, $1.6 million of which occurred in the first quarter of 2016, compared to zero in the first quarter of 2015 prior to the closing of the acquisition of Aspire Energy's operations;
- $2.4 million in operating expenses incurred by the Eight Flags' CHP plant, which commenced operations in June 2016;
- $817,000 in higher staffing and associated costs for additional personnel to support growth; and
- $683,000 in higher outside services costs primarily associated with growth and ongoing compliance activities.
- $1.7 million generated from natural gas transmission expansions completed in 2014 and 2015, as well as interim services pending completion of new facilities, which are discussed in the "Major Projects and Initiatives" section later in this press release;
- $1.2 million as a result of colder weather experienced during the fourth quarter of 2016;
- $975,000 generated by additional GRIP investments in the Florida natural gas distribution operations;
- $794,000 from customer growth in natural gas distribution services, unrelated to a recent service expansion offset by $304,000 in decreased margin from interruptible service to customers; and
- $477,000 from new natural gas transmission and distribution services provided to Eight Flags' CHP plant.
- $1.2 million in higher staffing and associated costs for additional personnel to support growth; and
- $1.1 million in higher depreciation expense, amortization, asset removal and property tax costs associated with capital investments to support growth and maintain system integrity.
- $2.4 million from higher propane gas sales by the Company's propane distribution operation primarily on the Delmarva Peninsula in response to colder weather quarter-over-quarter;
- $1.9 million from Eight Flags' CHP plant; and
- $1.4 million from Aspire Energy as a result of pricing amendments to long-term gas sales agreements, additional management fees and higher volumes of natural gas delivered to or on behalf of certain of its customers; which increases were offset by
- $427,000 of lower gross margin from Xeron.
- $1.3 million in operating expenses incurred by Eight Flags' CHP plant;
- $738,000 in higher staffing and associated costs for additional personnel to support growth;
- $344,000 in operating expenses, primarily higher staffing and associated costs as well as depreciation expense, incurred by Aspire Energy; and
- $289,000 in higher outside service expenses and facilities maintenance expenses.
- a Natural Gas Compression Service, under which Sandpiper may construct, own and maintain compression facilities for commercial customers who require enhanced pressure for their operations;
- a Multi-Family Housing Program, which will provide a contribution to builders and developers that select natural gas or propane as a fuel source for multi-family housing; and
- an extension of the due date for bill payments from 10 days to 20 days from the bill date.
- The scammer pretending to be a company representative acts angry and tells the customer his or her account is past due and service will be disconnected if a large payment isn't made – usually within less than an hour.
- The scammer instructs the customer to purchase a pre-paid debit or credit card – widely available at retail stores – then calls him or her back to supposedly make a payment to Chesapeake Utilities, Sandpiper Energy, Florida Public Utilities Company or Sharp Energy.
- The scammer asks the customer for the prepaid card's receipt number and PIN number, which grants instant access to the card's funds.
- Chesapeake Utilities, Sandpiper Energy, Florida Public Utilities Company or Sharp Energy will never ask or require a customer with a delinquent account to purchase a prepaid debit card to avoid disconnection of service.
- Customers can make payments online, by phone, automatic bank draft, and mail or in person.
- Customers with delinquent accounts will receive past due reminder notifications. Customers would never receive a single over the phone notification one hour before disconnection of service.
- If you suspect someone is trying to scam you, hang up and call the local police and then Chesapeake Utilities, Sandpiper Energy, Florida Public Utilities Company or Sharp Energy at the phone number listed on their bill. Never dial the phone number the scammers provide.
- $1.6 million generated from natural gas transmission expansions completed in 2015 and 2016, as well as interim services to customers pending construction of facilities, which are discussed in the "Major Projects and Initiatives" section below;
- $943,000 from customer growth in natural gas distribution and transmission services unrelated to recent service expansions;
- $920,000 generated by additional Gas Reliability Infrastructure Program ("GRIP") investments in the Florida natural gas distribution operations;
- $469,000 generated from the implementation of interim rates for the Company's Delaware natural gas distribution division;
- $464,000 from new natural gas transmission and distribution services provided to the Company's Eight Flags' CHP plant; and
- $226,000 related to higher margins from system improvement rates for the Company's subsidiary, Sandpiper Energy, Inc., ("Sandpiper") resulting from the continuing conversion of the Sandpiper system from propane service to natural gas service.
- $1.3 million in higher payroll and benefits costs for additional personnel to support growth;
- $702,000 in higher outside services costs primarily associated with growth and ongoing compliance activities;
- $517,000 in higher facilities costs to support growth; and
- $401,000 in higher depreciation, asset removal and property tax costs associated with recent capital investments to support growth and system integrity.
- $1.6 million of additional gross margin from Eight Flags' CHP plant, which commenced operations in June 2016; offset by:
- $613,000 in additional fixed pipeline and storage costs associated with natural gas supply contracts entered into by Peninsula Energy Services Company, Inc. ("PESCO"), where a significant portion of the sales volume will occur during the winter months;
- $414,000 less gross margin for the Company's propane distribution operations of which $344,000 is associated with the Delmarva Peninsula propane distribution operation where retail margins per gallon returned to more normal levels. The Company has assumed more normal levels of margins in its long-term financial plans and forecasts;
- $413,000 of lower gross margin from Xeron on executed trades; and
- $407,000 of decreased gross margin from Aspire Energy as a result of increased deliveries and imbalance positions that favorably impacted Aspire Energy in the third quarter of 2015, which are non-recurring. Lower margin associated with system volumes and imbalance positions in third quarter of 2016, also contributed to the decrease.
- $1.1 million in other operating expenses incurred by Eight Flags' CHP plant;
- $545,000 in higher payroll and benefits costs for additional personnel to support growth; and
- $225,000 in higher outside services costs primarily associated with growth and ongoing compliance activities.
- $5.5 million generated from natural gas transmission expansions completed in 2015 and 2016, as well as interim services to customers pending construction of facilities, which are more fully discussed in the "Major Projects and Initiatives" section below;
- $3.1 million generated by additional GRIP investments in the Florida natural gas distribution operations;
- $2.6 million from customer growth in natural gas distribution and transmission services unrelated to recent service expansions;
- $1.4 million generated from the implementation of interim rates for the Company's Delaware natural gas distribution division;
- $892,000 from new natural gas transmission and distribution services provided to Eight Flags' CHP plant; and
- $618,000 related to higher margins from system improvement rates for Sandpiper resulting from the continued conversion of its distribution system from propane service to natural gas service.
- $2.0 million in higher payroll and benefits costs for additional personnel to support growth;
- $1.4 million due to the absence of a $1.5 million gain from the payment received by the Company in the customer billing system settlement, recorded in 2015, which was partially offset by an associated gain of $130,000 during the third quarter of 2016, representing an additional current portion of the contingent recovery in connection with such settlement;
- $1.4 million in higher depreciation, asset removal and property tax costs associated with recent capital investments to support growth and system integrity; and
- $817,000 in higher outside services costs primarily associated with growth and ongoing compliance activities.
- $4.5 million of additional gross margin from Aspire Energy as the first nine months of 2015 reflect only six months of margin for Aspire Energy, which became a wholly-owned subsidiary of Chesapeake Utilities on April 1, 2015. In addition, Aspire Energy generated additional margins as a result of pricing amendments to long-term gas sales agreements, additional management fees and the optimization of gathering system receipts and deliveries;
- $1.7 million of additional gross margin from Eight Flags' CHP plant, which commenced operations in June 2016; and
- $1.1 million in additional gross margin from PESCO due to customer growth and favorable supply management activities.
- $4.1 million of lower gross margin due to lower customer consumption of propane. The decrease was driven mainly by weather as a result of warmer temperatures on the Delmarva Peninsula primarily during the first quarter of 2016 compared to colder temperatures during the first quarter of 2015;
- $2.2 million of lower gross margin for the Company's Delmarva propane distribution operation as retail margins per gallon returned to more normal levels; accordingly, the Company has assumed more normal levels of margins in its long-term financial plans and forecasts;
- $436,000 of lower gross margin due to decreased sales of propane to a third party who supplies Sandpiper Energy, as a result of significantly warmer weather in 2016 compared to 2015 as well as conversions to natural gas; and
- $419,000 of lower gross margin from Xeron on executed trades.
- $2.5 million in other operating expenses incurred by Aspire Energy, given the additional quarter's results included in 2016, compared to only six months of results in the nine months ended September 30, 2015; and
- $1.1 million in other operating expenses incurred by Eight Flags since it commenced operations in June 2016.
- Beth W. Cooper, Senior Vice President and Chief Financial Officer;
- Elaine B. Bittner, Senior Vice President of Strategic Development;
- Stephen C. Thompson, Senior Vice President; and
- Jeffry M Householder, President, Florida Public Utilities Company.
- $2.0 million generated from natural gas transmission expansions completed in 2015 and 2016, as well as interim services to customers pending construction of facilities, which are more fully discussed in the "Major Projects and Initiatives" section below;
- $1.0 million generated by additional Gas Reliability Infrastructure Program ("GRIP") investments in the Florida natural gas distribution operations;
- $820,000 from customer growth in natural gas distribution and transmission services unrelated to recent service expansions;
- $555,000 generated from the implementation of interim rates for the Company's Delaware division; and
- $432,000 from new natural gas transmission and distribution services provided to Eight Flags Energy, LLC ("Eight Flags") combined heat and power ("CHP") plant.
- The absence of a $1.5 million gain from a customer billing system settlement, recorded in 2015, which was partially offset by an associated gain of $130,000 during the second quarter of 2016, representing an additional current portion of the settlement recovery;
- $724,000 in higher payroll and benefits costs for additional personnel to support growth;
- $722,000 in higher service contractor and other consulting costs; and
- $385,000 in higher depreciation, asset removal and property tax costs associated with recent capital investments.
- Aspire Energy of Ohio ("Aspire Energy") generated $708,000 in additional gross margin for the quarter ended June 30, 2016 as a result of additional margins generated by pricing amendments to long-term gas sales agreements, the elimination of gas retainage volume credits associated with shrinkage for gas processing activities, and the optimization of gathering system receipts and deliveries through improved management and monitoring of system volumes and imbalance positions;
- $464,000 in additional gross margin generated by the Company's natural gas marketing operation in connection with customer growth, which included a new long-term sales agreement with an Ohio distribution company, and the positive impact from favorable supply management and hedging activities, which generated additional gross margin as a result of a decrease in inventory costs. The increase in gross margin as a result of favorable supply management and hedging activities is not predictable and, therefore, is not included in the Company's long-term financial plans or forecasts; and
- $370,000 in additional gross margin generated by the Company's propane distribution operations due to increased deliveries of propane as a result of weather and the timing of bulk deliveries.
- $3.9 million generated from natural gas transmission expansions completed in 2015 and 2016, as well as interim services to customers pending construction of facilities, which are more fully discussed in the "Major Projects and Initiatives" section below;
- $2.1 million generated by additional GRIP investments in the Florida natural gas distribution operations;
- $1.6 million from customer growth in natural gas distribution and transmission services unrelated to recent service expansions;
- $878,000 generated from the implementation of interim rates for the Company's Delaware division; and
- $432,000 from new natural gas transmission and distribution services provided to Eight Flags' CHP plant.
- The absence of a $1.5 million gain from a customer billing system settlement, recorded in 2015, which was partially offset by an associated gain of $130,000 during the second quarter of 2016, representing an additional current portion of the settlement recovery;
- $1.0 million in higher depreciation, asset removal and property tax costs associated with recent capital investments; and
- $565,000 in higher payroll and benefits costs for additional personnel to support growth.
- $3.9 million in decreased consumption of propane within the Company's distribution operations due largely to significantly warmer weather during the first quarter of 2016;
- $1.7 million in lower retail propane margins, reflecting an anticipated return to more normal margins, principally in the Company's Delmarva retail propane distribution operations; and
- $452,000 in decreased propane wholesale sales associated with the sales agreement with an affiliate of Eastern Shore Gas Company, that has a propane supply agreement with the Company's subsidiary, Sandpiper Energy, Inc. The lower sales are expected as more customers in Ocean City, Maryland and surrounding areas are converted from propane to natural gas. Lower sales due to significantly warmer weather in the first six months of 2016 compared to the same period in 2015, also contributed to this decrease.
- $1.9 million generated from natural gas transmission expansions completed in 2014 and 2015, as well as interim services to customers pending construction of facilities, which are more fully discussed in the "Major Projects and Initiatives" section below;
- $1.1 million generated by additional Gas Reliability Infrastructure Program ("GRIP") investments in the Florida natural gas distribution operations; and
- $745,000 from customer growth in natural gas distribution and transmission services unrelated to recent service expansions.
- $4.3 million in decreased consumption of propane largely due to significantly warmer weather during the first quarter of 2016; and
- $1.8 million in lower retail propane margins reflecting an anticipated return to more normal margins principally in the Company's Delmarva retail propane distribution operations.
- $5.2 million generated from natural gas transmission expansions completed in 2014 and 2015, as well as interim services to customers pending construction of facilities, which are more fully discussed in the "Major Projects and Initiatives" section below;
- $4.3 million in customer growth in natural gas distribution and transmission services unrelated to recent service expansions;
- $4.2 million generated by additional Gas Reliability Infrastructure Program ("GRIP") investments by the Florida natural gas distribution operations;
- $2.5 million from a base rate increase for the Florida electric distribution operation; partially offset by:
- $3.1 million in decreased consumption of natural gas and electricity largely as a result of significantly warmer weather during the fourth quarter of 2015.
- $2.9 million in higher depreciation, asset removal and property tax costs associated with recent capital investments;
- $2.8 million in higher payroll and benefits costs as a result of additional personnel to support growth;
- $1.4 million in higher service contractor and other consulting costs;
- $987,000 in legal and consulting costs associated with the customer billing system settlement and other initiatives; and
- $480,000 in higher incentive compensation as a result of the Company's 2015 financial results.
- $8.9 million generated from higher retail propane margins per gallon due to the Company's retail pricing strategy, which is guided by local market conditions, and lower propane costs as a result of favorable supply management and hedging activities;
- $6.3 million in gross margin generated by Aspire Energy of Ohio, LLC, ("Aspire Energy"), following the acquisition of Gatherco, Inc. ("Gatherco") on April 1, 2015; and, therefore, not included in prior year results; partially offset by:
- $1.8 million in decreased consumption of propane decreased largely due to significantly warmer weather during the fourth quarter of 2015; and
- $1.2 million in decreased gross margin for Xeron, Inc. ("Xeron"), due to lower volatility in wholesale propane prices.
- $5.8 million in operating costs of Aspire Energy, following the acquisition of Gatherco;
- $1.4 million in higher payroll and benefits expense due to increased seasonal overtime and additional resources hired to support growth;
- $553,000 in additional costs for facility maintenance; and
- $411,000 in increased incentive compensation as a result of the Company's 2015 financial results as well as a larger workforce.
- $1.1 million generated from natural gas transmission expansions completed in 2014 and 2015, as well as interim services to customers pending construction of facilities, which are further discussed in the "Major Projects and Initiatives" section below;
- $1.1 million generated by additional GRIP investments in Florida;
- $1.0 million from customer growth in natural gas distribution and transmission services unrelated to recent service expansions; partially offset by:
- $2.9 million from decreased consumption of natural gas and electricity largely as a result of significantly warmer weather during the fourth quarter of 2015.
- $1.1 million in higher depreciation, asset removal and property tax costs associated with recent capital investments;
- $741,000 in additional costs for facility maintenance; and
- $601,000 of higher payroll and benefit costs as a result of increased payroll and a larger workforce.
- $2.7 million of gross margin generated by Aspire Energy, following the acquisition of Gatherco in April 2015;
- $2.2 million of additional gross margin in the propane distribution business as a result of higher retail propane margins per gallon due to the Company's retail pricing strategy guided by local market conditions, and lower propane costs; partially offset by:
- $2.0 million from decreased consumption of propane largely due to significantly warmer weather during the fourth quarter of 2015; and
- $326,000 in decreased gross margin for Xeron due to lower volatility in wholesale propane prices.
- $1.9 million in costs from the operation of Aspire Energy, following the acquisition of Gatherco in April 2015; and
- $466,000 in higher payroll and benefits costs as a result of additional personnel hired to support growth.
1/28/2021 - Chesapeake Utilities Corporation Named Winner of Inaugural 2021 Top Workplaces USA Award
Chesapeake Utilities Corporation Named Winner of Inaugural 2021 Top Workplaces USA Award
Source: PR Newswire
Orignial Article: https://contentapi.cision...
DOVER, Del., Jan. 28, 2021 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) today announced it has earned the inaugural 2021 Top Workplaces USA award for mid-size companies. In the Top Workplace program's 14-year history, more than 20 million employees across 54 markets have been surveyed for the regional Top Workplaces awards. In August 2020, Chesapeake Utilities was recognized as a Top Workplace in Delaware for the ninth consecutive year, and in November 2020, Florida Public Utilities Company (FPUC), a wholly-owned subsidiary of Chesapeake Utilities, was recognized as a Top Workplace in Central Florida.
"This has been an incredibly challenging period for our employees, yet they continue to demonstrate every day extraordinary dedication and teamwork, which remain essential to our strong culture that encourages a commitment to community engagement, sustainability, environmental justice, and equity, diversity and inclusion," said Jeff Householder, President and Chief Executive Officer for Chesapeake Utilities Corporation. "I'm honored that the Company is being recognized as a Top Workplace on a national level, and I'm humbled to work alongside our employees who continue to drive success for our customers and communities despite the many challenges faced throughout the COVID-19 pandemic."
Top Workplaces USA offers national recognition for large organizations, those with more than 150 employees, and those that may have operations in multiple markets. Several thousand organizations from across the country were invited, and more than 1,100 participated in the Top Workplaces USA survey. Winners named to the Top Workplaces USA list are chosen based solely on feedback gathered through an employee engagement survey conducted by Energage, a research firm that specializes in organizational health and workplace engagement. Results are calculated by comparing the survey's research-based statements, including 15 Culture Drivers that are proven to predict high performance against industry benchmarks.
"During this very challenging time, Top Workplaces has proven to be a beacon of light for organizations, as well as a sign of resiliency and strong business performance," said Eric Rubino, Energage CEO. "When you give your employees a voice, you come together to navigate challenges and shape your path forward. Top Workplaces draw on real-time insights into what works best for their organization, so they can make informed decisions that have a positive impact on their people and their business."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas (CNG) utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
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SOURCE Chesapeake Utilities Corporation
Article Date
1/28/202111/11/2020 - Chesapeake Utilities Corporation and TECO Peoples Gas Announce Completion of Callahan Pipeline in Northeast Florida
Chesapeake Utilities Corporation and TECO Peoples Gas Announce Completion of Callahan Pipeline in Northeast Florida
Source: PR Newswire
DOVER, Del., Nov. 11, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that its Florida subsidiary, Peninsula Pipeline Company, Inc., in collaboration with SeaCoast Gas Transmission, an affiliate of Tampa-based TECO Peoples Gas, have completed the Callahan Intrastate Pipeline, bringing additional natural gas capacity to Nassau and Duval Counties. The new supply source will enable both Chesapeake Utilities subsidiary Florida Public Utilities Company (FPUC) and Peoples Gas to expand natural gas distribution service in this growing area of Florida. FPUC and Peoples Gas previously worked together in 2012 to introduce natural gas service to Nassau County.
"The completion of this joint pipeline project with Peoples Gas is critical to providing safe, reliable and affordable natural gas to residents and businesses in northeast Florida," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "This partnership provides an environmentally friendly, practical and cost-effective energy solution to underserved communities in northeast Florida while providing the additional capacity needed to support future growth in the region."
"Our work with Chesapeake Utilities is a wonderful example of how we are fulfilling our commitment to providing more Floridians with access to clean and affordable natural gas," said T.J. Szelistowski, President of Peoples Gas. "This pipeline will support economic recovery and new development throughout northeast Florida, allowing homes and businesses to have more energy choices."
The Callahan Intrastate Pipeline facilities include a 26.5-mile-long joint natural gas pipeline, which initiates from a gate station that was recently commissioned on the Southern Natural Gas Cypress Interstate Pipeline near Crawford Road in Callahan, Florida to Radio Avenue and Highway 17 in Yulee, Florida. Peninsula Pipeline constructed, partially owns and will fully maintain the pipeline.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas (CNG) utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
About Florida Public Utilities Company
Florida Public Utilities Company (FPUC) is a wholly owned subsidiary of Chesapeake Utilities Corporation. Headquartered in Fernandina Beach, Florida, FPUC distributes natural gas and propane and provides electric services to more than 110,000 customers in markets throughout Florida. For more information, visit www.fpuc.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
About Peoples Gas
Peoples Gas System, Florida's largest natural gas distribution utility, serves more than 400,000 customers across the state. Peoples Gas is owned by Emera Inc., a geographically diverse energy and services company headquartered in Halifax, Nova Scotia, Canada.
About SeaCoast Gas Transmission
SeaCoast Gas Transmission, LLC, an affiliate of Peoples Gas System owned by Emera Inc., designs, constructs and operates intrastate natural gas pipelines in Florida.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
Sylvia Vega
Senior Brand and Communication Strategist
Peoples Gas
813-228-4381
shvega@tecoenergy.com
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SOURCE Chesapeake Utilities Corporation
Article Date
11/11/2020Chesapeake Utilities Corporation Announces New Officer Appointments
Source: PR Newswire
DOVER, Del., Nov. 9, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK), announced today the appointment of Kelley Parmer to Assistant Vice President of Customer Care for the Company and Jason Bennett to Assistant Vice President of the newly-created Operation Services team for Chesapeake Utilities Corporation.
Ms. Parmer is responsible for overseeing the Company's customer service teams, ensuring customers have their energy needs met. She is also responsible for all customer care functions throughout the Company with a focus on continuous improvement of the overall customer experience. Mr. Bennett will oversee the newly-created Operation Services team. In this role, Mr. Bennett and his team will initially focus on streamlining and standardizing processes and systems for the distribution business, while looking for additional continuous improvement opportunities across the Company.
"Kelley and Jason both have significant energy industry experience and track records of driving operational efficiencies and they will be valued members of our leadership team," said Jeff Sylvester, Senior Vice President, Pipeline Transmission and Regulated Gas and Electric Distribution for Chesapeake Utilities Corporation. "These two results-oriented leaders will greatly assist us in their new roles as we continue to grow and expand our operations and organizational structure and evolve to meet growing market demands, challenges and opportunities."
Ms. Parmer joined Chesapeake Utilities in 2015 as Director of Planning and Analysis and was responsible for overseeing the regulated utilities' customer care functions. Under her leadership, Ms. Parmer and the Customer Care teams implemented several key pieces of technology to drive operational efficiency and support growth, as well as build key skills necessary to support future endeavors. Additionally, she and her teams supported critical customer outreach during operational incidents and throughout the current COVID-19 pandemic. Ms. Parmer has served for two years as a Southern Gas Association (SGA) Contact Center Committee member and has been a Maryland/DC Utilities board member since 2019. Ms. Parmer earned a Bachelor of Science in Business Administration from the University of Maryland Global Campus.
Mr. Bennett joins Chesapeake Utilities from Black Hills Energy and brings extensive experience in financial, regulatory and business process improvement. Mr. Bennett played an important and successful leadership role in helping to integrate the $1B acquisition of Aquila and the $2B acquisition of SourceGas for Black Hills Energy. Over the past 12 years, his accomplishments include leading many improvement projects that helped to establish a focus on standardization. Mr. Bennett earned a Bachelor of Science in Accounting and Management Information Systems from the University of South Florida in Tampa.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas (CNG) utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
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SOURCE Chesapeake Utilities Corporation
Article Date
11/9/202011/5/2020 - Chesapeake Utilities Corporation Announces Quarterly Dividend Representing 60 Years Of Consecutive Dividends
Chesapeake Utilities Corporation Announces Quarterly Dividend Representing 60 Years Of Consecutive Dividends
Source: PR Newswire
DOVER, Del., Nov. 5, 2020 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.44 per share on the Company's common stock. The $0.44 per share dividend will be paid on January 5, 2021 to all shareholders of record at the close of business on December 15, 2020.
For 60 years, Chesapeake has paid dividends to its shareholders without interruption. During those 60 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas (CNG) utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Heidi W. Watkins
Shareholder Services Manager
302.734.6716
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SOURCE Chesapeake Utilities Corporation
Article Date
11/5/2020Chesapeake Utilities Corporation Reports Third Quarter 2020 Results
Source: PR Newswire
DOVER, Del., Nov. 4, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced its financial results for the third quarter of 2020. The Company's net income for the quarter ended September 30, 2020 was $9.3 million, or $0.56 per share, compared to $5.6 million or $0.34 per share, for the same quarter of 2019. Net income for the nine months ended September 30, 2020 was $49.1 million, or $2.97 per share, compared to $42.6 million, or $2.59 per share, for the same period in 2019, representing an increase of 14.7 percent. In terms of continuing operations, the Company's EPS for the quarter ended September 30, 2020 totaled $0.56 per share, an increase of $0.18 per share over the same quarter of 2019. For the nine months ended September 30, 2020, EPS from continuing operations totaled $2.96 per share, an increase of $0.29 per share or 10.9 percent, over the same period in 2019.
Earnings for the third quarter of 2020 reflect increased earnings from the approval of the Hurricane Michael regulatory settlement by the Florida Public Service Commission ("PSC"), pipeline expansion projects, organic growth in the natural gas distribution operations and increased margin from Marlin Gas Services, LLC ("Marlin Gas Services"). These increases were offset by lower customer consumption driven primarily by weather and the unfavorable net impact of the coronavirus ("COVID-19") pandemic.
Year-to-date earnings were impacted by the factors noted above as well as higher retail propane margins, and contributions from the acquisitions of Boulden, Inc. ("Boulden") and Elkton Gas Company ("Elkton Gas") and by gains from two property sales totaling $2.3 million on an after tax basis. The property sales were made possible due to changes in the consolidation of certain operations.
In March 2020, the U.S. Centers for Disease Control and Prevention ("CDC") declared a national emergency due to the rapidly growing outbreak of COVID-19. In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. These restrictions have continued to significantly impact economic conditions in the United States. Chesapeake Utilities is considered an "essential business," which allows the Company to continue its operational activities and construction projects while the social distancing restrictions remain in place. In response to the COVID-19 pandemic and related restrictions, the Company implemented its pandemic response plan, which includes having all employees who can work remotely do so in order to promote social distancing and providing personal protective equipment to field employees and others to reduce the spread of COVID-19. For the three and nine months ended September 30, 2020, the estimated impacts that COVID-19 had on the Company's earnings were approximately $0.7 million and $1.9 million, respectively, primarily driven by reduced consumption of energy largely in the commercial and industrial sectors, higher bad debt expenses and incremental expenses associated with COVID-19, including personal protective equipment and premium pay for field personnel. The additional operating expenses the Company has incurred support the ongoing delivery of our essential services during these unprecedented times. As the COVID-19 pandemic is still ongoing, the Company is continuing to assess recoverability and to date, has not established regulatory assets associated with the incremental net expense impacts, as currently authorized by the Delaware, Maryland and Florida PSCs. The Company is committed to communicating timely updates and will continue to monitor developments affecting its employees, customers, suppliers, and stockholders and take additional precautions as warranted to operate safely and to comply with the CDC, Occupational Safety and Health Administration, state and local requirements in order to protect its employees, customers and the communities.
"Our Company delivered strong third quarter results and is well positioned to achieve solid performance for the year, despite the challenges created by the COVID-19 pandemic. We also remain on track to achieve results within our stated 2022 EPS guidance range. The Company's performance to date has been driven by a myriad of growth initiatives across the enterprise. Since our second quarter earnings release, we have announced several key accomplishments, most notably the settlement of the Hurricane Michael regulatory proceeding, which had a significant impact on our third quarter and year-to-date results. The purchase of Elkton Gas at the end of July immediately created a solid foundation for our growing footprint in the Cecil County, Maryland area," stated Jeffrey Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Across all businesses, our dedicated team continued to execute, generating additional margin growth from expansions of our pipelines and Marlin Gas Services' suite of services, organic growth, key regulatory initiatives, and further integration of our strategic acquisitions. Just recently, we announced several new projects that will add to our earnings trajectory in 2021 and beyond, including several renewable natural gas projects and the acquisition of Western Natural Gas Company, a propane company in a growing market adjacent to our northern Florida service territory. Because of new growth opportunities like these, Chesapeake Utilities remains poised to further expand our delivery of essential services that our customers expect from us and to drive increased shareholder value over the coming years."
Capital Expenditures Forecast and Earnings Guidance Update
In February 2020, the Company reaffirmed its capital expenditures projection of $750 million - $1 billion of capital expenditures from 2018-2022. Additionally, the Company updated its previous EPS guidance by increasing the forecasted range for 2022 to $4.70 to $4.90 given the investments already made, those underway and the growth prospects included in the Company's strategic growth plan. The Company expects EPS to grow at an average annual rate of 7.75 percent to 9.50 percent.
The Company has continued to review its projections and remains supportive of this guidance, after taking into consideration its strategic plan, the expected impact of COVID-19 and the anticipated regulatory relief and opportunities for continued collaboration across the enterprise. The Company has historically achieved an average earnings growth at or above this range, and continues to view its long-term growth prospects as comparable to its historical growth.
*Unless otherwise noted, EPS information is presented on a diluted basis.
**This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin. 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 "gross margin" by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance.
Operating Results for the Quarters Ended September 30, 2020 and 2019
Consolidated Results
Three Months Ended | ||||||||||||||
September 30, | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 79,508 | $ | 67,298 | $ | 12,210 | 18.1 | % | ||||||
Depreciation, amortization and property taxes | 22,976 | 16,010 | 6,966 | 43.5 | % | |||||||||
Other operating expenses | 39,126 | 36,931 | 2,195 | 5.9 | % | |||||||||
Operating income | $ | 17,406 | $ | 14,357 | $ | 3,049 | 21.2 | % | ||||||
Operating income for the three months ended September 30, 2020 increased by $3.0 million, or 21.2 percent, compared to the same period in 2019. The increase in operating income was largely driven by the settlement of the Hurricane Michael regulatory proceeding which improved operating income by $2.9 million, including $1.9 million in operating income that was previously billed under interim rates during the first half of 2020. Operating income for the quarter was also reduced by an estimated $1.9 million due to unfavorable impacts of COVID-19. For additional details on the Hurricane Michael regulatory proceeding, see the Major Projects and Initiatives discussion below.
Further contributing to the improved performance for the quarter was margin growth from the Company's organic growth projects, increased margins from investments in Florida Gas Reliability Infrastructure Program ("GRIP") and increased demand for Marlin Gas Services' compressed natural gas ("CNG") transportation services. These increases were partially offset by higher operating expenses related to growth initiatives.
Regulated Energy Segment
Three Months Ended | ||||||||||||||
September 30, | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 66,491 | $ | 54,961 | $ | 11,530 | 21.0 | % | ||||||
Depreciation, amortization and property taxes | 19,617 | 13,076 | 6,541 | 50.0 | % | |||||||||
Other operating expenses | 26,392 | 24,345 | 2,047 | 8.4 | % | |||||||||
Operating income | $ | 20,482 | $ | 17,540 | $ | 2,942 | 16.8 | % | ||||||
Operating income for the Regulated Energy segment increased by $2.9 million for the three months ended September 30, 2020 compared to 2019, or 16.8 percent. Higher operating income was a result of the settlement of the Hurricane Michael regulatory proceeding, which included recognizing the first and second quarter rate impacts associated with the settlement, expansion projects completed and underway by Eastern Shore Natural Gas Company ("Eastern Shore") and Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), organic growth in the Company's natural gas distribution businesses and margin from increased investments in the Florida GRIP. These increases were partially offset by higher depreciation, amortization and property taxes including amortization of the regulatory asset associated with the Hurricane Michael regulatory proceeding settlement and higher other operating expenses. Operating income for the quarter was reduced by an estimated $1.5 million due to unfavorable impacts of COVID-19, which included an increase in bad debt expense of $1.3 million compared to the third quarter 2019.
The key components of the increase in gross margin are shown below:
(in thousands) | |||
Margin contribution from Hurricane Michael regulatory proceeding settlement (1) | $ | 8,261 | |
Eastern Shore and Peninsula Pipeline service expansions | 2,677 | ||
Natural gas growth (excluding service expansions) | 797 | ||
Florida GRIP | 685 | ||
Margin contribution from Elkton Gas (acquisition completed in July 2020) | 357 | ||
Decreased customer consumption - weather related | (1,013) | ||
Other variances | (234) | ||
Quarter-over-quarter increase in gross margin | $ | 11,530 | |
(1) This amount includes $5.5 million of gross margin previously invoiced under interim rates that was not recognized in revenue during the first and second quarters of 2020. |
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Unfavorable COVID-19 impacts (primarily bad debt expense) | $ | 1,334 | |
Payroll, Benefits and other employee-related expenses | 447 | ||
Operating expenses from Elkton Gas acquisition (completed July 2020) | 276 | ||
Other variances | (10) | ||
Quarter-over-quarter increase in other operating expenses | $ | 2,047 | |
Unregulated Energy Segment
Three Months Ended | ||||||||||||||
September 30, | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 13,068 | $ | 12,418 | $ | 650 | 5.2 | % | ||||||
Depreciation, amortization and property taxes | 3,326 | 2,901 | 425 | 14.7 | % | |||||||||
Other operating expenses | 12,834 | 12,686 | 148 | 1.2 | % | |||||||||
Operating loss | $ | (3,092) | $ | (3,169) | $ | 77 | 2.4 | % | ||||||
Operating results for the Unregulated Energy segment increased by $0.1 million for the third quarter, as compared to the third quarter of 2019. Excluding the estimated COVID-19 impacts of $0.3 million, operating income increased by $0.4 million driven by margin growth from Marlin Gas Services and incremental margin from the Boulden assets. These increases were partially offset by higher depreciation, amortization and property taxes and higher other operating expenses.
The major components of the increase in gross margin are shown below:
(in thousands) | ||||
Marlin Gas Services - increased gross margin from demand for CNG transportation services | $ | 599 | ||
Boulden acquisition (assets acquired in December 2019) | 327 | |||
Unfavorable COVID-19 impacts on gross margin | (399) | |||
Other variances | 123 | |||
Quarter-over-quarter increase in gross margin | $ | 650 | ||
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Operating expenses from Boulden acquisition (completed December 2019) | $ | 290 | |
Payroll, Benefits and other employee-related expenses | (202) | ||
Other variances | 60 | ||
Quarter-over-quarter increase in other operating expenses | $ | 148 | |
Operating Results for the Nine Months Ended September 30, 2020 and 2019
Consolidated Results
Nine Months Ended | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 253,418 | $ | 236,203 | $ | 17,215 | 7.3 | % | ||||||
Depreciation, amortization and property taxes | 57,103 | 47,337 | 9,766 | 20.6 | % | |||||||||
Other operating expenses | 118,797 | 112,221 | 6,576 | 5.9 | % | |||||||||
Operating income | $ | 77,518 | $ | 76,645 | $ | 873 | 1.1 | % | ||||||
Operating income for the nine months ended September 30, 2020 increased by $0.9 million compared to the same period in 2019. Operating income for the period was reduced by an estimated $6.7 million due to unfavorable impacts of COVID-19, inclusive of an increase in bad debt expense of $1.9 million compared to the same period in 2019. Excluding this impact, operating income for the period increased by $7.6 million which included operating income of $2.9 million from the settlement of the Hurricane Michael regulatory proceeding, higher operating income from organic growth projects, gross margin contributions from the Boulden and Elkton Gas asset acquisitions completed in December 2019 and July 2020, respectively, and higher retail propane margins per gallon, partially offset by decreased margin from customer consumption associated with milder weather during 2020.
Regulated Energy Segment
Nine Months Ended | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 191,745 | $ | 177,149 | $ | 14,596 | 8.2 | % | ||||||
Depreciation, amortization and property taxes | 47,144 | 38,694 | 8,450 | 21.8 | % | |||||||||
Other operating expenses | 78,225 | 73,145 | 5,080 | 6.9 | % | |||||||||
Operating income | $ | 66,376 | $ | 65,310 | $ | 1,066 | 1.6 | % | ||||||
Operating income for the Regulated Energy segment for the nine months ended September 30, 2020 was $66.4 million, an increase of $1.1 million, compared to the same period in 2019. Excluding the estimated unfavorable COVID-19 impacts of $4.8 million, which included an increase in bad debt expense of $1.9 million, operating income increased $5.9 million as a result of the Hurricane Michael regulatory proceeding settlement, higher gross margin from expansion projects completed by Eastern Shore and Peninsula Pipeline and organic growth in the Company's natural gas distribution businesses. These increases were offset by higher depreciation, amortization and property taxes, including amortization of the regulatory asset associated with the Hurricane Michael regulatory proceeding settlement and higher other operating expenses.
The key components of the increase in gross margin are shown below:
(in thousands) | |||
Margin Contribution from Hurricane Michael regulatory proceeding settlement | $ | 8,261 | |
Eastern Shore and Peninsula Pipeline service expansions | 5,485 | ||
Natural gas distribution - customer growth (excluding service expansions) | 2,497 | ||
Eastern Shore margin from capital improvements and non-service expansion projects | 793 | ||
Florida GRIP | 678 | ||
Margin contribution from Elkton Gas acquisition (completed July 2020) | 357 | ||
Unfavorable COVID-19 impacts on gross margin | (2,634) | ||
Absence of Florida tax savings (net of GRIP refunds) recorded in the first quarter of 2019 for 2018 | (910) | ||
Decreased customer consumption - weather related | (863) | ||
Other variances | 932 | ||
Period-over-period increase in gross margin | $ | 14,596 | |
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Unfavorable COVID-19 impacts (largely higher bad debt expense) | $ | 2,194 | |
Insurance expense (non-health) - both insured and self-insured | 1,377 | ||
Payroll, benefits and other employee-related expenses | 1,029 | ||
Facilities maintenance and outside services costs | 777 | ||
Operating expenses from Elkton acquisition (completed July 2020) | 276 | ||
Other variances | (573) | ||
Period-over-period increase in other operating expenses | $ | 5,080 | |
Unregulated Energy Segment
Nine Months Ended | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 61,883 | $ | 59,340 | $ | 2,543 | 4.3 | % | ||||||
Depreciation, amortization and property taxes | 9,869 | 8,543 | 1,326 | 15.5 | % | |||||||||
Other operating expenses | 40,964 | 39,480 | 1,484 | 3.8 | % | |||||||||
Operating income | $ | 11,050 | $ | 11,317 | $ | (267) | (2.4) | % | ||||||
Operating income for the Unregulated Energy segment decreased by $0.3 million for the nine months ended September 30, 2020, compared to the same period in 2019. Excluding the estimated COVID-19 impacts of $1.6 million, operating income increased $1.3 million as a result of incremental gross margin from the acquisition of the Boulden propane assets, higher retail propane margins per gallon and increased demand for Marlin Gas Services' CNG transportation services. These increases were partially offset by reduced gross margins from overall warmer temperatures, expenses associated with recent acquisitions, and increased insurance expense.
The key components of the increase in gross margin are shown below:
(in thousands) | ||||
Propane Operations | ||||
Boulden acquisition (assets acquired in December 2019) | $ | 2,763 | ||
Increased retail propane margins per gallon driven by favorable market conditions and supply management | 1,892 | |||
Decreased customer consumption - primarily weather related | (1,540) | |||
Marlin Gas Services | ||||
Increased demand for CNG services | 694 | |||
Aspire Energy | ||||
Decreased customer consumption - primarily weather related | (687) | |||
Higher margins from negotiated rate increases | 443 | |||
Unfavorable COVID-19 impacts on gross margin | (1,145) | |||
Other variances | 123 | |||
Period-over-period increase in gross margin | $ | 2,543 | ||
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Operating expenses from Boulden acquisition (completed in December 2019) | $ | 939 | |
Insurance expense (non-health) - both insured and self-insured | 523 | ||
Unfavorable COVID-19 impacts (higher operating and bad debt expenses) | 417 | ||
Other variances | (395) | ||
Period-over-period increase in other operating expenses | $ | 1,484 | |
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 2019 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the third quarter of 2020 for further information on the risks and uncertainties related to the Company's forward-looking statements. In addition, to the risks and uncertainties identified in the Company's 2019 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q for the first, second and third quarters of 2020, risks and uncertainties related to the COVID-19 pandemic could cause actual future results to differ materially from those expressed in any forward-looking statements, including, but not limited to, the duration and scope of the COVID-19 pandemic and impact on the demand for our services; our ability to obtain needed materials and components from our suppliers; actions governments, business, and individuals take in response to the pandemic, including mandatory business closures and restrictions on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; our customers' ability to make payments for our services; and general economic uncertainty in the United States and global markets and a continuation or worsening of economic conditions in the United States or low levels of economic growth.
Conference Call
Chesapeake Utilities will host a conference call on Thursday, November 5, 2020 at 4:00 p.m. Eastern Time to discuss the Company's financial results for the three and nine ended September 30, 2020. To participate in this call, dial 877.224.1468 and reference Chesapeake Utilities' 2020 Third Quarter Results Conference Call. To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, use the link CPK - Conference Call Audio Replay, or visit the Investors/Events and Presentations section of the Company's website at www.chpk.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas services; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at https://www.chpk.com or through its Investor Relations (IR) App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
Financial Summary | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Gross Margin | |||||||||||||||
Regulated Energy segment | $ | 66,491 | $ | 54,961 | $ | 191,745 | $ | 177,149 | |||||||
Unregulated Energy segment | 13,068 | 12,418 | 61,883 | 59,340 | |||||||||||
Other businesses and eliminations | (51) | (81) | (210) | (286) | |||||||||||
Total Gross Margin | $ | 79,508 | $ | 67,298 | $ | 253,418 | $ | 236,203 | |||||||
Operating Income | |||||||||||||||
Regulated Energy segment | $ | 20,482 | $ | 17,540 | $ | 66,376 | $ | 65,310 | |||||||
Unregulated Energy segment | (3,092) | (3,169) | 11,050 | 11,317 | |||||||||||
Other businesses and eliminations | 16 | (14) | 92 | 18 | |||||||||||
Total Operating Income | 17,406 | 14,357 | 77,518 | 76,645 | |||||||||||
Other income (expense), net | (40) | (351) | 2,997 | (731) | |||||||||||
Interest Charges | 4,584 | 5,403 | 15,452 | 16,583 | |||||||||||
Income from Continuing Operations Before Income Taxes | 12,782 | 8,603 | 65,063 | 59,331 | |||||||||||
Income Taxes on Continuing Operations | 3,502 | 2,352 | 16,082 | 15,354 | |||||||||||
Income from Continuing Operations | 9,280 | 6,251 | 48,981 | 43,977 | |||||||||||
Income (loss) from Discontinued Operations, Net of Tax | (19) | (630) | 165 | (1,388) | |||||||||||
Net Income | $ | 9,261 | $ | 5,621 | $ | 49,146 | $ | 42,589 | |||||||
Basic Earnings Per Share of Common Stock | |||||||||||||||
Earnings from Continuing Operations | $ | 0.56 | $ | 0.38 | $ | 2.97 | $ | 2.68 | |||||||
Earnings (loss) from Discontinued Operations | — | (0.04) | 0.01 | (0.08) | |||||||||||
Basic Earnings Per Share of Common Stock | $ | 0.56 | $ | 0.34 | $ | 2.98 | $ | 2.60 | |||||||
Diluted Earnings Per Share of Common Stock | |||||||||||||||
Earnings from Continuing Operations | $ | 0.56 | $ | 0.38 | $ | 2.96 | $ | 2.67 | |||||||
Earnings (loss) from Discontinued Operations | — | (0.04) | 0.01 | (0.08) | |||||||||||
Diluted Earnings Per Share of Common Stock | $ | 0.56 | $ | 0.34 | $ | 2.97 | $ | 2.59 | |||||||
Financial Summary Highlights
Key variances in continuing operations, between the third quarter of 2020 and the third quarter of 2019, included:
(in thousands, except per share data) | Pre-tax | Net | Earnings | |||||||||
Third Quarter of 2019 Reported Results from Continuing Operations | $ | 8,603 | $ | 6,251 | $ | 0.38 | ||||||
Adjusting for Unusual Items: | ||||||||||||
Hurricane Michael (net impact of the first and second quarter of 2020)(1) | 2,705 | 1,964 | 0.12 | |||||||||
Unfavorable COVID-19 impacts | (1,023) | (742) | (0.04) | |||||||||
Decreased customer consumption - primarily weather related | (1,005) | (729) | (0.05) | |||||||||
677 | 493 | 0.03 | ||||||||||
Increased (Decreased) Gross Margins: | ||||||||||||
Margin contribution from the Hurricane Michael regulatory proceeding settlement* | 2,754 | 1,999 | 0.12 | |||||||||
Eastern Shore and Peninsula Pipeline service expansions* | 2,677 | 1,943 | 0.12 | |||||||||
Natural gas growth (excluding service expansions) | 797 | 578 | 0.03 | |||||||||
Florida GRIP* | 685 | 498 | 0.03 | |||||||||
Margin contributions from Boulden and Elkton Gas acquisitions (completed July | 684 | 496 | 0.03 | |||||||||
Increased demand for CNG services for Marlin Gas Services* | 599 | 435 | 0.03 | |||||||||
8,196 | 5,949 | 0.36 | ||||||||||
(Increased) Decreased Operating Expenses (Excluding Cost of Sales): | ||||||||||||
Depreciation and amortization associated with Hurricane Michael regulatory proceeding settlement | (1,781) | (1,293) | (0.08) | |||||||||
Depreciation, amortization and property tax costs due to new capital investments | (1,312) | (952) | (0.06) | |||||||||
Operating expenses from Elkton Gas and Boulden acquisitions (completed July | (867) | (630) | (0.04) | |||||||||
Facilities, maintenance and outside services costs | (414) | (301) | (0.02) | |||||||||
Insurance expense (non-health) - both insured and self-insured | (323) | (234) | (0.01) | |||||||||
(4,697) | (3,410) | (0.21) | ||||||||||
Interest charges | (841) | (611) | (0.04) | |||||||||
Lower pension expense | 388 | 282 | 0.02 | |||||||||
Net other changes | 456 | 326 | 0.02 | |||||||||
3 | (3) | — | ||||||||||
Third Quarter of 2020 Reported Results from Continuing Operations | $ | 12,782 | $ | 9,280 | $ | 0.56 | ||||||
*See the Major Projects and Initiatives table. | |
(1) | Includes amortization of regulatory liability associated with interest expense of $0.8 million related to the Hurricane Michael regulatory proceeding settlement. |
Key variances in continuing operations, between the nine months ended 2020 and the nine months ended 2019, included:
(in thousands, except per share data) | Pre-tax | Net | Earnings | |||||||||
Nine Months Ended September 30, 2019 Reported Results from Continuing Operations: | $ | 59,331 | $ | 43,977 | $ | 2.67 | ||||||
Adjusting for Unusual Items: | ||||||||||||
Unfavorable COVID-19 impacts | (4,933) | (3,587) | (0.22) | |||||||||
Decreased customer consumption - primarily weather related | (3,090) | (2,247) | (0.14) | |||||||||
Absence of Florida tax savings (net of GRIP refunds) recorded in first quarter of 2019 for | (910) | (667) | (0.04) | |||||||||
Gains from sales of assets | 3,162 | 2,317 | 0.14 | |||||||||
Favorable income tax impact associated with net operating loss carryback | — | 1,669 | 0.10 | |||||||||
(5,771) | (2,515) | (0.16) | ||||||||||
Increased (Decreased) Gross Margins: | ||||||||||||
Margin contribution from the Hurricane Michael regulatory proceeding settlement* | 8,261 | 6,007 | 0.36 | |||||||||
Eastern Shore and Peninsula Pipeline service expansions* | 5,485 | 3,988 | 0.24 | |||||||||
Margin contribution from Elkton Gas and Boulden acquisitions (completed July 2020 and | 3,120 | 2,269 | 0.14 | |||||||||
Natural gas growth (excluding service expansions) | 2,497 | 1,816 | 0.11 | |||||||||
Increased retail propane margins per gallon | 1,892 | 1,375 | 0.08 | |||||||||
Eastern Shore margin from capital improvements and capital surcharge increases | 793 | 576 | 0.04 | |||||||||
Increased demand for CNG services for Marlin Gas Services* | 694 | 505 | 0.03 | |||||||||
Florida GRIP* | 678 | 493 | 0.03 | |||||||||
Aspire Energy rate increases | 443 | 322 | 0.02 | |||||||||
23,863 | 17,351 | 1.05 | ||||||||||
(Increased) Decreased Other Operating Expenses (Excluding Cost of Sales): | ||||||||||||
Depreciation and amortization associated with Hurricane Michael regulatory proceeding settlement | (5,355) | (3,894) | (0.24) | |||||||||
Depreciation, amortization and property tax costs due to new capital investments | (3,732) | (2,714) | (0.16) | |||||||||
Insurance expense (non-health) - both insured and self-insured | (1,900) | (1,382) | (0.08) | |||||||||
Operating expenses from Elkton Gas and Boulden acquisitions (completed July 2020 and | (1,900) | (1,382) | (0.08) | |||||||||
Facilities maintenance and outside services costs | (1,294) | (941) | (0.06) | |||||||||
(14,181) | (10,313) | (0.62) | ||||||||||
Other income tax effects | — | (914) | (0.06) | |||||||||
Lower pension expense | 1,131 | 822 | 0.05 | |||||||||
Interest charges (1) | (852) | (620) | (0.04) | |||||||||
Net other changes | 1,542 | 1,193 | 0.07 | |||||||||
1,821 | 481 | 0.02 | ||||||||||
Nine Months Ended September 30, 2020 Reported Results from Continuing Operations | $ | 65,063 | $ | 48,981 | $ | 2.96 | ||||||
*See the Major Projects and Initiatives table later in this press release. | |
(1) | Interest charges includes amortization of a regulatory liability of $1.1 million related to the Hurricane Michael regulatory proceeding settlement. |
Recently Completed and Ongoing Major Projects and Initiatives
The Company constantly pursues and develops additional projects and initiatives to serve existing and new customers, and to further grow its businesses and earnings, with the intention to increase shareholder value. The following represent the major projects/initiatives recently completed and currently underway. Major projects and initiatives that have generated consistent year-over-year margin contributions are removed from the table. In the future, the Company will add new projects and initiatives to this table once negotiations are substantially final and the associated earnings can be estimated.
Gross Margin for the Period | ||||||||||||||||||||||||||||
Three Months | Nine Months Ended | Year Ended | Estimate for | |||||||||||||||||||||||||
Project/Initiative | September 30, | September 30, | December 31, | Fiscal | ||||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | 2019 | 2020 | 2021 | |||||||||||||||||||||
Pipeline Expansions | ||||||||||||||||||||||||||||
West Palm Beach County, Florida Expansion (1) | $ | 1,020 | $ | 745 | $ | 2,988 | $ | 1,068 | $ | 2,139 | $ | 4,076 | $ | 4,984 | ||||||||||||||
Del-Mar Energy Pathway (1) | 925 | 189 | 1,565 | 542 | 731 | 2,398 | 4,100 | |||||||||||||||||||||
Auburndale | 170 | 113 | 509 | 113 | 283 | 679 | 679 | |||||||||||||||||||||
Callahan Intrastate Pipeline (including related | 1,609 | — | 2,146 | — | — | 4,039 | 6,437 | |||||||||||||||||||||
Guernsey Power Station | — | — | — | — | — | — | 514 | |||||||||||||||||||||
Total Pipeline Expansions | 3,724 | 1,047 | 7,208 | 1,723 | 3,153 | 11,192 | 16,714 | |||||||||||||||||||||
Virtual Pipeline Growth | ||||||||||||||||||||||||||||
Compressed Natural Gas Transportation | 1,592 | 993 | 5,047 | 4,353 | 5,410 | 7,000 | 8,000 | |||||||||||||||||||||
Renewable Natural Gas Transportation | — | — | — | — | — | — | 1,000 | |||||||||||||||||||||
Total Virtual Pipeline Growth | 1,592 | 993 | 5,047 | 4,353 | 5,410 | 7,000 | 9,000 | |||||||||||||||||||||
Acquisitions | ||||||||||||||||||||||||||||
Boulden Propane | 327 | — | 2,763 | — | 329 | 4,000 | 4,200 | |||||||||||||||||||||
Elkton Gas | 357 | — | 357 | — | — | 1,365 | 3,992 | |||||||||||||||||||||
Western Natural Gas Company | — | — | — | — | — | 250 | 1,800 | |||||||||||||||||||||
Total Acquisitions | 684 | — | 3,120 | — | 329 | 5,615 | 9,992 | |||||||||||||||||||||
Regulatory Initiatives | ||||||||||||||||||||||||||||
Florida GRIP | 3,831 | 3,146 | 11,135 | 10,457 | 13,939 | 14,976 | 16,739 | |||||||||||||||||||||
Hurricane Michael regulatory proceeding (2) | 8,261 | — | 8,261 | — | — | 11,014 | 11,014 | |||||||||||||||||||||
Total Regulatory Initiatives | 12,092 | 3,146 | 19,396 | 10,457 | 13,939 | 25,990 | 27,753 | |||||||||||||||||||||
Total | $ | 18,092 | $ | 5,186 | $ | 34,771 | $ | 16,533 | $ | 22,831 | $ | 49,797 | $ | 63,459 | ||||||||||||||
(1) | Includes margin generated from interim services. |
(2) | This amount includes $5.5 million of gross margin previously invoiced under interim rates that was not recognized in revenue during the first and second quarters of 2020. |
Detailed Discussion of Major Projects and Initiatives
Pipeline Expansions
West Palm Beach County, Florida Expansion
Peninsula Pipeline is constructing four transmission lines to bring additional natural gas to the Company's distribution system in West Palm Beach, Florida. The first phase of this project was placed into service in December 2018 and generated $0.3 million and $1.9 million in additional gross margin for the three and nine months ended September 30, 2020, respectively. The Company expects to complete the remainder of the project in phases through the second quarter of 2021, and estimates that the project will generate gross margin of $4.1 million in 2020 and $5.0 million annually thereafter.
Del-Mar Energy Pathway
In December 2019, the Federal Energy Regulatory Commission issued an order approving the construction of the Del-Mar Energy Pathway project. Eastern Shore anticipates that this project will be fully in-service by the beginning of the fourth quarter of 2021. The new facilities will: (i) ensure an additional 14,300 Dekatherms per day ("Dts/d") of firm service to four customers, (ii) provide additional natural gas transmission pipeline infrastructure in eastern Sussex County, Delaware, and (iii) represent the first extension of Eastern Shore's pipeline system into Somerset County, Maryland. Construction on the project began in January 2020, and interim services in advance of this project generated $0.9 million and $1.6 million in margin for the three and nine months ended September 30, 2020, respectively. The estimated gross margin from this project is approximately $2.4 million in 2020, $4.1 million in 2021 and $5.1 million annually thereafter.
Auburndale
In August 2019, the Florida PSC approved Peninsula Pipeline's Transportation Service Agreement with the Florida Division of Chesapeake Utilities. Peninsula Pipeline purchased an existing pipeline owned by the Florida Division of Chesapeake Utilities and Calpine, and has completed the construction of pipeline facilities in Polk County, Florida. Peninsula Pipeline provides transportation service to the Florida Division of Chesapeake Utilities increasing both delivery capacity and downstream pressure as well as introducing a secondary source of natural gas for the Florida Division of Chesapeake Utilities' distribution system. Peninsula Pipeline generated gross margin from this project of $0.2 million and $0.5 million for the three and nine months ended September 30, 2020, respectively, and expects to generate annual gross margin of $0.7 million in 2020 and beyond.
Callahan Intrastate Pipeline
In May 2018, Peninsula Pipeline announced a plan to construct a jointly owned intrastate transmission pipeline with Seacoast Gas Transmission in Nassau County, Florida. The 26-mile pipeline will serve growing demand in both Nassau and Duval Counties. This project was placed in service in June 2020, one month earlier than initially forecasted, and generated $1.6 million and $2.1 million in additional gross for the three and nine months ended September 30, 2020, respectively. Peninsula Pipeline expects to generate gross margin of $4.0 million in 2020 and $6.4 million annually thereafter.
Guernsey Power Station
Guernsey Power Station, LLC ("Guernsey Power Station") and the Company's affiliate, Aspire Energy Express, LLC ("Aspire Energy Express"), entered into a precedent firm transportation capacity agreement whereby Guernsey Power Station will construct a power generation facility and Aspire Energy Express will provide firm natural gas transportation service to this facility. Guernsey Power Station commenced construction of the project in October 2019. Aspire Energy Express is expected to commence construction of the gas transmission facilities in the fourth quarter of 2021. This project is expected to produce gross margin of approximately $0.5 million in 2021 and $1.5 million for 2022 and beyond.
Virtual Pipeline Growth
CNG Transportation
Marlin Gas Services provides CNG temporary hold services, contracted pipeline integrity services, emergency services for damaged pipelines and specialized gas services for customers who have unique requirements. For the three and nine months ended September 30, 2020, Marlin Gas Services generated additional gross margin of $0.6 million and $0.7 million, respectively. We estimate that Marlin Gas Services will generate annual gross margin of approximately $7.0 million in 2020 and $8.0 million in 2021, with the potential for additional growth in future years. Marlin Gas Services continues to actively expand the territories it serves, as well as leverage its patented technology to serve other markets, including pursuing liquefied natural gas transportation opportunities and most recently, announcing its expansion into the transportation of renewable natural gas from diverse supply sources to various pipeline interconnection points, as further outlined below.
Renewable Natural Gas Transportation
Bioenergy DevCo
In June 2020, the Company and Bioenergy DevCo ("BDC"), a developer of anaerobic digestion facilities that create renewable energy and healthy soil products from organic material, entered into an agreement related to a project to remove excess organics from poultry waste and convert it into renewable natural gas. BDC and the Company's affiliates are collaborating on this project in addition to several other project sites where organic waste can be converted into a carbon-negative energy source. This project provides the opportunity for the Company to maintain the green attributes of the renewable natural gas as it is distributed to its natural gas distribution customers.
The resources generated from organic material at BDC's anaerobic digestion facilities in Delaware, will be processed by the Company and Eastern Shore and Marlin Gas Services will facilitate the transportation and receipt of renewable natural gas for multiple suppliers through its interconnect facility and equipment. Marlin Gas Services will transport the sustainable fuel to Eastern Shore, where it will be introduced to the Company's own distribution system and ultimately distributed to its natural gas customers.
CleanBay Project
In July 2020, the Company and CleanBay Renewables Inc. ("CleanBay") announced a new partnership to bring renewable natural gas to its Delmarva natural gas operations. As part of this partnership, the Company will transport the renewable natural gas produced at CleanBay's planned Westover, Maryland bio-refinery, to the Company's natural gas infrastructure in the Delmarva region. Eastern Shore and Marlin Gas Services, will transport the renewable natural gas from CleanBay to the Company's Delmarva natural gas distribution system where it is ultimately delivered to the Delmarva natural gas distribution end use customers.
At the present time, the Company has disclosed that it expects to generate at least $1.0 million in 2021 in incremental margin from renewable natural gas transportation services beginning in 2021. The Company continues to finalize contract terms associated with some of these projects. Additional information will be provided regarding incremental margin on these projects at a future time, as contracts are finalized.
Acquisitions
Boulden Propane
In December 2019, Sharp Energy, Inc. ("Sharp"), the Company's wholly-owned subsidiary, acquired certain propane customers and operating assets of Boulden which provides propane distribution service to approximately 5,200 customers in Delaware, Maryland and Pennsylvania. The customers and assets acquired from Boulden have been assimilated into Sharp. The operations acquired from Boulden generated $0.3 million and $2.8 million of incremental gross margin for the three and nine months ended September 30, 2020, respectively. The Company estimates that this acquisition will generate annual gross margin of approximately $4.0 million in 2020, and $4.2 million in 2021, with the potential for additional growth in future years.
Elkton Gas Company
In July 2020, the Company closed on the acquisition of Elkton Gas, which provides natural gas distribution service to approximately 7,000 residential and commercial customers within a franchised area of Cecil County, Maryland. The purchase price is approximately $15.6 million, which included $0.6 million of working capital. Elkton Gas' territory is contiguous to the Company's franchised service territory in Cecil County, Maryland. The Company generated $0.4 million in additional gross margin from Elkton Gas and estimates that this acquisition will generate gross margin of approximately $1.4 million in 2020 and $4.0 million in 2021.
Western Natural Gas Company
In October 2020, Sharp acquired certain propane operating assets of Western Natural Gas Company, which provides propane distribution service throughout Jacksonville, Florida and the surrounding communities, for approximately $6.7 million, net of cash acquired. The acquisition will be accounted for as a business combination within the Unregulated Energy segment beginning in the fourth quarter of 2020. Sharp estimates that this acquisition will generate gross margin of approximately of $0.3 million in 2020 and $1.8 million in 2021.
Regulatory Initiatives
Florida GRIP
Florida GRIP is a natural gas pipe replacement program approved by the Florida PSC that allows automatic recovery, through rates, of costs associated with the replacement of mains and services. Since the program's inception in August 2012, we have invested $160.1 million of capital expenditures to replace 322 miles of qualifying distribution mains, including $16.1 million of new pipes during the first nine months of 2020. The Company expects to generate annual gross margin of approximately $15.0 million in 2020, and $16.7 million in 2021.
Hurricane Michael
In October 2018, Hurricane Michael passed through FPU's electric distribution operation's service territory in Northwest Florida. The hurricane caused widespread and severe damage to FPU's infrastructure resulting in 100 percent of its customers in the Northwest Florida service territory losing electrical service.
In August 2019, FPU filed a limited proceeding requesting recovery of storm-related costs associated with Hurricane Michael (capital and expenses) through a change in base rates. FPU also requested treatment and recovery of certain storm-related costs as regulatory assets for items currently not allowed to be recovered through the storm reserve as well as the recovery of capital replaced as a result of the storm. Recovery of these costs included a component of an overall return on capital additions and regulatory assets. In March 2020, FPU filed an update to the original filing to account for actual charges incurred through December 2019, revised the amortization period of the storm-related costs from 30 years as originally requested to 10 years, and included costs related to Hurricane Dorian of approximately $1.2 million in this filing.
In September 2019, FPU filed a petition, with the Florida PSC, for approval of its consolidated electric depreciation rates. The petition was joined to the Hurricane Michael docket. The approved rates, which were part of the settlement agreement in September 2020 that is described below, were retroactively applied effective January 1, 2020.
In September 2020, the Florida PSC approved a settlement agreement between FPU and the Office of the Public Counsel regarding final cost recovery and rates associated with Hurricane Michael. Previously, the Florida PSC approved an interim rate increase, subject to refund, effective January 1, 2020, associated with the restoration effort following Hurricane Michael. FPU fully reserved these interim rates, pending a final resolution and settlement of the limited proceeding. The settlement agreement allowed FPU to: (a) record regulatory assets for storm costs in the amount of $45.8 million including interest which will be amortized over six years; (b) recover these storm costs through a surcharge for a total of $7.7 million annually; and (c) collect an annual increase in revenue of $3.3 million to recover capital costs associated with new plant and a regulatory asset for the cost of removal and undepreciated plant. The new base rates and storm surcharge were effective on November 1, 2020. The following table summarizes the impact of Hurricane Michael regulatory proceeding for the three and nine months ended September 30, 2020:
Three Months Ended | Nine Months Ended | ||||||
(in thousands) | September 30, 2020(1) | September 30, 2020 | |||||
Gross Margin | $ | 2,754 | $ | 8,261 | |||
Depreciation | (298) | (883) | |||||
Amortization of regulatory assets | 2,079 | 6,238 | |||||
Operating income | 973 | 2,906 | |||||
Amortization of liability associated with interest expense | (360) | (1,132) | |||||
Pre-tax income | 1,333 | 4,038 | |||||
Income tax expense | 365 | 1,106 | |||||
Net income | $ | 968 | $ | 2,932 | |||
(1) The Hurricane Michael impact for the three months ended September 30, 2020, is presented for comparison purposes. |
Other major factors influencing gross margin
Weather and Consumption
Weather conditions accounted for a $1.0 million decrease in gross margin during the third quarter of 2020, compared to the same period in 2019, due to a 17 percent decrease in Cooling Degree-Days ("CDDs") in Florida that resulted in reduced customer consumption for our electric operations. Compared to normal temperatures, as detailed below, gross margin was $0.5 million lower due to a lower number of CDDs in the Company's Florida service territory. For the nine-month period, overall milder temperatures decreased gross margin by $3.1 million compared to the same period in 2019 and $3.2 million compared to normal temperatures. The following table summarizes Heading Degree-Days ("HDD") and CDD variances from the 10-year average HDD/CDD ("Normal") for the three and nine months ended September 30, 2020 and 2019.
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2020 | 2019 | Variance | 2020 | 2019 | Variance | ||||||||||||
Delmarva | |||||||||||||||||
Actual HDD | 43 | 7 | 36 | 2,416 | 2,576 | (160) | |||||||||||
10-Year Average HDD ("Normal") | 48 | 61 | (13) | 2,797 | 2,846 | (49) | |||||||||||
Variance from Normal | (5) | (54) | (381) | (270) | |||||||||||||
Florida | |||||||||||||||||
Actual HDD | — | — | — | 343 | 379 | (36) | |||||||||||
10-Year Average HDD ("Normal") | — | — | — | 508 | 532 | (24) | |||||||||||
Variance from Normal | — | — | (165) | (153) | |||||||||||||
Ohio | |||||||||||||||||
Actual HDD | 86 | 2 | 84 | 3,383 | 3,533 | (150) | |||||||||||
10-Year Average HDD ("Normal") | 79 | 90 | (11) | 3,691 | 3,742 | (51) | |||||||||||
Variance from Normal | 7 | (88) | (308) | (209) | |||||||||||||
Florida | |||||||||||||||||
Actual CDD | 1,337 | 1,620 | (283) | 2,412 | 2,840 | (428) | |||||||||||
10-Year Average CDD ("Normal") | 1,573 | 1,553 | 20 | 2,666 | 2,625 | 41 | |||||||||||
Variance from Normal | (236) | 67 | (254) | 215 | |||||||||||||
Natural Gas Distribution Margin Growth
Customer growth for the Company's natural gas distribution operations, as a result of the addition of new customers and the conversion of customers from alternative fuel sources to natural gas service, generated $0.8 million and $2.5 million for the three and nine months ended September 30, 2020, respectively. The average number of residential customers served on the Delmarva Peninsula and in Florida increased by 4.9 percent and 3.9 percent, respectively, during the third quarter of 2020 and 4.0 percent and 3.8 percent, respectively for the nine months ended September 30, 2020. On the Delmarva Peninsula, a larger percentage of the margin growth was generated from residential growth given the expansion of gas into new communities and conversions to natural gas as our distribution infrastructure continues to build out. In Florida, as gas heating is not a significant portion of residential use, the incremental margin is split more even among the sectors with 50-percent coming from each of the sectors on a year-to-date basis. The details for the three and nine months ended September 30, 2020 are provided in the following table:
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, 2020 | September 30, 2020 | |||||||||||||
(in thousands) | Delmarva Peninsula | Florida | Delmarva Peninsula | Florida | ||||||||||
Customer Growth: | ||||||||||||||
Residential | $ | 302 | $ | 166 | $ | 1,069 | $ | 560 | ||||||
Commercial and industrial | 78 | 251 | 302 | 566 | ||||||||||
Total Customer Growth | $ | 380 | $ | 417 | $ | 1,371 | $ | 1,126 | ||||||
Capital Investment Growth and Associated Financing Plans
The Company's capital expenditures were $143.9 million for the nine months ended September 30, 2020. The following table shows a range of the expected 2020 capital expenditures by segment and by business line:
2020 | |||||||
(dollars in thousands) | Low | High | |||||
Regulated Energy: | |||||||
Natural gas distribution | $ | 77,000 | $ | 85,000 | |||
Natural gas transmission | 70,000 | 74,000 | |||||
Electric distribution | 3,000 | 5,000 | |||||
Total Regulated Energy | 150,000 | 164,000 | |||||
Unregulated Energy: | |||||||
Propane distribution | 14,000 | 16,000 | |||||
Energy transmission | 17,000 | 18,000 | |||||
Other unregulated energy | 12,000 | 14,000 | |||||
Total Unregulated Energy | 43,000 | 48,000 | |||||
Other: | |||||||
Corporate and other businesses | 2,000 | 3,000 | |||||
Total Other | 2,000 | 3,000 | |||||
Total 2020 Expected Capital Expenditures | $ | 195,000 | $ | 215,000 | |||
The capital expenditure projection is subject to continuous review and modification. Actual capital requirements may vary from the above estimates due to a number of factors, including changing economic conditions, capital delays because of COVID-19 that are greater than currently anticipated, customer growth in existing areas, regulation, new growth or acquisition opportunities and availability of capital. Historically, actual capital expenditures have typically lagged behind the budgeted amounts.
Management reaffirms its capital expenditure guidance of between $750 million and $1 billion for the five-year period between 2018 and 2022. From January 1, 2018 through September 30, 2020, the Company has invested $625.7 million in new capital expenditures.
The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. The Company's equity to total capitalization ratio, including short term borrowings, was 45 percent as of September 30, 2020. The Company may utilize more temporary short-term debt, when the financing cost is attractive, as a bridge to the permanent long-term financing, or if the equity markets are more volatile. The Company also maintains an effective shelf registration statement with the Securities and Exchange Commission for the issuance of shares under its Dividend Reinvestment and Direct Stock Purchase Plan (the "DRIP"). In June 2020, the Company filed a shelf registration statement with the Securities and Exchange Commission, which provides for the issuance of shares of its common stock in a variety of offering types. On August 17, 2020, the Company filed a prospectus supplement under the shelf registration statement for an At-the-Market ("ATM") program under which the Company may issue and sell shares of common stock up to an aggregate offering price of $75.0 million. In September 2020, the Company issued 0.2 million shares of common stock and received net proceeds of approximately $19.2 million, for the DRIP and ATM issuances, which were added to its general corporate funds. In October 2020, the Company issued an additional 0.7 million shares and received approximately $63.8 million in net proceeds, for the DRIP and ATM issuances. As a result of issuing additional equity in October 2020, the Company's equity to total capitalization ratio including short-term borrowings was approximately 50 percent at October 31, 2020, which is at the low end of its target range.
Depending on the Company's capital needs and subject to market conditions, in addition to other debt and equity offerings, the Company may consider, as necessary in the future, issuing additional shares under the direct stock purchase component of the DRIP, the ATM program, or pursuant to its shelf registration statement.
In September 2020, the Company entered into a $375.0 million syndicated revolving line of credit (the "Revolver"), with six participating lenders. The Revolver expires on September 29, 2021 and has a tiered commitment fee and interest rate schedule, based upon a pre-determined spread over LIBOR, depending upon the Company's total capitalization. As of September 30, 2020, when pricing was established fourth quarter of 2020, the applicable commitment fee represented 0.175 percent and the spread over LIBOR for the interest rate represented 1.125 percent. As a result of entering into the Revolver, in September 2020, the Company terminated and paid outstanding balances for all previously existing bilateral lines of credit and its previous revolving credit facility. The Company's available credit under the new Revolver at September 30, 2020 was $154.7 million. More information about the Company's new revolving line of credit as well as the renewal of several debt private placement shelf agreements is included in the Company's Quarterly Report on Form 10-Q for the third quarter of 2020.
Chesapeake Utilities Corporation and Subsidiaries | |||||||||||||||
Condensed Consolidated Statements of Income (Unaudited) | |||||||||||||||
(in thousands, except shares and per share data) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Operating Revenues | |||||||||||||||
Regulated Energy | $ | 82,762 | $ | 74,580 | $ | 259,235 | $ | 251,601 | |||||||
Unregulated Energy and other | 18,657 | 18,046 | 91,925 | 96,029 | |||||||||||
Total Operating Revenues | 101,419 | 92,626 | 351,160 | 347,630 | |||||||||||
Operating Expenses | |||||||||||||||
Regulated Energy cost of sales | 16,271 | 19,619 | 67,490 | 74,452 | |||||||||||
Unregulated Energy and other cost of sales | 5,640 | 5,709 | 30,250 | 36,975 | |||||||||||
Operations | 34,959 | 32,614 | 105,516 | 99,558 | |||||||||||
Maintenance | 3,717 | 3,920 | 11,695 | 11,200 | |||||||||||
Gain from a settlement | — | — | (130) | (130) | |||||||||||
Depreciation and amortization | 18,293 | 11,220 | 42,793 | 33,612 | |||||||||||
Other taxes | 5,133 | 5,187 | 16,028 | 15,318 | |||||||||||
Total operating expenses | 84,013 | 78,269 | 273,642 | 270,985 | |||||||||||
Operating Income | 17,406 | 14,357 | 77,518 | 76,645 | |||||||||||
Other income (expense), net | (40) | (351) | 2,997 | (731) | |||||||||||
Interest charges | 4,584 | 5,403 | 15,452 | 16,583 | |||||||||||
Income from Continuing Operations Before Income Taxes | 12,782 | 8,603 | 65,063 | 59,331 | |||||||||||
Income Taxes on Continuing Operations | 3,502 | 2,352 | 16,082 | 15,354 | |||||||||||
Income from Continuing Operations | 9,280 | 6,251 | 48,981 | 43,977 | |||||||||||
Income (loss) from Discontinued Operations, Net of Tax | (19) | (630) | 165 | (1,388) | |||||||||||
Net Income | $ | 9,261 | $ | 5,621 | $ | 49,146 | $ | 42,589 | |||||||
Weighted Average Common Shares Outstanding: | |||||||||||||||
Basic | 16,533,748 | 16,403,776 | 16,466,106 | 16,396,646 | |||||||||||
Diluted | 16,592,842 | 16,453,867 | 16,523,200 | 16,444,231 | |||||||||||
Basic Earnings Per Share of Common Stock: | |||||||||||||||
Earnings from Continuing Operations | $ | 0.56 | $ | 0.38 | $ | 2.97 | $ | 2.68 | |||||||
Earnings (loss) from Discontinued Operations | — | (0.04) | 0.01 | (0.08) | |||||||||||
Basic Earnings Per Share of Common Stock | $ | 0.56 | $ | 0.34 | $ | 2.98 | $ | 2.60 | |||||||
Diluted Earnings Per Share of Common Stock: | |||||||||||||||
Earnings from Continuing Operations | $ | 0.56 | $ | 0.38 | $ | 2.96 | $ | 2.67 | |||||||
Earnings (loss) from Discontinued Operations | — | (0.04) | 0.01 | (0.08) | |||||||||||
Diluted Earnings Per Share of Common Stock | $ | 0.56 | $ | 0.34 | $ | 2.97 | $ | 2.59 | |||||||
Chesapeake Utilities Corporation and Subsidiaries | ||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
Assets | September 30, 2020 | December 31, 2019 | ||||||
(in thousands, except shares and per share data) | ||||||||
Property, Plant and Equipment | ||||||||
Regulated Energy | $ | 1,564,420 | $ | 1,441,473 | ||||
Unregulated Energy | 278,897 | 265,209 | ||||||
Other businesses and eliminations | 30,365 | 39,850 | ||||||
Total property, plant and equipment | 1,873,682 | 1,746,532 | ||||||
Less: Accumulated depreciation and amortization | (358,851) | (336,876) | ||||||
Plus: Construction work in progress | 52,519 | 54,141 | ||||||
Net property, plant and equipment | 1,567,350 | 1,463,797 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 3,056 | 6,985 | ||||||
Trade and other receivables | 53,132 | 50,899 | ||||||
Less: Allowance for credit losses | (4,130) | (1,337) | ||||||
Trade receivables, net | 49,002 | 49,562 | ||||||
Accrued revenue | 11,545 | 20,846 | ||||||
Propane inventory, at average cost | 4,099 | 5,824 | ||||||
Other inventory, at average cost | 5,583 | 6,067 | ||||||
Regulatory assets | 10,372 | 5,144 | ||||||
Storage gas prepayments | 2,971 | 3,541 | ||||||
Income taxes receivable | 15,156 | 20,050 | ||||||
Prepaid expenses | 14,817 | 13,928 | ||||||
Derivative assets, at fair value | 1,967 | — | ||||||
Other current assets | 753 | 2,879 | ||||||
Total current assets | 119,321 | 134,826 | ||||||
Deferred Charges and Other Assets | ||||||||
Goodwill | 36,930 | 32,668 | ||||||
Other intangible assets, net | 7,215 | 8,129 | ||||||
Investments, at fair value | 9,680 | 9,229 | ||||||
Operating lease right-of-use assets | 11,077 | 11,563 | ||||||
Regulatory assets | 112,650 | 73,407 | ||||||
Receivables and other deferred charges | 23,865 | 49,579 | ||||||
Total deferred charges and other assets | 201,417 | 184,575 | ||||||
Total Assets | $ | 1,888,088 | $ | 1,783,198 | ||||
Chesapeake Utilities Corporation and Subsidiaries | ||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
Capitalization and Liabilities | September 30, 2020 | December 31, 2019 | ||||||
(in thousands, except shares and per share data) | ||||||||
Capitalization | ||||||||
Stockholders' equity | ||||||||
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares | $ | — | $ | — | ||||
Common stock, par value $0.4867 per share (authorized 50,000,000 shares) | 8,126 | 7,984 | ||||||
Additional paid-in capital | 283,836 | 259,253 | ||||||
Retained earnings | 328,357 | 300,607 | ||||||
Accumulated other comprehensive loss | (3,629) | (6,267) | ||||||
Deferred compensation obligation | 5,634 | 4,543 | ||||||
Treasury stock | (5,634) | (4,543) | ||||||
Total stockholders' equity | 616,690 | 561,577 | ||||||
Long-term debt, net of current maturities | 519,971 | 440,168 | ||||||
Total capitalization | 1,136,661 | 1,001,745 | ||||||
Current Liabilities | ||||||||
Current portion of long-term debt | 15,600 | 45,600 | ||||||
Short-term borrowing | 216,388 | 247,371 | ||||||
Accounts payable | 46,492 | 54,068 | ||||||
Customer deposits and refunds | 32,635 | 30,939 | ||||||
Accrued interest | 5,231 | 2,554 | ||||||
Dividends payable | 7,293 | 6,644 | ||||||
Accrued compensation | 10,903 | 16,236 | ||||||
Regulatory liabilities | 6,460 | 5,991 | ||||||
Derivative liabilities, at fair value | 439 | 1,844 | ||||||
Other accrued liabilities | 18,531 | 12,077 | ||||||
Total current liabilities | 359,972 | 423,324 | ||||||
Deferred Credits and Other Liabilities | ||||||||
Deferred income taxes | 202,649 | 180,656 | ||||||
Regulatory liabilities | 142,280 | 127,744 | ||||||
Environmental liabilities | 4,447 | 6,468 | ||||||
Other pension and benefit costs | 27,462 | 30,569 | ||||||
Operating lease - liabilities | 9,681 | 9,896 | ||||||
Deferred investment tax credits and other liabilities | 4,936 | 2,796 | ||||||
Total deferred credits and other liabilities | 391,455 | 358,129 | ||||||
Environmental and other commitments and contingencies (1) | ||||||||
Total Capitalization and Liabilities | $ | 1,888,088 | $ | 1,783,198 | ||||
(1) Refer to Note 6 and 7 in the Company's Quarterly Report on Form 10-Q for further information. |
Chesapeake Utilities Corporation and Subsidiaries | ||||||||||||||||||||||||||||||||
Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
For the Three Months Ended September 30, 2020 | For the Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||
Delmarva NG | Chesapeake | FPU NG | FPU Electric | Delmarva NG | Chesapeake | FPU NG | FPU Electric | |||||||||||||||||||||||||
Operating Revenues (in thousands) | ||||||||||||||||||||||||||||||||
Residential | $ | 6,722 | $ | 1,412 | $ | 6,380 | $ | 11,308 | $ | 7,314 | $ | 1,349 | $ | 5,671 | $ | 14,460 | ||||||||||||||||
Commercial | 5,321 | 1,517 | 4,985 | 9,077 | 3,812 | 1,471 | 5,588 | 11,216 | ||||||||||||||||||||||||
Industrial | 1,982 | 3,235 | 6,028 | 414 | 1,678 | 3,063 | 5,707 | 591 | ||||||||||||||||||||||||
Other (1) | (45) | 1,146 | 3,174 | 3 | 456 | 827 | 942 | (2,093) | ||||||||||||||||||||||||
Total Operating Revenues | $ | 13,980 | $ | 7,310 | $ | 20,567 | $ | 20,802 | $ | 13,260 | $ | 6,710 | $ | 17,908 | $ | 24,174 | ||||||||||||||||
Volume (in Dts for natural gas and KWHs for electric) | ||||||||||||||||||||||||||||||||
Residential | 210,787 | 56,754 | 243,255 | 101,555 | 183,998 | 52,805 | 214,521 | 97,537 | ||||||||||||||||||||||||
Commercial | 508,172 | 1,047,271 | 302,504 | 88,250 | 483,382 | 1,045,666 | 344,727 | 92,571 | ||||||||||||||||||||||||
Industrial | 1,144,210 | 5,999,386 | 1,080,078 | 1,596 | 1,233,019 | 7,019,573 | 1,114,359 | 7,460 | ||||||||||||||||||||||||
Other | 53,093 | — | 738,191 | — | 59,635 | — | 583,267 | — | ||||||||||||||||||||||||
Total | 1,916,262 | 7,103,411 | 2,364,028 | 191,401 | 1,960,034 | 8,118,044 | 2,256,874 | 197,568 | ||||||||||||||||||||||||
Average Customers | ||||||||||||||||||||||||||||||||
Residential | 84,343 | 17,930 | 60,353 | 25,104 | 73,454 | 17,342 | 57,999 | 24,624 | ||||||||||||||||||||||||
Commercial | 7,710 | 1,583 | 3,984 | 7,282 | 7,040 | 1,555 | 3,934 | 7,240 | ||||||||||||||||||||||||
Industrial | 181 | 16 | 2,518 | 2 | 168 | 17 | 2,440 | 2 | ||||||||||||||||||||||||
Other | 21 | — | 14 | — | 18 | — | 12 | — | ||||||||||||||||||||||||
Total | 92,255 | 19,529 | 66,869 | 32,388 | 80,680 | 18,914 | 64,385 | 31,866 | ||||||||||||||||||||||||
For the Nine Months Ended September 30, 2020 | For the Nine Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||
Delmarva NG | Chesapeake | FPU NG | FPU Electric | Delmarva NG | Chesapeake | FPU NG | FPU Electric | |||||||||||||||||||||||||
Operating Revenues (in thousands) | ||||||||||||||||||||||||||||||||
Residential | $ | 49,472 | $ | 4,773 | $ | 26,272 | $ | 26,225 | $ | 47,729 | $ | 4,645 | $ | 23,848 | $ | 35,121 | ||||||||||||||||
Commercial | 23,190 | 4,791 | 17,817 | 23,151 | 23,307 | 4,796 | 19,924 | 28,838 | ||||||||||||||||||||||||
Industrial | 6,444 | 9,754 | 19,323 | 725 | 5,839 | 9,450 | 17,767 | 1,617 | ||||||||||||||||||||||||
Other (1) | (4,535) | 3,700 | 3,886 | 631 | (4,013) | 2,734 | (1,182) | (6,560) | ||||||||||||||||||||||||
Total Operating Revenues | $ | 74,571 | $ | 23,018 | $ | 67,298 | $ | 50,732 | $ | 72,862 | $ | 21,625 | $ | 60,357 | $ | 59,016 | ||||||||||||||||
Volume (in Dts for natural gas and KWHs for electric) | ||||||||||||||||||||||||||||||||
Residential | 2,867,349 | 269,273 | 1,136,539 | 235,283 | 2,962,532 | 268,993 | 1,036,872 | 235,406 | ||||||||||||||||||||||||
Commercial | 2,730,931 | 3,270,286 | 1,119,081 | 220,238 | 2,810,391 | 3,348,307 | 1,275,328 | 233,940 | ||||||||||||||||||||||||
Industrial | 3,667,782 | 21,015,935 | 3,466,115 | 13,978 | 3,960,447 | 21,419,122 | 3,688,370 | 18,383 | ||||||||||||||||||||||||
Other | 196,076 | — | 2,000,351 | — | 138,009 | — | 1,771,243 | — | ||||||||||||||||||||||||
Total | 9,462,138 | 24,555,494 | 7,722,086 | 469,499 | 9,871,379 | 25,036,422 | 7,771,813 | 487,729 | ||||||||||||||||||||||||
Average Customers | ||||||||||||||||||||||||||||||||
Residential | 83,752 | 17,784 | 59,638 | 24,983 | 73,698 | 17,178 | 57,444 | 24,511 | ||||||||||||||||||||||||
Commercial | 7,756 | 1,582 | 3,982 | 7,268 | 7,090 | 1,543 | 3,923 | 7,233 | ||||||||||||||||||||||||
Industrial | 195 | 16 | 2,511 | 2 | 168 | 17 | 2,430 | 2 | ||||||||||||||||||||||||
Other | 18 | — | 14 | — | 14 | — | 12 | — | ||||||||||||||||||||||||
Total | 91,721 | 19,382 | 66,145 | 32,253 | 80,970 | 18,738 | 63,809 | 31,746 | ||||||||||||||||||||||||
(1) | Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties, and adjustments for pass-through taxes. |
(2) | Delmarva NG distribution customers includes approximately 7,000 customers acquired in the July 2020 acquisition of Elkton Gas. |
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SOURCE Chesapeake Utilities Corporation
Article Date
11/4/2020Chesapeake Utilities Corporation Subsidiary Acquires Western Natural Gas Company
Source: PR Newswire
DOVER, Del., Nov. 4, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that its propane subsidiary, Sharp Energy, has acquired Western Natural Gas Company in Jacksonville, Florida. The parties closed on this transaction on October 26, 2020. Terms of the transaction were not publicly disclosed.
"This is an important acquisition for our Company as it enables Sharp Energy to immediately expand the availability of its propane operations into Florida and build upon our existing propane footprint," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Sharp Energy continues to expand and generate strong performance for our Company. They are an industry leader, providing community gas systems, wholesale capabilities and propane AutoGas to customers throughout the Mid-Atlantic region. Acquiring Western Natural Gas will assist us in meeting customer demand and expanding our propane distribution foundation in Florida."
Western Natural Gas has been providing propane service to the First Coast of Florida for more than 80 years. Western Natural Gas provides propane service to approximately 4,000 residential and commercial customers and sells approximately one million gallons of propane throughout four counties in northeast Florida.
"As a family owned and operated business in northeast Florida for over 80 years, the decision to sell was not easy, but it was very clear that Sharp Energy is a company that best replicated our way of doing business with an appreciation for our customers and our employees," said Ken Baker, Executive Vice President of Western Natural Gas Company. "We are confident that Sharp Energy will continue our tradition of safety first, unmatched service and dependability."
About Sharp Energy
Sharp Energy, headquartered in Georgetown, Delaware, distributes propane gas to approximately 65,000 residential, commercial and industrial customers in Maryland, Delaware, Virginia, Pennsylvania and Florida. With four rail facilities and over three million gallons of propane gas storage, Sharp Energy has established a solid supply portfolio. Sharp Energy is a proud partner of Alliance AutoGas, a national network of companies that have joined together to deliver a comprehensive alternative fueling solution including EPA-certified propane AutoGas vehicle conversions, on-site fueling infrastructure, fuel supply, safety and operational training, and ongoing technical support. To learn more about Sharp Energy, visit www.sharpenergy.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas (CNG) utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-subsidiary-acquires-western-natural-gas-company-301166154.html
SOURCE Chesapeake Utilities Corporation
Article Date
11/4/2020Chesapeake Utilities Corporation Urges Customers, if Needed, to Establish Payment Plans and Secure Energy Assistance
Source: PR Newswire
DOVER, Del., Oct. 8, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) recognizes the financial impact that the COVID-19 pandemic may have had on customers. As a result, the Company is advising customers to reach out immediately, if needed, to establish payment arrangements and to learn about the customer assistance programs that can help to bring their accounts up to date. Chesapeake Utilities will continue to work with each customer on a case-by-case basis to assist with the continuation of their energy service. In March, the Company suspended service disconnections, waived late fees and expanded billing and payment options, including the extension of payment periods for up to 12 months and the elimination of a deposit to secure a payment arrangement. Service disconnections are always a last resort and can often be avoided if customers contact the customer care center to establish payment arrangements and to discuss additional options.
Chesapeake Utilities will continue to communicate with customers who are delayed in making their payments and with customers who may be eligible for energy assistance.
Customers who are having difficulty keeping their accounts current should take immediate action by contacting the Company at the following numbers:
The Company offers special payment schedules for customers who need assistance with paying their entire bill on time. In addition, the Budget Billing program allows customers to manage their monthly energy costs by averaging payments over a 12-month period.
Chesapeake Utilities will connect customers with social service organizations that are prepared to assist with financial programs. Customers may also apply for grants offered through our SHARING Program by contacting local Energy Assistance Offices or https://chesapeakesharing.com. This program offers several grants, including a COVID-19 grant, that can help pay customers' gas bills. Assistance is also available through local, state, and federal agencies by calling 211.
As a precautionary measure to prevent COVD-19, and in the interest of its customers' wellness and the safety of employees, the Company's walk-in offices will remain closed. Chesapeake Utilities offers several convenient ways to pay your bill, including online, U.S.P.S. mail, by phone, auto-pay or at any one of our authorized payment locations. To learn more or to enroll in EZ-BILLING, visit www.chpkgas.com.
Chesapeake Utilities is committed to helping to support our customers and communities, especially those impacted by the COVID-19 pandemic. As part of the Company's response to the unprecedented pandemic, Chesapeake Utilities donated $200,000 to organizations supporting communities impacted by the coronavirus.
These donations supported organizations such as Feeding America, United Way and The Salvation Army as they continue to provide food assistance and financial resources, and address short and long-term community needs.
Customers should be aware of potential scams threatening disconnection. Scammers may attempt to call, text or email customers demanding immediate payment to avoid service disconnection. For more information on scam awareness, visit https://chpk.com/scam-awareness/.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas (CNG) utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-urges-customers-if-needed-to-establish-payment-plans-and-secure-energy-assistance-301148766.html
SOURCE Chesapeake Utilities Corporation
Article Date
10/8/202010/7/2020 - Chesapeake Utilities Corporation To Host Conference Call To Review Third Quarter 2020 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review Third Quarter 2020 Financial Results
Source: PR Newswire
DOVER, Del., Oct. 7, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Thursday, November 5, 2020, at 4:00 p.m. ET to discuss the Company's financial results for the third quarter of 2020. The earnings press release will be issued on Wednesday, November 4, 2020, after the market closes.
To participate in this call, dial toll-free 877.224.1468 and reference Chesapeake Utilities Corporation's 2020 Third Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile CNG utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Heidi W. Watkins
Shareholder Services Manager
302.734.6716
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-third-quarter-2020-financial-results-301148067.html
SOURCE Chesapeake Utilities Corporation
Article Date
10/7/2020FPUC Hurricane Michael Settlement Approved by the Florida Public Service Commission
Source: PR Newswire
DOVER, De., Sept. 24, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today announced that its electric subsidiary, Florida Public Utilities Company (FPUC), received approval from the Florida Public Service Commission (FPSC) on a settlement agreement between FPUC and the Office of Public Counsel (OPC) regarding final cost recovery and rates associated with Hurricane Michael. Previously, the Commission approved an interim rate increase effective January 1, 2020, associated with the restoration effort following Hurricane Michael. FPUC was able to time this interim rate increase with its efforts to reduce customer fuel costs, leading to an average residential customer experiencing no financial impact on their monthly bill. On September 21, 2020, a final resolution and rates were approved effective November 1, 2020, and as a result, the total bill for an average residential customer will be reduced by approximately $2.05 per month.
"Because of the collaborative effort of our employees, utility partners, and regulators, FPUC was able to find a creative solution that resolved the devastating impacts of this hurricane while minimizing the impact to our customers' monthly bills," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation.
In October 2018, Hurricane Michael passed through FPUC's electric distribution service territory in northwest Florida. This powerful storm was the first Category 5 hurricane on record to make landfall in the Florida Panhandle, bringing 155 mile-per-hour winds and inflicting heavy damage throughout the region. Hurricane Michael caused widespread and severe damage to FPUC's system resulting in 100 percent of its Panhandle customers losing electrical service. Teams worked around-the-clock shifts to restore service to customers as safely and quickly as possible. Service was first restored to critical infrastructure facilities, including local hospitals, medical facilities, and schools, as well as the primary water treatment and waste management plants.
As part of the restoration effort, FPUC, with the help of mutual assistance crews, rebuilt several miles of power lines, and replaced over 2,000 electric poles and hundreds of transformers with more resilient, storm-hardened equipment capable of withstanding extreme weather. Through the extraordinary efforts of FPUC and its utility partners, service was restored to those customers who were able to accept it within just 22 days. FPUC expended nearly $67 million in this restoration effort. Additional information will be included in the Company's third quarter Quarterly Report on Form 10-Q regarding the financial impacts of this approved settlement.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas (CNG) utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
About Florida Public Utilities Company
Florida Public Utilities Company (FPUC) is a wholly owned subsidiary of Chesapeake Utilities Corporation. Headquartered in Fernandina Beach, Florida, FPUC distributes natural gas and propane and provides electric services to more than 110,000 customers in markets throughout Florida. For more information, visit www.fpuc.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/fpuc-hurricane-michael-settlement-approved-by-the-florida-public-service-commission-301137513.html
SOURCE Chesapeake Utilities Corporation
Article Date
9/24/2020Chesapeake Utilities Corporation Partners with Atlanta Gas Light to Build CNG Filling Station at Port of Savannah
Source: PR Newswire
DOVER, Del., Aug. 24, 2020 /PRNewswire/ --Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities or the Company) today announced that the Company has entered into an agreement with Atlanta Gas Light (AGL), a wholly-owned subsidiary of Southern Company Gas, for AGL to construct and maintain a compressed natural gas (CNG) filling station at the Port Fuel Center located in Port Wentworth near the Port of Savannah in Georgia. The station will provide a strategic staging area and CNG supply source for the Company's Marlin Gas Services subsidiary's (Marlin) CNG virtual pipeline operations. Marlin is a premier North American supplier of mobile CNG utility and pipeline natural gas solutions, and the Savannah location will provide greater access to Marlin's customers in Georgia, South Carolina and North Carolina.
"With Marlin now fully integrated into the Chesapeake Utilities family of businesses, we continue to look for opportunities for mobile fuel and virtual pipeline solutions that expand our Florida and Delmarva service areas," said Kevin Webber, senior vice president for Chesapeake Utilities Corporation. "This new fueling station not only positions us to support Marlin CNG trailer filling but allows us to extend environmentally friendly service offerings to a variety of new customers in the Southeast."
Atlanta Gas Light has been building and maintaining CNG fueling stations for fleet operators and CNG retailers in Georgia since the early 1990s. AGL currently operates about 275 CNG vehicles across the state in its day-to-day utility operations.
"We have a long history of supporting CNG initiatives and assisting our customers in meeting their sustainability goals by developing and building CNG infrastructure throughout the state so they can deploy clean, efficient natural gas vehicles," said Pedro Cherry, president and CEO of AGL. "We are proud to be Chesapeake Utilities' infrastructure partner on this project and aide in supplying CNG near the Port of Savannah."
Since 1996, Marlin Gas Services has been providing mobile virtual pipeline applications to local gas distribution utilities, municipal gas companies, intrastate and interstate pipeline companies, natural gas producers, various manufacturers and large industrial customers throughout North America. With its experienced and highly trained personnel in combination with its fleet of CNG tankers, mobile compressors and patented offload regulator systems, Marlin Gas Services provides gas supply support during planned interruptions of service as well as responding rapidly to unexpected interruptions.
The Savannah station is designed to serve local CNG fleets as well as renewable natural gas (RNG) fueled vehicles, including high capacity dispensers for fueling Class 8 trucks. The station aligns with the Company's ongoing commitment to environmental responsibility by supplying clean-burning natural gas to fuel vehicles and making it available to customers with limited access to natural gas. CNG-powered vehicles produce lower emissions than gasoline and diesel vehicles, reducing greenhouse gas emissions by up to 30%, and nitrogen oxide emissions by 85%.
Chesapeake Utilities is also in the process of developing and contracting RNG to supply ultra-low carbon fuel for local fleets. When CNG vehicles are fueled with RNG, the greenhouse gas emissions are reduced by up to 90%, or can even be carbon negative depending on the source of the RNG.
In addition, the CNG station will provide opportunities for both on-port and surrounding logistics centers to take advantage of various types of natural gas-fueled equipment, such as yard tractors and trucks, to advance their sustainability initiatives. Chesapeake Utilities and its affiliates are working with a number of truck and equipment manufacturers and financing entities to establish incentives and reasonable financing terms for fleet conversion; and Marlin will be offering a mobile fueling solution for fleets that are on-port or in the regional logistics centers.
"The Georgia Ports Authority has had a long-term commitment to operating in a sustainable fashion and cutting our environmental footprint, in part by transitioning much of our equipment from diesel to electric power," said Georgia Ports Authority Executive Director Griff Lynch. "Marlin's entry into the Savannah market will provide the support necessary for our port community to expand the migration to fuel options that lower carbon emissions and provide cleaner air."
The Port Fuel Center is a 15-acre fully permitted site with additional fueling amenities, restaurants and a convenience store. The Center will provide the full array of fueling choices, including diesel and gasoline, to serve the more than 12,000 trucks that pass the site daily. The CNG fueling station, which is slated to open in early 2021, has received the endorsement of the city of Port Wentworth and the Georgia Ports Authority.
"The Port Fuel Center is excited to partner with Marlin to bring additional fueling options for its customers, providing increased opportunities to support more sustainable vehicles and equipment," said Sean Register, owner of the Port Fuel Center.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile CNG utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
About Atlanta Gas Light
Atlanta Gas Light is one of four natural gas distribution companies of Southern Company Gas, a wholly owned subsidiary of Southern Company (NYSE: SO). Atlanta Gas Light provides natural gas delivery service to more than 1.6 million customers in Georgia. In operation since 1856, the company is one of the oldest corporations in the state. For more information, visit atlantagaslight.com.
About Southern Company Gas
Southern Company Gas is a wholly-owned subsidiary of Atlanta-based Southern Company (NYSE:SO), America's premier energy company. Southern Company Gas serves approximately 4.2 million natural gas utility customers through its regulated distribution companies in four states with approximately 700,000 retail customers through its companies that market natural gas. Other nonutility businesses include investments in interstate pipelines, asset management for natural gas wholesale customers and ownership and operation of natural gas storage facilities. For more information, visit southerncompanygas.com.
About Georgia Ports Authority
Georgia's deepwater ports and inland barge terminals support more than 439,000 jobs throughout the state annually and contribute $25 billion in income, $106 billion in revenue and $2.9 billion in state and local taxes to Georgia's economy. The Port of Savannah is home to the largest single-terminal container facility of its kind in North America, handling 8.5% of U.S. containerized cargo volume and 10% of all U.S. containerized exports in its FY2017. For more information, visit gaports.com.
For more information regarding this press release, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-partners-with-atlanta-gas-light-to-build-cng-filling-station-at-port-of-savannah-301116824.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/24/20208/18/2020 - Chesapeake Utilities Corporation Announces $75 Million At-The-Market Equity Offering Program
Chesapeake Utilities Corporation Announces $75 Million At-The-Market Equity Offering Program
Source: PR Newswire
DOVER, Del., Aug. 17, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced that it has established an at-the-market equity offering program (the "ATM Program") under which it may, from time to time, sell shares of its common stock having an aggregate sales price of up to $75,000,000 (the "Shares").
Chesapeake Utilities has entered into an equity distribution agreement with each of RBC Capital Markets, LLC, BofA Securities, Wells Fargo Securities, LLC, Janney Montgomery Scott LLC, Guggenheim Securities, LLC, Maxim Group LLC, Sidoti & Company, LLC, and Siebert Williams Shank & Co., LLC (collectively, the "Sales Agents"), as sales agents. Pursuant to the equity distribution agreement, sales of the Shares may be made in transactions deemed to be "at-the-market offerings," as defined in Rule 415 under the Securities Act of 1933, as amended, including by sales made directly on or through the New York Stock Exchange.
Chesapeake Utilities intends to use the proceeds from the sales, if any, of the Shares for general corporate purposes, including, but not limited to, financing of capital expenditures, repayment of short-term debt, financing acquisitions, investing in subsidiaries, and general working capital purposes.
The Shares will be offered under the Company's existing shelf registration statement on Form S-3ASR (File No.: 333-239569) filed with the Securities and Exchange Commission (the "SEC"). The offering is being made by means of a prospectus supplement to the prospectus contained in the registration statement. Before making an investment in the Shares, potential investors should read the prospectus and the prospectus supplement for more complete information about Chesapeake Utilities and the offering. Potential investors may obtain these documents for free by visiting EDGAR on the SEC's website at www.sec.gov. Alternatively, the Company or the Sales Agents will arrange, upon request, to send the prospectus. Please direct requests to: RBC Capital Markets, LLC by mail at 200 Vesey Street, 8th Floor, New York, NY 10281-8098, attention: Equity Syndicate, by email at equityprospectus@rbccm.com or by telephone at 877-822-4089.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile CNG utility services and solutions; and other businesses.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Forward Looking Statements
This press release contains forward-looking statements regarding our planned offer and sale of common stock and the use of the net proceeds from any such sale. We cannot be sure that we will complete the offering program or, if we do, on what terms we will complete it. Forward-looking statements are based on current beliefs and expectations and are subject to inherent risks and uncertainties, including those discussed under the caption "Risk Factors" in the prospectus and prospectus supplement. In addition, Chesapeake Utilities management retains broad discretion with respect to the allocation of the net proceeds of this offering. The forward-looking statements speak only as of the date of this release, and Chesapeake Utilities is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6022
Thomas E. Mahn
Vice President & Treasurer
302.736.7656
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-75-million-at-the-market-equity-offering-program-301113574.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/18/2020Chesapeake Utilities Corporation Reports Second Quarter 2020 Results
Source: PR Newswire
DOVER, Del., Aug. 5, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced its financial results for the second quarter of 2020. The Company's net income for the quarter ended June 30, 2020 was $11.0 million, or $0.66 per share, compared to $8.3 million or $0.50 per share, for the same quarter of 2019. Net income for the six months ended June 30, 2020 was $39.9 million, or $2.42 per share, compared to $37.0 million, or $2.25 per share, for the same period in 2019, representing an increase of 7.6 percent.
Earnings for the second quarter reflect increased gross margin from higher customer consumption driven primarily by colder weather, pipeline expansion projects, increased margin from Marlin Gas Services, LLC ("Marlin Gas Services"), higher retail propane margins per gallon, organic growth in the natural gas distribution operations, and contribution from the Boulden, Inc. ("Boulden") acquisition. These increases were offset by the net unfavorable impact of a novel strain of coronavirus ("COVID-19"), after including the Federal income tax benefit associated with the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.
Year-to-date earnings were impacted by the positive factors noted above, although on a year-to-date basis, milder temperatures resulted in decreased consumption. Weather during the first six months of 2020 was 8 and 7 percent warmer than the first six months of 2019 on the Delmarva Peninsula and in Ohio, respectively, which was a significant driver of lower consumption and reduced net income by $1.4 million, or $0.09 per share. The adverse weather impact was more than offset by gains from two property sales totaling $2.3 million on an after tax basis. The property sales related to operations which have been consolidated into the Company's energy efficient Energy Lane campus and the completion of the conversion of the piped propane system in Ocean City, Maryland to natural gas service.
Absent from the Company's second quarter and year-to-date results was regulatory relief associated with Hurricane Michael. The Company filed a limited regulatory proceeding with the Florida Public Service Commission ("PSC") in August 2019 and continues to engage in discussions with the Florida PSC staff and the Office of Public Counsel. A final ruling is expected in the second half of 2020. Interim rates related to this limited proceeding were implemented in January 2020 and have been fully reserved pending final resolution with the Florida PSC.
On March 13, 2020, the U.S. Centers for Disease Control and Prevention ("CDC") declared a national emergency due to the rapidly growing outbreak of COVID-19. In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. These restrictions have continued to significantly impact economic conditions in the United States. Chesapeake Utilities is considered an "essential business," which allows the Company to continue its operational activities and construction projects while the social distancing restrictions remain in place. In response to the COVID-19 pandemic and related restrictions, the Company implemented its pandemic response plan, which includes having all employees who can work remotely do so in order to promote social distancing and providing personal protective equipment to field employees to reduce the spread of COVID-19. For the three and six months ended June 30, 2020, the estimated impacts that COVID-19 had on the Company's earnings was $0.9 million and $1.1 million, respectively, primarily driven by reduced consumption of energy largely in the commercial and industrial sectors, and incremental expenses associated with COVID-19, including protective personal equipment, premium pay for field personnel and higher bad debt expense. The additional operating expenses the Company has incurred support the ongoing delivery of our essential services during these unprecedented times. The negative impact was partially offset by reduced federal income tax expense recognized in connection with implementation of the CARES Act and lower short-term borrowing costs resulting from a decrease in interest rates. As the COVID-19 pandemic is ongoing, the Company to date has not established regulatory assets associated with the incremental expense impacts, as currently authorized by the Delaware and Maryland PSCs. In Florida, the PSC requires utility companies seeking regulatory asset treatment for COVID-19 related expenses to individually file a formal petition for consideration. The Company is committed to communicating timely updates and will continue to monitor developments affecting its employees, customers, suppliers and stockholders and take additional precautions as warranted to operate safely and to comply with the CDC, Occupational Safety and Health Administration, state and local requirements in order to protect its employees, customers and communities.
"The ability of our employees to execute during these challenging times is demonstrated by our strong performance and significant business achievements during the quarter. Generating increased performance quarter-over-quarter, as well as on a year-to-date basis, was a significant accomplishment in the midst of the COVID-19 pandemic and despite the absence of regulatory relief associated with Hurricane Michael. We have remained focused on the health of our employees and customers as we safely and reliably deliver our essential energy services during this global pandemic," said Jeffry M. Householder, President and Chief Executive Officer. "In addition to the safe delivery of these services, we have continued to execute on our growth strategy, including our pipeline and distribution system expansion projects as well as our business development activities. We recently announced two new projects that will support local communities in resolving long-term problems of poultry waste disposal and the impact on local waterways. These projects will transform poultry waste into renewable natural gas which will address the impacts of climate change and positively influence the local ecosystem. Despite the unique operating circumstances created by COVID-19, all business units remain focused on growth while also managing our expenses to help offset the COVID-19 impacts. All of these initiatives enabled us to generate strong second quarter performance and to re-affirm our commitment to our 2022 EPS guidance."
Capital Expenditures Forecast and Earnings Guidance Update
In February 2020, the Company reaffirmed its capital expenditures projection of $750 million - $1 billion of capital expenditures from 2018-2022. Additionally, the Company updated its previous EPS guidance by increasing the forecasted range for 2022 to $4.70 to $4.90 given the investments already made, those underway and the growth prospects included in the Company's strategic growth plan. The Company expects its EPS to grow at an average annual rate of 7.75 percent to 9.50 percent.
The Company has continued to review its projections and remains supportive of this guidance, after taking into consideration its strategic plan, the expected impact of COVID-19, the anticipated regulatory relief and opportunities for continued collaboration across the enterprise. The Company has historically achieved an average earnings growth at or above this range, therefore the Company continues to view its long-term growth prospects as comparable to its historical growth.
*Unless otherwise noted, EPS information is presented on a diluted basis.
**This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin. 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 "gross margin" by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance.
Operating Results for the Quarters Ended June 30, 2020 and 2019
Consolidated Results
Three Months Ended | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 74,090 | $ | 69,369 | $ | 4,721 | 6.8 | % | ||||||
Depreciation, amortization and property taxes | 17,093 | 15,970 | 1,123 | 7.0 | % | |||||||||
Other operating expenses | 39,020 | 35,234 | 3,786 | 10.7 | % | |||||||||
Operating income | $ | 17,977 | $ | 18,165 | $ | (188) | (1.0) | % | ||||||
Operating income for the three months ended June 30, 2020 decreased by $0.2 million, compared to the same period in 2019. The decrease in operating income was driven by the $4.3 million unfavorable impacts of COVID-19. Excluding these impacts, our operating income increased by $4.1 million primarily as a result of gross margin growth from the Company's organic growth projects, increased customer consumption due to colder weather, Marlin Gas Services' temporary emergency and contracted pipeline integrity services, increased retail propane margins per gallon and contribution from the Boulden assets that were acquired in December 2019.
Regulated Energy Segment
Three Months Ended | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 57,131 | $ | 55,086 | $ | 2,045 | 3.7 | % | ||||||
Depreciation, amortization and property taxes | 13,769 | 13,087 | 682 | 5.2 | % | |||||||||
Other operating expenses | 25,356 | 23,971 | 1,385 | 5.8 | % | |||||||||
Operating income | $ | 18,006 | $ | 18,028 | $ | (22) | (0.1) | % | ||||||
Operating income for the Regulated Energy segment remained largely unchanged for the three months ended June 30, 2020 compared to 2019, as a result of the impacts of COVID-19. Results for the quarter included $3.2 million of negative impacts from COVID-19. Excluding these impacts, operating income increased by $3.2 million as a result of higher gross margin from expansion projects completed and underway by Eastern Shore Natural Gas Company ("Eastern Shore") and Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), increased customer consumption due to colder weather and organic growth in the Company's natural gas distribution businesses. This was offset by $0.7 million in higher depreciation, amortization and other taxes and $0.4 million in higher other operating expenses.
The key components of the increase in gross margin are shown below:
(in thousands) | Margin Impact | ||
Eastern Shore and Peninsula Pipeline service expansions | $ | 1,776 | |
Increased customer consumption - primarily due to colder weather | 1,127 | ||
Natural gas growth (excluding service expansions) | 832 | ||
Unfavorable COVID-19 impacts on gross margin | (2,201) | ||
Other variances | 511 | ||
Quarter-over-quarter increase in gross margin | $ | 2,045 | |
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Unfavorable COVID-19 impacts (higher operating and bad debt expenses) | $ | 1,014 | |
Payroll, Benefits and other employee-related expenses | 612 | ||
Insurance expense (non-health) - both insured and self-insured | 438 | ||
Other variances | (679) | ||
Quarter-over-quarter increase in other operating expenses | $ | 1,385 | |
Unregulated Energy Segment
Three Months Ended | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent Change | ||||||||||
Gross margin | $ | 17,032 | $ | 14,380 | $ | 2,652 | 18.4 | % | ||||||
Depreciation, amortization and property taxes | 3,303 | 2,850 | 453 | 15.9 | % | |||||||||
Other operating expenses | 13,448 | 12,301 | 1,147 | 9.3 | % | |||||||||
Operating income/(loss) | $ | 281 | $ | (771) | $ | 1,052 | 136.4 | % | ||||||
Operating income for the Unregulated Energy segment increased by $1.1 million for the second quarter, as compared to the second quarter of 2019. Excluding the impacts of COVID-19 of $0.7 million, operating income increased by $1.8 million. The increased operating income reflects margin growth from Marlin Gas Services, higher margin from increased customer consumption as a result of colder weather, higher retail propane margins per gallon and incremental margin from the Boulden assets. These increases were partially offset by $0.5 million in higher depreciation, amortization and property taxes and $0.8 million in higher operating expenses.
The major components of the increase in gross margin are shown below:
(in thousands) | Margin Impact | |||
Propane Operations | ||||
Increased retail propane margins per gallon driven by favorable market conditions and supply management | $ | 867 | ||
Boulden acquisition (assets acquired in December 2019) | 549 | |||
Increase in customer consumption - primarily due to colder weather | 535 | |||
Marlin Gas Services - increased gross margin from demand for services | 1,077 | |||
Aspire Energy | ||||
Increase in customer consumption - primarily due to colder weather | 351 | |||
Unfavorable COVID-19 impacts on gross margin | (317) | |||
Other variances | (410) | |||
Quarter-over-quarter increase in gross margin | $ | 2,652 | ||
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Unfavorable COVID-19 impacts (higher operating and bad debt expenses) | $ | 369 | |
Operating expenses from Boulden acquisition (completed December 2019) | 305 | ||
Payroll, Benefits and other employee-related expenses | 302 | ||
Insurance expense (non-health) - both insured and self-insured | 218 | ||
Other variances | (47) | ||
Quarter-over-quarter increase in other operating expenses | $ | 1,147 | |
Operating Results for the Six Months Ended June 30, 2020 and 2019
Consolidated Results
Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 173,911 | $ | 168,905 | $ | 5,006 | 3.0 | % | ||||||
Depreciation, amortization and property taxes | 34,128 | 31,327 | 2,801 | 8.9 | % | |||||||||
Other operating expenses | 79,672 | 75,291 | 4,381 | 5.8 | % | |||||||||
Operating income | $ | 60,111 | $ | 62,287 | $ | (2,176) | (3.5) | % | ||||||
Operating income for the six months ended June 30, 2020 decreased by $2.2 million compared to the same period in 2019. Results through the second quarter of 2020 included $4.7 million of negative impacts from COVID-19. Excluding these impacts, our operating income increased by $2.5 million primarily as a result of higher operating income from organic growth projects, contributions from the Boulden asset acquisition in December 2019 and higher retail propane margins per gallon.
Regulated Energy Segment
Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 125,254 | $ | 122,188 | $ | 3,066 | 2.5 | % | ||||||
Depreciation, amortization and property taxes | 27,527 | 25,618 | 1,909 | 7.5 | % | |||||||||
Other operating expenses | 51,833 | 48,801 | 3,032 | 6.2 | % | |||||||||
Operating income | $ | 45,894 | $ | 47,769 | $ | (1,875) | (3.9) | % | ||||||
Operating income for the Regulated Energy segment for the six months ended June 30, 2020 was $45.9 million, a decrease of $1.9 million, compared to the same period in 2019. Excluding the COVID-19 impacts of $3.3 million, operating income increased $1.4 million as a result of higher gross margin from expansion projects completed by Eastern Shore and Peninsula Pipeline, organic growth in the Company's natural gas distribution businesses, and increased customer consumption.
The key components of the increase in gross margin are shown below:
(in thousands) | |||
Eastern Shore and Peninsula Pipeline service expansions | $ | 2,839 | |
Natural gas distribution - customer growth (excluding service expansions) | 1,928 | ||
Increased customer consumption | 620 | ||
Absence of Florida tax savings (net of GRIP refunds) recorded in the first quarter of 2019 for 2018 | (910) | ||
Unfavorable COVID-19 impacts on gross margin | (2,430) | ||
Other variances | 1,019 | ||
Period-over-period increase in gross margin | $ | 3,066 | |
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Insurance expense (non-health) - both insured and self-insured | $ | 1,272 | |
Unfavorable COVID-19 impacts (higher operating and bad debt expenses) | 906 | ||
Facilities maintenance costs | 837 | ||
Other variances | 17 | ||
Period-over-period increase in other operating expenses | $ | 3,032 | |
Unregulated Energy Segment
Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 48,815 | $ | 46,922 | $ | 1,893 | 4.0 | % | ||||||
Depreciation, amortization and property taxes | 6,542 | 5,641 | 901 | 16.0 | % | |||||||||
Other operating expenses | 28,131 | 26,795 | 1,336 | 5.0 | % | |||||||||
Operating income | $ | 14,142 | $ | 14,486 | $ | (344) | (2.4) | % | ||||||
Operating income for the Unregulated Energy segment decreased by $0.3 million for the six months ended June 30, 2020, compared to the same period in 2019. Excluding the COVID-19 impacts of $0.9 million, operating income increased $0.6 million as a result of incremental gross margin primarily from the Boulden assets and higher propane retail margins per gallon which more than overcame reduced gross margin due to warmer temperatures.
The key components of the increase in gross margin are shown below:
(in thousands) | ||||
Propane Operations | ||||
Boulden acquisition (assets acquired in December 2019) | $ | 2,437 | ||
Increased retail propane margins per gallon driven by favorable market conditions and supply management | 2,009 | |||
Decrease in customer consumption - primarily due to milder weather | (2,003) | |||
Aspire Energy | ||||
Decrease in customer consumption - primarily due to milder weather | (549) | |||
Higher margins from negotiated rate increases | 308 | |||
Unfavorable COVID-19 impacts on gross margin | (442) | |||
Other variances | 133 | |||
Period-over-period increase in gross margin | $ | 1,893 | ||
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Operating expenses from Boulden acquisition (completed in December 2019) | $ | 646 | |
Unfavorable COVID-19 impacts (higher operating and bad debt expenses) | 487 | ||
Insurance expense (non-health) - both insured and self-insured | 414 | ||
Other variances | (211) | ||
Period-over-period increase in other operating expenses | $ | 1,336 | |
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 2019 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the second quarter of 2020 for further information on the risks and uncertainties related to the Company's forward-looking statements. In addition, to the risks and uncertainties identified in the Company's 2019 Annual Report on Form 10-K, Quarterly Report on Form 10-Q for the first quarter of 2020, and Quarterly Report on Form 10-Q for the second quarter of 2020, risks and uncertainties related to the COVID-19 pandemic could cause actual future results to differ materially from those expressed in any forward-looking statements, including, but not limited to, the duration and scope of the COVID-19 pandemic and impact on the demand for our services; our ability to obtain needed materials and components from our suppliers; actions governments, business, and individuals take in response to the pandemic, including mandatory business closures and restrictions on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; and general economic uncertainty in the United States' and global markets and a continuation or worsening of economic conditions in the United States or low levels of economic growth.
Conference Call
Chesapeake Utilities will host a conference call on Thursday, August 6, 2020 at 4:00 p.m. Eastern Time to discuss the Company's financial results for the three and six months ended June 30, 2020. To participate in this call, dial 877.224.1468 and reference Chesapeake Utilities' 2020 Second Quarter Results Conference Call. To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, use the link CPK - Conference Call Audio Replay, or visit the Investors/Events and Presentations section of the Company's website at www.chpk.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas services; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at https://www.chpk.com or through its Investor Relations (IR) App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
Financial Summary | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Gross Margin | |||||||||||||||
Regulated Energy segment | $ | 57,131 | $ | 55,086 | $ | 125,254 | $ | 122,188 | |||||||
Unregulated Energy segment | 17,032 | 14,380 | 48,815 | 46,922 | |||||||||||
Other businesses and eliminations | (73) | (97) | (158) | (205) | |||||||||||
Total Gross Margin | $ | 74,090 | $ | 69,369 | $ | 173,911 | $ | 168,905 | |||||||
Operating Income | |||||||||||||||
Regulated Energy segment | $ | 18,006 | $ | 18,028 | $ | 45,894 | $ | 47,769 | |||||||
Unregulated Energy segment | 281 | (771) | 14,142 | 14,486 | |||||||||||
Other businesses and eliminations | (310) | 908 | 75 | 32 | |||||||||||
Total Operating Income | 17,977 | 18,165 | 60,111 | 62,287 | |||||||||||
Other income (expense), net | (279) | (320) | 3,039 | (380) | |||||||||||
Interest Charges | 5,054 | 5,552 | 10,868 | 11,180 | |||||||||||
Income from Continuing Operations Before Income Taxes | 12,644 | 12,293 | 52,282 | 50,727 | |||||||||||
Income Taxes on Continuing Operations | 1,983 | 3,379 | 12,580 | 13,002 | |||||||||||
Income from Continuing Operations | 10,661 | 8,914 | 39,702 | 37,725 | |||||||||||
Income (loss) from Discontinued Operations, Net of Tax | 295 | (610) | 184 | (757) | |||||||||||
Net Income | $ | 10,956 | $ | 8,304 | $ | 39,886 | $ | 36,968 | |||||||
Basic Earnings Per Share of Common Stock | |||||||||||||||
Earnings from Continuing Operations | $ | 0.65 | $ | 0.55 | $ | 2.42 | $ | 2.31 | |||||||
Earnings (loss) from Discontinued Operations | 0.02 | (0.04) | 0.01 | (0.05) | |||||||||||
Basic Earnings Per Share of Common Stock | $ | 0.67 | $ | 0.51 | $ | 2.43 | $ | 2.26 | |||||||
Diluted Earnings Per Share of Common Stock | |||||||||||||||
Earnings from Continuing Operations | $ | 0.64 | $ | 0.54 | $ | 2.41 | $ | 2.30 | |||||||
Earnings (loss) from Discontinued Operations | 0.02 | (0.04) | 0.01 | (0.05) | |||||||||||
Diluted Earnings Per Share of Common Stock | $ | 0.66 | $ | 0.50 | $ | 2.42 | $ | 2.25 | |||||||
Financial Summary Highlights | ||||||||||||
Key variances in continuing operations, between the second quarter of 2020 and the second quarter of 2019, included: | ||||||||||||
(in thousands, except per share data) | Pre-tax | Net | Earnings | |||||||||
Second Quarter of 2019 Reported Results from Continuing Operations | $ | 12,293 | $ | 8,914 | $ | 0.54 | ||||||
Adjusting for Unusual Items: | ||||||||||||
Unfavorable COVID-19 impacts | (3,595) | (2,557) | (0.15) | |||||||||
Increased customer consumption - primarily due to colder weather | 2,013 | 1,432 | 0.08 | |||||||||
Favorable federal income tax impact associated with the CARES Act | — | 1,669 | 0.10 | |||||||||
(1,582) | 544 | 0.03 | ||||||||||
Increased (Decreased) Gross Margins: | ||||||||||||
Eastern Shore and Peninsula Pipeline service expansions* | 1,776 | 1,263 | 0.07 | |||||||||
Increased gross margin from demand for Marlin Gas Services * | 1,077 | 766 | 0.05 | |||||||||
Increased retail propane margins per gallon | 867 | 616 | 0.04 | |||||||||
Natural gas growth (excluding service expansions) | 832 | 592 | 0.04 | |||||||||
Margin contributions from Boulden acquisition (completed December 2019)* | 549 | 390 | 0.02 | |||||||||
5,101 | 3,627 | 0.22 | ||||||||||
(Increased) Decreased Operating Expenses (Excluding Cost of Sales): | ||||||||||||
Payroll, Benefits and other employee-related expenses | (967) | (688) | (0.05) | |||||||||
Depreciation, asset removal and property tax costs due to new capital investments | (932) | (663) | (0.04) | |||||||||
Insurance expense (non-health) - both insured and self-insured | (547) | (389) | (0.02) | |||||||||
Operating expenses from Boulden acquisition (completed December 2019) * | (498) | (354) | (0.02) | |||||||||
(2,944) | (2,094) | (0.13) | ||||||||||
Other income tax effects | — | (177) | (0.01) | |||||||||
Interest charges | (436) | (310) | (0.02) | |||||||||
Lower pension expense | 371 | 264 | 0.02 | |||||||||
Net other changes | (159) | (107) | (0.01) | |||||||||
(224) | (330) | (0.02) | ||||||||||
Second Quarter of 2020 Reported Results from Continuing Operations | $ | 12,644 | $ | 10,661 | $ | 0.64 | ||||||
*See the Major Projects and Initiatives table later in this press release. |
Key variances in continuing operations, between the six months ended 2020 and the six months ended 2019, included: | ||||||||||||
(in thousands, except per share data) | Pre-tax | Net | Earnings | |||||||||
Six Months Ended June 30, 2019 Reported Results from Continuing Operations: | $ | 50,727 | $ | 37,725 | $ | 2.30 | ||||||
Adjusting for Unusual Items: | ||||||||||||
Unfavorable COVID-19 impacts | (3,800) | (2,764) | (0.17) | |||||||||
Decreased customer consumption - primarily due to milder weather | (1,931) | (1,405) | (0.09) | |||||||||
Absence of Florida tax savings (net of GRIP refunds) recorded in first quarter of 2019 for 2018 | (910) | (667) | (0.04) | |||||||||
Gains from sales of assets | 3,162 | 2,317 | 0.14 | |||||||||
Favorable income tax impact associated with the CARES Act | — | 1,669 | 0.10 | |||||||||
(3,479) | (850) | (0.06) | ||||||||||
Increased (Decreased) Gross Margins: | ||||||||||||
Eastern Shore and Peninsula Pipeline service expansions* | 2,839 | 2,065 | 0.12 | |||||||||
Margin contribution from Boulden acquisition (completed December 2019)* | 2,437 | 1,773 | 0.11 | |||||||||
Increased retail propane margins per gallon | 2,009 | 1,461 | 0.09 | |||||||||
Natural gas growth (excluding service expansions) | 1,928 | 1,403 | 0.09 | |||||||||
Aspire Energy rate increases | 308 | 224 | 0.01 | |||||||||
9,521 | 6,926 | 0.42 | ||||||||||
(Increased) Decreased Other Operating Expenses (Excluding Cost of Sales): | ||||||||||||
Depreciation, asset removal and property taxes | (2,421) | (1,761) | (0.11) | |||||||||
Insurance expense (non-health) - both insured and self-insured | (1,578) | (1,148) | (0.07) | |||||||||
Operating expenses from Boulden acquisition (completed December 2019) | (1,032) | (751) | (0.05) | |||||||||
Facilities maintenance costs | (757) | (550) | (0.03) | |||||||||
Payroll, benefits and other employee-related expenses | 261 | 190 | 0.01 | |||||||||
(5,527) | (4,020) | (0.25) | ||||||||||
Other income tax effects | — | (849) | (0.05) | |||||||||
Interest Charges | (783) | (570) | (0.03) | |||||||||
Lower pension expense | 743 | 540 | 0.03 | |||||||||
Net other changes | 1,080 | 800 | 0.05 | |||||||||
1,040 | (79) | — | ||||||||||
Six Months Ended June 30, 2020 Reported Results from Continuing Operations | $ | 52,282 | $ | 39,702 | $ | 2.41 | ||||||
*See the Major Projects and Initiatives table later in this press release. |
Recently Completed and Ongoing Major Projects and Initiatives | ||||||||||||||||||||||||||||
The Company constantly pursues and develops additional projects and initiatives to serve existing and new customers, and to further grow its businesses and earnings, with the intention to increase shareholder value. The following represent the major projects/initiatives recently completed and currently underway. Major projects and initiatives that have generated consistent year-over-year margin contributions are removed from the table. In the future, the Company will add new projects and initiatives to this table once negotiations are substantially final and the associated earnings can be estimated. | ||||||||||||||||||||||||||||
Gross Margin for the Period | ||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | Year Ended | Estimate for | |||||||||||||||||||||||||
Project/Initiative | June 30, | June 30, | December 31, | Fiscal | ||||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | 2019 | 2020 | 2021 | |||||||||||||||||||||
Pipeline Expansions | ||||||||||||||||||||||||||||
West Palm Beach County, Florida Expansion (1) | $ | 967 | $ | 161 | $ | 1,968 | $ | 293 | $ | 2,139 | $ | 4,092 | $ | 5,227 | ||||||||||||||
Del-Mar Energy Pathway (1) | 452 | 189 | 641 | 353 | 731 | 2,398 | 4,100 | |||||||||||||||||||||
Auburndale | 170 | — | 340 | — | 283 | 679 | 679 | |||||||||||||||||||||
Callahan Intrastate Pipeline (including related natural gas distribution services) | 536 | — | 536 | — | — | 4,039 | 7,564 | |||||||||||||||||||||
Guernsey Power Station | — | — | — | — | — | — | 700 | |||||||||||||||||||||
Total Pipeline Expansions | 2,125 | 350 | 3,485 | 646 | 3,153 | 11,208 | 18,270 | |||||||||||||||||||||
Virtual Pipeline Growth | ||||||||||||||||||||||||||||
Compressed Natural Gas Transportation | 2,107 | 1,030 | 3,454 | 3,359 | 5,410 | 6,900 | 7,700 | |||||||||||||||||||||
Renewable Natural Gas Transportation | — | — | — | — | — | — | 1,000 | |||||||||||||||||||||
Total Virtual Pipeline Growth | 2,107 | 1,030 | 3,454 | 3,359 | 5,410 | 6,900 | 8,700 | |||||||||||||||||||||
Acquisitions | ||||||||||||||||||||||||||||
Boulden Propane | 549 | — | 2,437 | — | 329 | 3,800 | 4,200 | |||||||||||||||||||||
Elkton Gas | — | — | — | — | — | 1,207 | 3,992 | |||||||||||||||||||||
Total Acquisitions | 549 | — | 2,437 | — | 329 | 5,007 | 8,192 | |||||||||||||||||||||
Regulatory Initiatives | ||||||||||||||||||||||||||||
Florida GRIP | 3,609 | 3,530 | 7,305 | 7,311 | 13,939 | 15,206 | 16,898 | |||||||||||||||||||||
Hurricane Michael regulatory proceeding | — | — | — | — | — | TBD | TBD | |||||||||||||||||||||
Total Regulatory Initiatives | 3,609 | 3,530 | 7,305 | 7,311 | 13,939 | 15,206 | 16,898 | |||||||||||||||||||||
Total | $ | 8,390 | $ | 4,910 | $ | 16,681 | $ | 11,316 | $ | 22,831 | $ | 38,321 | $ | 52,060 | ||||||||||||||
(1) | Includes margin generated from interim services. |
Detailed Discussion of Major Projects and Initiatives
Pipeline Expansions
West Palm Beach County, Florida Expansion
Peninsula Pipeline is constructing four transmission lines to bring additional natural gas to the Company's distribution system in West Palm Beach, Florida. The first phase of this project was placed into service in December 2018 and generated $0.8 million and $1.7 million in additional gross margin for the three and six months ended June 30, 2020, respectively. The Company expects to complete the remainder of the project in phases through the third quarter of 2020, and estimates that the project will generate gross margin of $4.1 million in 2020 and $5.2 million annually thereafter.
Del-Mar Energy Pathway
In December 2019, the Federal Energy Regulatory Commission issued an order approving the construction of the Del-Mar Energy Pathway project. Eastern Shore anticipates that this project will be fully in-service by the beginning of the fourth quarter of 2021. The new facilities will: (i) ensure an additional 14,300 Dekatherms per day ("Dts/d") of firm service to four customers, (ii) provide additional natural gas transmission pipeline infrastructure in eastern Sussex County, Delaware, and (iii) represent the first extension of Eastern Shore's pipeline system into Somerset County, Maryland. Construction on the project began in January 2020, and interim services in advance of this project generated $0.5 million and $0.6 million in margin for the three and six months ended June 30, 2020, respectively. The estimated gross margin from this project is approximately $2.4 million in 2020, $4.1 million in 2021 and $5.1 million annually thereafter.
Auburndale
In August 2019, the Florida PSC approved Peninsula Pipeline's Transportation Service Agreement with the Florida Division of Chesapeake Utilities. Peninsula Pipeline purchased an existing pipeline owned by the Florida Division of Chesapeake Utilities and Calpine, and has completed the construction of pipeline facilities in Polk County, Florida. Peninsula Pipeline provides transportation service to the Florida Division of Chesapeake Utilities increasing both delivery capacity and downstream pressure as well as introducing a secondary source of natural gas for the Florida Division of Chesapeake Utilities' distribution system. Peninsula Pipeline generated gross margin from this project of $0.2 million and $0.3 million for the three and six months ended June 30, 2020, respectively, and expects to generate annual gross margin of $0.7 million in 2020 and beyond.
Callahan Intrastate Pipeline
In May 2018, Peninsula Pipeline announced a plan to construct a jointly owned intrastate transmission pipeline with Seacoast Gas Transmission in Nassau County, Florida. The 26-mile pipeline will serve growing demand in both Nassau and Duval Counties. This project was placed in service in June 2020, one month earlier than initially forecasted, and generated $0.5 million in additional gross for the three and six months ended June 30, 2020. Peninsula Pipeline expects to generate gross margin of $4.0 million in 2020 and $7.6 million annually thereafter.
Guernsey Power Station
Guernsey Power Station, LLC ("Guernsey Power Station") and the Company's affiliate, Aspire Energy Express, LLC ("Aspire Energy Express"), entered into a precedent firm transportation capacity agreement whereby Guernsey Power Station will construct a power generation facility and Aspire Energy Express will provide firm natural gas transportation service to this facility. Guernsey Power Station commenced construction of the project in October 2019. Aspire Energy Express is expected to commence construction of the gas transmission facilities in the second quarter of 2021. This project is expected to produce gross margin of approximately $0.7 million in 2021 and $1.5 million for 2022 and beyond.
Virtual Pipeline Growth
Compressed Natural Gas ("CNG") Transportation
Marlin Gas Services provides CNG temporary hold services, contracted pipeline integrity services, emergency services for damaged pipelines and specialized gas services for customers who have unique requirements. For the three and six months ended June 30, 2020, Marlin Gas Services generated additional gross margin of $1.1 million and $0.1 million, respectively. We estimate that Marlin Gas Services will generate annual gross margin of approximately $6.9 million in 2020 and $7.7 million in 2021, with the potential for additional growth in future years. Marlin Gas Services continues to actively expand the territories it serves, as well as leverage its patented technology to serve other markets, including pursuing liquefied natural gas transportation opportunities and most recently, announcing its expansion into the transportation of renewable natural gas from diverse supply sources to various pipeline interconnection points, as further outlined below.
Renewable Natural Gas Transportation
Bioenergy DevCo
In June 2020, the Company and Bioenergy DevCo ("BDC"), a developer of anaerobic digestion facilities that create renewable energy and healthy soil products from organic material, entered into an agreement related to a project to remove excess organics from poultry waste and convert it into renewable natural gas. BDC and the Company's affiliates are collaborating on this project in addition to several other project sites where organic waste can be converted into a carbon-negative energy source. This project provides the opportunity for the Company to maintain the green attributes of the renewable natural gas as it is distributed to its natural gas distribution customers.
The resources generated from organic material at BDC's anaerobic digestion facilities in Delaware, will be processed by the Company and Eastern Shore and Marlin Gas Services will facilitate the transportation and receipt of renewable natural gas for multiple suppliers through its interconnect facility and equipment. Marlin Gas Services will transport the sustainable fuel to Eastern Shore, where it will be introduced to the Company's own distribution system and ultimately distributed to its natural gas customers.
CleanBay Project
In July 2020, the Company and CleanBay Renewables Inc. ("CleanBay") announced a new partnership to bring renewable natural gas to its Delmarva natural gas operations. As part of this partnership, the Company will transport the renewable natural gas produced at CleanBay's planned Westover, Maryland bio-refinery, to the Company's natural gas infrastructure in the Delmarva region. Eastern Shore and Marlin Gas Services, will transport the renewable natural gas from CleanBay where it is ultimately delivered to the Delmarva natural gas distribution end use customers.
At the present time, the Company has disclosed that it expects to generate $1.0 million in 2021 in incremental margin from renewable natural gas transportation beginning in 2021. The Company is finalizing contract terms associated with some of these projects. Additional information will be provided regarding incremental margin on these projects at a future time, as contracts are finalized.
Acquisitions
Boulden Propane
In December 2019, Sharp Energy, Inc. ("Sharp"), the Company's wholly-owned subsidiary, acquired certain propane customers and operating assets of Boulden which provides propane distribution service to approximately 5,200 customers in Delaware, Maryland and Pennsylvania. The customers and assets acquired from Boulden have been assimilated into Sharp. The operations acquired from Boulden generated $0.5 million and $2.4 million of incremental gross margin for the three and six months ended June 30, 2020, respectively. The Company estimates that this acquisition will generate annual gross margin of approximately $3.8 million in 2020, and $4.2 million in 2021, with the potential for additional growth in future years.
Elkton Gas Company
In December 2019, the Company entered into an agreement with South Jersey Industries, Inc. to acquire Elkton Gas Company, which provides natural gas distribution service to approximately 7,000 residential and commercial customers in Cecil County, Maryland contiguous to the Company's existing franchise territory in Cecil County. The acquisition closed at the end of July 2020, and the Company estimates that this acquisition will generate gross margin of approximately $1.2 million in 2020 and $4.0 million in 2021.
Regulatory Initiatives
Florida GRIP
Florida GRIP is a natural gas pipe replacement program approved by the Florida PSC that allows automatic recovery, through rates, of costs associated with the replacement of mains and services. Since the program's inception in August 2012, we have invested $154.2 million of capital expenditures to replace 312 miles of qualifying distribution mains, including $10.3 million of new pipes during the first six months of 2020. The Company expects to generate annual gross margin of approximately $15.2 million in 2020, and $16.9 million in 2021.
Hurricane Michael
In October 2018, Hurricane Michael passed through FPU's electric distribution operation's service territory in Northwest Florida. The hurricane caused widespread and severe damage to FPU's infrastructure resulting in 100 percent of its customers in the Northwest Florida service territory losing electrical service. FPU expended more than $65.0 million to restore service as quickly as possible, which has been recorded as new plant and equipment, charged against FPU's accumulated depreciation or charged against FPU's storm reserve. Additionally, amounts currently being reviewed by the Florida PSC for regulatory asset treatment have been recorded as receivables and other deferred charges.
In August 2019, FPU filed a limited proceeding requesting recovery of storm-related costs associated with Hurricane Michael (plant investment and expenses) through a change in base rates. FPU also requested treatment and recovery of certain storm-related costs as a regulatory asset for items currently not allowed to be recovered through the storm reserve as well as the recovery of plant investment replaced as a result of the storm. FPU has proposed an overall return component on both the plant additions and the proposed regulatory assets. In the fourth quarter of 2019, FPU along with the Office of Public Counsel in Florida, filed a joint motion with the Florida PSC to approve an interim rate increase, subject to refund, pending the final ruling on the recovery of the restoration costs incurred. The petition was approved by the Florida PSC in November 2019 and interim rate increases were implemented effective January 2020. To date, the Company has recorded a reserve for the interim rate increases, pending a final resolution of the proceeding.
In September 2019, FPU filed a petition, with the Florida PSC, for approval of its consolidated electric depreciation rates. Once approved, the Company expects the new rates to be retroactively effective to January 1, 2020. The petition, was joined to the open dockets regarding Hurricane Michael, and is currently on the schedule for hearing at the Florida PSC agenda in September 2020.
In March 2020, FPU filed an update to the original filing to account for actual charges incurred through December 2019, revised the amortization period of the storm-related costs from 30 years as originally requested to 10 years, and included costs related to Hurricane Dorian of approximately $1.2 million in this filing. FPU continues to work with the Florida PSC and the petition is currently on the schedule for approval at the Florida PSC Agenda in September 2020.
Other major factors influencing gross margin
Weather and Consumption
Weather conditions accounted for a $2.0 million increase in gross margin during the second quarter of 2020, compared to the same period in 2019, as Heating Degree-Day ("HDD") increased by 266 days for both the Delmarva Peninsula and our Ohio service territory. During the second quarter of 2020, gross margin increased by $1.0 million compared to normal temperatures as defined below. For the six months ended June 30, 2020, there was overall lower customer consumption as warmer weather in the first quarter was partially offset by colder temperatures during the second quarter. For the six-month period, overall milder temperatures decreased gross margin by $1.9 million compared to the same period in 2019 and $2.0 million compared to normal temperatures. The following table summarizes HDD and Cooling Degree-Day ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three and six months ended June 30, 2020 and 2019.
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2020 | 2019 | Variance | 2020 | 2019 | Variance | ||||||||||||
Delmarva | |||||||||||||||||
Actual HDD | 513 | 247 | 266 | 2,373 | 2,569 | (196) | |||||||||||
10-Year Average HDD ("Normal") | 400 | 423 | (23) | 2,749 | 2,785 | (36) | |||||||||||
Variance from Normal | 113 | (176) | (376) | (216) | |||||||||||||
Florida | |||||||||||||||||
Actual HDD | 9 | 18 | (9) | 343 | 379 | (36) | |||||||||||
10-Year Average HDD ("Normal") | 13 | 14 | (1) | 508 | 532 | (24) | |||||||||||
Variance from Normal | (4) | 4 | (165) | (153) | |||||||||||||
Ohio | |||||||||||||||||
Actual HDD | 801 | 535 | 266 | 3,297 | 3,531 | (234) | |||||||||||
10-Year Average HDD ("Normal") | 593 | 607 | (14) | 3,612 | 3,652 | (40) | |||||||||||
Variance from Normal | 208 | (72) | (315) | (121) | |||||||||||||
Florida | |||||||||||||||||
Actual CDD | 849 | 1,086 | (237) | 1,075 | 1,220 | (145) | |||||||||||
10-Year Average CDD ("Normal") | 988 | 975 | 13 | 1,093 | 1,072 | 21 | |||||||||||
Variance from Normal | (139) | 111 | (18) | 148 | |||||||||||||
Natural Gas Distribution Margin Growth
Customer growth for the Company's natural gas distribution operations, as a result of the addition of new customers and the conversion of customers from alternative fuel sources to natural gas service, generated $0.8 million and $1.9 million for the three and six months ended June 30, 2020, respectively. The average number of residential customers served on the Delmarva Peninsula and in Florida increased by 5.3 percent and 3.6 percent, respectively, during the second quarter of 2020 and 4.6 percent and 3.7 percent, respectively for the six months ended June 30, 2020. On the Delmarva Peninsula, a larger percentage of the margin growth was generated from residential growth given the expansion of gas into new communities and conversions to natural gas as our distribution infrastructure continues to build out, while in Florida, as gas heating is not a significant portion of residential use, a greater portion of the margin growth occurred in the commercial and industrial sectors. The details for the three and six months ended June 30, 2020 are provided in the following table:
Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2020 | June 30, 2020 | |||||||||||||
(in thousands) | Delmarva Peninsula | Florida | Delmarva Peninsula | Florida | ||||||||||
Customer Growth: | ||||||||||||||
Residential | $ | 326 | $ | 171 | $ | 767 | $ | 394 | ||||||
Commercial and industrial | 70 | 265 | 224 | 543 | ||||||||||
Total Customer Growth | $ | 396 | $ | 436 | $ | 991 | $ | 937 | ||||||
Capital Investment Growth and Associated Financing Plans
The Company's capital expenditures were $88.4 million for the six months ended June 30, 2020. The following table shows a range of the expected 2020 capital expenditures by segment and by business line:
2020 | |||||||
(dollars in thousands) | Low | High | |||||
Regulated Energy: | |||||||
Natural gas distribution | $ | 75,000 | $ | 80,000 | |||
Natural gas transmission | 70,000 | 80,000 | |||||
Electric distribution | 5,000 | 7,000 | |||||
Total Regulated Energy | 150,000 | 167,000 | |||||
Unregulated Energy: | |||||||
Propane distribution | 10,000 | 13,000 | |||||
Energy transmission | 10,000 | 15,000 | |||||
Other unregulated energy | 14,000 | 19,000 | |||||
Total Unregulated Energy | 34,000 | 47,000 | |||||
Other: | |||||||
Corporate and other businesses | 1,000 | 1,000 | |||||
Total Other | 1,000 | 1,000 | |||||
Total 2020 Expected Capital Expenditures | $ | 185,000 | $ | 215,000 | |||
The capital expenditure projection is subject to continuous review and modification. Actual capital requirements may vary from the above estimates due to a number of factors, including changing economic conditions, capital delays because of COVID-19 that are greater than currently anticipated, customer growth in existing areas, regulation, new growth or acquisition opportunities and availability of capital. Historically, actual capital expenditures have typically lagged behind the budgeted amounts.
Management reaffirms its capital expenditure guidance of between $750 million and $1 billion for the five-year period between 2018 and 2022. From January 1, 2018 through June 30, 2020, the Company has invested $570.4 million in new capital expenditures.
The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. The Company's equity to total capitalization ratio, including short term borrowings, was 45 percent as of June 30, 2020.
The Company may utilize more temporary short-term debt, when the financing cost is attractive, as a bridge to the permanent long-term financing, or if the equity markets are more volatile. The Company also maintains an effective shelf registration statement with the Securities and Exchange Commission for the issuance of shares under its Dividend Reinvestment and Direct Stock Purchase Plan (the "DRIP"). In addition, the Company recently filed an effective shelf registration statement with the Securities and Exchange Commission for the issuance of shares of its common stock via a variety of offerings. Depending on the Company's capital needs and subject to market conditions, in addition to other debt and equity offerings, the Company may consider issuing additional shares under the direct stock purchase component of the DRIP or pursuant to its shelf registration statement.
As of June 30, 2020, the Company had approximately $180 million available under its existing short-term lines of credit and syndicated revolver facility. This includes four additional credit facilities that were entered into during the second quarter of 2020 to provide additional debt capital given the uncertainty regarding the length and depth of the impacts of the COVID-19 pandemic. More information about these additional lines of credit and the renewal of the respective shelf agreements is included in the Company's Quarterly Report on Form 10-Q for the second quarter of 2020.
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Operating Revenues | |||||||||||||||
Regulated Energy | $ | 73,518 | $ | 73,403 | $ | 176,473 | $ | 177,021 | |||||||
Unregulated Energy and other | 23,533 | 21,139 | 73,268 | 77,984 | |||||||||||
Total Operating Revenues | 97,051 | 94,542 | 249,741 | 255,005 | |||||||||||
Operating Expenses | |||||||||||||||
Regulated Energy cost of sales | 16,387 | 18,317 | 51,219 | 54,833 | |||||||||||
Unregulated Energy and other cost of sales | 6,573 | 6,857 | 24,609 | 31,267 | |||||||||||
Operations | 34,607 | 31,531 | 70,559 | 66,945 | |||||||||||
Maintenance | 4,143 | 3,600 | 7,979 | 7,280 | |||||||||||
Gain from a settlement | (130) | (130) | (130) | (130) | |||||||||||
Depreciation and amortization | 12,247 | 11,464 | 24,500 | 22,392 | |||||||||||
Other taxes | 5,247 | 4,738 | 10,894 | 10,131 | |||||||||||
Total operating expenses | 79,074 | 76,377 | 189,630 | 192,718 | |||||||||||
Operating Income | 17,977 | 18,165 | 60,111 | 62,287 | |||||||||||
Other income (expense), net | (279) | (320) | 3,039 | (380) | |||||||||||
Interest charges | 5,054 | 5,552 | 10,868 | 11,180 | |||||||||||
Income from Continuing Operations Before Income Taxes | 12,644 | 12,293 | 52,282 | 50,727 | |||||||||||
Income Taxes on Continuing Operations | 1,983 | 3,379 | 12,580 | 13,002 | |||||||||||
Income from Continuing Operations | 10,661 | 8,914 | 39,702 | 37,725 | |||||||||||
Income (loss) from Discontinued Operations, Net of Tax | 295 | (610) | 184 | (757) | |||||||||||
Net Income | $ | 10,956 | $ | 8,304 | $ | 39,886 | $ | 36,968 | |||||||
Weighted Average Common Shares Outstanding: | |||||||||||||||
Basic | 16,448,490 | 16,401,028 | 16,431,724 | 16,393,022 | |||||||||||
Diluted | 16,503,603 | 16,445,743 | 16,487,807 | 16,439,333 | |||||||||||
Basic Earnings Per Share of Common Stock: | |||||||||||||||
Earnings from Continuing Operations | $ | 0.65 | $ | 0.55 | $ | 2.42 | $ | 2.31 | |||||||
Earnings (loss) from Discontinued Operations | 0.02 | (0.04) | 0.01 | (0.05) | |||||||||||
Basic Earnings Per Share of Common Stock | $ | 0.67 | $ | 0.51 | $ | 2.43 | $ | 2.26 | |||||||
Diluted Earnings Per Share of Common Stock: | |||||||||||||||
Earnings from Continuing Operations | $ | 0.64 | $ | 0.54 | $ | 2.41 | $ | 2.30 | |||||||
Earnings (loss) from Discontinued Operations | 0.02 | (0.04) | 0.01 | (0.05) | |||||||||||
Diluted Earnings Per Share of Common Stock | $ | 0.66 | $ | 0.50 | $ | 2.42 | $ | 2.25 | |||||||
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
Assets | June 30, 2020 | December 31, 2019 | ||||||
(in thousands, except shares and per share data) | ||||||||
Property, Plant and Equipment | ||||||||
Regulated Energy | $ | 1,499,389 | $ | 1,441,473 | ||||
Unregulated Energy | 277,209 | 265,209 | ||||||
Other businesses and eliminations | 39,798 | 39,850 | ||||||
Total property, plant and equipment | 1,816,396 | 1,746,532 | ||||||
Less: Accumulated depreciation and amortization | (357,303) | (336,876) | ||||||
Plus: Construction work in progress | 66,267 | 54,141 | ||||||
Net property, plant and equipment | 1,525,360 | 1,463,797 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 3,590 | 6,985 | ||||||
Trade and other receivables | 48,799 | 50,899 | ||||||
Less: Allowance for credit losses | (2,104) | (1,337) | ||||||
Trade receivables, net | 46,695 | 49,562 | ||||||
Accrued revenue | 12,076 | 20,846 | ||||||
Propane inventory, at average cost | 3,951 | 5,824 | ||||||
Other inventory, at average cost | 5,397 | 6,067 | ||||||
Regulatory assets | 3,625 | 5,144 | ||||||
Storage gas prepayments | 1,943 | 3,541 | ||||||
Income taxes receivable | 9,827 | 20,050 | ||||||
Prepaid expenses | 9,167 | 13,928 | ||||||
Derivative assets, at fair value | 1,270 | — | ||||||
Other current assets | 1,017 | 2,879 | ||||||
Total current assets | 98,558 | 134,826 | ||||||
Deferred Charges and Other Assets | ||||||||
Goodwill | 32,684 | 32,668 | ||||||
Other intangible assets, net | 7,520 | 8,129 | ||||||
Investments, at fair value | 9,571 | 9,229 | ||||||
Operating lease right-of-use assets | 11,546 | 11,563 | ||||||
Regulatory assets | 74,814 | 73,407 | ||||||
Receivables and other deferred charges | 62,122 | 49,579 | ||||||
Total deferred charges and other assets | 198,257 | 184,575 | ||||||
Total Assets | $ | 1,822,175 | $ | 1,783,198 | ||||
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
Capitalization and Liabilities | June 30, 2020 | December 31, 2019 | ||||||
(in thousands, except shares and per share data) | ||||||||
Capitalization | ||||||||
Stockholders' equity | ||||||||
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding | $ | — | $ | — | ||||
Common stock, par value $0.4867 per share (authorized 50,000,000 shares) | 8,013 | 7,984 | ||||||
Additional paid-in capital | 263,272 | 259,253 | ||||||
Retained earnings | 326,454 | 300,607 | ||||||
Accumulated other comprehensive loss | (4,462) | (6,267) | ||||||
Deferred compensation obligation | 5,659 | 4,543 | ||||||
Treasury stock | (5,659) | (4,543) | ||||||
Total stockholders' equity | 593,277 | 561,577 | ||||||
Long-term debt, net of current maturities | 430,106 | 440,168 | ||||||
Total capitalization | 1,023,383 | 1,001,745 | ||||||
Current Liabilities | ||||||||
Current portion of long-term debt | 15,600 | 45,600 | ||||||
Short-term borrowing | 286,405 | 247,371 | ||||||
Accounts payable | 46,382 | 54,069 | ||||||
Customer deposits and refunds | 30,707 | 30,939 | ||||||
Accrued interest | 2,169 | 2,554 | ||||||
Dividends payable | 7,244 | 6,644 | ||||||
Accrued compensation | 9,260 | 16,236 | ||||||
Regulatory liabilities | 10,328 | 5,991 | ||||||
Derivative liabilities, at fair value | 802 | 1,844 | ||||||
Other accrued liabilities | 20,926 | 12,076 | ||||||
Total current liabilities | 429,823 | 423,324 | ||||||
Deferred Credits and Other Liabilities | ||||||||
Deferred income taxes | 193,595 | 180,656 | ||||||
Regulatory liabilities | 130,180 | 127,744 | ||||||
Environmental liabilities | 4,520 | 6,468 | ||||||
Other pension and benefit costs | 28,185 | 30,569 | ||||||
Operating lease - liabilities | 10,055 | 9,896 | ||||||
Deferred investment tax credits and other liabilities | 2,434 | 2,796 | ||||||
Total deferred credits and other liabilities | 368,969 | 358,129 | ||||||
Environmental and other commitments and contingencies (1) | ||||||||
Total Capitalization and Liabilities | $ | 1,822,175 | $ | 1,783,198 | ||||
(1) | Refer to Note 6 and 7 in the Company's Quarterly Report on Form 10-Q for further information. |
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
For the Three Months Ended June 30, 2020 | For the Three Months Ended June 30, 2019 | |||||||||||||||||||||||||||||||
Delmarva NG | Chesapeake | FPU NG | FPU Electric | Delmarva NG | Chesapeake | FPU NG | FPU Electric | |||||||||||||||||||||||||
Operating Revenues (in thousands) | ||||||||||||||||||||||||||||||||
Residential | $ | 13,873 | $ | 1,500 | $ | 8,693 | $ | 7,691 | $ | 10,444 | $ | 1,511 | $ | 7,457 | $ | 10,801 | ||||||||||||||||
Commercial | 5,630 | 1,491 | 4,856 | 7,126 | 6,353 | 1,587 | 6,633 | 9,807 | ||||||||||||||||||||||||
Industrial | 2,066 | 3,180 | 5,630 | 247 | 1,773 | 3,122 | 6,062 | 416 | ||||||||||||||||||||||||
Other (1) | (2,974) | 1,060 | 319 | 637 | (3,647) | 795 | (1,489) | (560) | ||||||||||||||||||||||||
Total Operating Revenues | $ | 18,595 | $ | 7,231 | $ | 19,498 | $ | 15,701 | $ | 14,923 | $ | 7,015 | $ | 18,663 | $ | 20,464 | ||||||||||||||||
Volume (in Dts for natural gas and KWHs for electric) | ||||||||||||||||||||||||||||||||
Residential | 747,431 | 73,330 | 376,351 | 68,781 | 558,159 | 83,315 | 317,025 | 72,358 | ||||||||||||||||||||||||
Commercial | 682,648 | 1,023,892 | 296,994 | 67,309 | 673,689 | 1,143,877 | 426,555 | 79,540 | ||||||||||||||||||||||||
Industrial | 1,199,163 | 7,302,156 | 1,022,672 | 770 | 1,216,120 | 7,065,699 | 1,226,774 | 3,173 | ||||||||||||||||||||||||
Other | 66,069 | — | 700,328 | — | 60,515 | — | 634,071 | — | ||||||||||||||||||||||||
Total | 2,695,311 | 8,399,378 | 2,396,345 | 136,860 | 2,508,483 | 8,292,891 | 2,604,425 | 155,071 | ||||||||||||||||||||||||
Average Customers | ||||||||||||||||||||||||||||||||
Residential | 77,573 | 17,763 | 59,623 | 24,952 | 73,666 | 17,205 | 57,504 | 24,530 | ||||||||||||||||||||||||
Commercial | 7,221 | 1,583 | 3,981 | 7,263 | 7,085 | 1,544 | 3,937 | 7,228 | ||||||||||||||||||||||||
Industrial | 176 | 16 | 2,518 | 2 | 168 | 17 | 2,435 | 2 | ||||||||||||||||||||||||
Other | 16 | — | 14 | — | 16 | — | 12 | — | ||||||||||||||||||||||||
Total | 84,986 | 19,362 | 66,136 | 32,217 | 80,935 | 18,766 | 63,888 | 31,760 | ||||||||||||||||||||||||
For the Six Months Ended June 30, 2020 | For the Six Months Ended June 30, 2019 | |||||||||||||||||||||||||||||||
Delmarva NG | Chesapeake | FPU NG | FPU Electric | Delmarva NG | Chesapeake | FPU NG | FPU Electric | |||||||||||||||||||||||||
Operating Revenues (in thousands) | ||||||||||||||||||||||||||||||||
Residential | $ | 42,750 | $ | 3,361 | $ | 19,891 | $ | 14,918 | $ | 40,414 | $ | 3,297 | $ | 18,177 | $ | 20,661 | ||||||||||||||||
Commercial | 17,869 | 3,274 | 12,833 | 14,074 | 19,494 | 3,325 | 14,336 | 17,622 | ||||||||||||||||||||||||
Industrial | 4,463 | 6,518 | 13,295 | 310 | 4,162 | 6,387 | 12,060 | 1,026 | ||||||||||||||||||||||||
Other (1) | (4,490) | 2,555 | (1,077) | 618 | (4,468) | 1,906 | (2,123) | (4,467) | ||||||||||||||||||||||||
Total Operating Revenues | $ | 60,592 | $ | 15,708 | $ | 44,942 | $ | 29,920 | $ | 59,602 | $ | 14,915 | $ | 42,450 | $ | 34,842 | ||||||||||||||||
Volume (in Dts for natural gas and KWHs for electric) | ||||||||||||||||||||||||||||||||
Residential | 2,656,562 | 212,519 | 869,883 | 133,728 | 2,778,534 | 216,187 | 822,351 | 137,869 | ||||||||||||||||||||||||
Commercial | 2,222,759 | 2,223,015 | 795,185 | 131,988 | 2,327,009 | 2,392,641 | 930,601 | 141,369 | ||||||||||||||||||||||||
Industrial | 2,523,572 | 15,016,549 | 2,323,533 | 12,382 | 2,727,428 | 14,399,549 | 2,574,011 | 10,923 | ||||||||||||||||||||||||
Other | 142,983 | — | 1,255,371 | — | 78,374 | — | 1,189,462 | — | ||||||||||||||||||||||||
Total | 7,545,876 | 17,452,083 | 5,243,972 | 278,098 | 7,911,345 | 17,008,377 | 5,516,425 | 290,161 | ||||||||||||||||||||||||
Average Customers | ||||||||||||||||||||||||||||||||
Residential | 77,222 | 17,712 | 59,280 | 24,923 | 73,821 | 17,097 | 57,166 | 24,455 | ||||||||||||||||||||||||
Commercial | 7,233 | 1,582 | 3,981 | 7,262 | 7,116 | 1,537 | 3,917 | 7,230 | ||||||||||||||||||||||||
Industrial | 174 | 16 | 2,508 | 2 | 168 | 17 | 2,425 | 2 | ||||||||||||||||||||||||
Other | 17 | — | 14 | — | 12 | — | 12 | — | ||||||||||||||||||||||||
Total | 84,646 | 19,310 | 65,783 | 32,187 | 81,117 | 18,651 | 63,520 | 31,687 | ||||||||||||||||||||||||
(1) | Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties, and adjustments for pass-through taxes. |
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SOURCE Chesapeake Utilities Corporation
Article Date
8/5/2020Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
DOVER, Del., Aug. 5, 2020 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.44 per share on the Company's common stock. The $0.44 per share dividend will be paid on October 5, 2020 to all shareholders of record at the close of business on September 15, 2020.
Chesapeake has paid dividends to its shareholders without interruption for 59 years. During those 59 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-quarterly-dividend-301107031.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/5/2020Chesapeake Utilities Corporation Completes Acquisition of Elkton Gas
Source: PR Newswire
DOVER, Del., Aug. 3, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (Chesapeake Utilities) (NYSE: CPK) announced today the completion of its acquisition of Elkton Gas from South Jersey Industries (SJI) (NYSE: SJI). With all closing conditions now satisfied, Elkton Gas becomes the newest wholly-owned subsidiary of Chesapeake Utilities. Chesapeake Utilities recently announced final regulatory approval from the Maryland Public Service Commission for the acquisition.
Incorporated in 1863, Elkton Gas delivers safe, reliable and affordable natural gas to approximately 7,000 residential and commercial customers within a franchised area of Cecil County, Maryland. Elkton Gas will continue to operate out of its existing office with the same local personnel. Chesapeake Utilities currently serves another franchised area of Cecil County, Maryland with natural gas service and has been managing its expansion into this area largely from its Delaware operations. With the addition of the Elkton Gas team and facilities, the entire County can be served locally from the existing office.
"We are pleased to welcome the dedicated team of Elkton Gas employees and our new Elkton Gas customers to our Company," said Jeff Householder, President and CEO of Chesapeake Utilities Corporation. "This move is a natural fit and we are excited about our prospects for natural gas distribution expansion in this growing area."
"The collaboration with Chesapeake Utilities ensured the timely completion of this sale and a seamless transition for Elkton Gas customers," said Christie McMullen, President and Chief Operations Officer, Elizabethtown Gas and Elkton Gas. "We are confident that Elkton Gas customers will continue to receive the outstanding service they expect and deserve as part of Chesapeake Utilities."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile CNG utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
About South Jersey Industries
SJI (NYSE: SJI), an energy services holding company based in Folsom, NJ, delivers energy services to its customers through three primary subsidiaries. SJI Utilities, SJI's regulated natural gas utility business, delivers safe, reliable, affordable natural gas to approximately 700,000 South Jersey Gas and Elizabethtown Gas customers. SJI's non-utility businesses within South Jersey Energy Solutions promote efficiency, clean technology and renewable energy by providing customized wholesale commodity marketing and fuel management services; and developing, owning and operating on-site energy production facilities. SJI Midstream houses the company's interest in the PennEast Pipeline Project. Visit sjindustries.com for more information about SJI and its subsidiaries.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-completes-acquisition-of-elkton-gas-301104492.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/3/20207/29/2020 - Chesapeake Utilities Corporation To Host Conference Call To Review Second Quarter 2020 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review Second Quarter 2020 Financial Results
Source: PR Newswire
DOVER, Del., July 29, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Thursday, August 6, 2020, at 4:00 p.m. ET to discuss the Company's financial results for the second quarter of 2020. The earnings press release will be issued on Wednesday, August 5, 2020, after the market closes.
To participate in this call, dial toll-free 877.224.1468 and reference Chesapeake Utilities Corporation's 2020 Second Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile CNG utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Heidi W. Watkins
Shareholder Services Manager
302.734.6716
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-second-quarter-2020-financial-results-301102538.html
SOURCE Chesapeake Utilities Corporation
Article Date
7/29/20207/9/2020 - Chesapeake Utilities Corporation Announces Maryland PSC Approval of Elkton Gas Acquisition
Chesapeake Utilities Corporation Announces Maryland PSC Approval of Elkton Gas Acquisition
Source: PR Newswire
DOVER, Del., July 9, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (Chesapeake Utilities) (NYSE: CPK) announced today that it has received regulatory approval from the Maryland Public Service Commission for the pending acquisition of Elkton Gas from South Jersey Industries (SJI) (NYSE: SJI). Assuming all closing conditions are satisfied, the transaction is anticipated to close by August 1, 2020, at which time Elkton Gas will become the newest wholly-owned subsidiary of Chesapeake Utilities. The agreement between Chesapeake Utilities and SJI was entered into on December 5, 2019.
Incorporated in 1863, Elkton Gas delivers safe, reliable and affordable natural gas to approximately 7,000 residential and commercial customers within a franchised area of Cecil County, Maryland. Elkton Gas will continue to operate out of its existing office with the same local personnel. Customers can expect to continue to receive the same high quality service that they have experienced with the local office and its team members. Elkton Gas has also been a long-term customer of Eastern Shore Natural Gas Company, an interstate transmission pipeline company that is also a wholly-owned subsidiary of Chesapeake Utilities Corporation.
Chesapeake Utilities currently serves another franchised area of Cecil County, Maryland with natural gas service and has been managing its expansion into this area largely from its Delaware operations. With the addition of the Elkton Gas team and facilities, the entire County can be served locally from the existing office.
"The acquisition of Elkton Gas is a great, strategic fit for our Company and will enable us to more quickly expand our services in Cecil County," said Jeff Householder, President and CEO of Chesapeake Utilities Corporation. "We thank the Maryland Public Service Commission for approving this acquisition and we look forward to completing this transaction and welcoming Elkton Gas into the Chesapeake Utilities family. Together, we will remain committed to delivering superior service to the customers and communities we serve through increased, affordable and cleaner energy options."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile CNG utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
About South Jersey Industries
SJI, an energy services holding company based in Folsom, New Jersey, delivers safe, reliable, affordable natural gas service to approximately 681,000 customers in New Jersey and Maryland through its three regulated natural gas utilities - South Jersey Gas, Elizabethtown Gas and Elkton Gas. SJI's non-utility businesses within South Jersey Energy Solutions promote efficiency, clean technology and renewable energy by providing customized wholesale commodity marketing and fuel management services; and developing, owning and operating on-site energy production facilities. SJI Midstream houses the company's interest in the PennEast Pipeline Project. Visit sjindustries.com for more information about SJI and its subsidiaries.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-maryland-psc-approval-of-elkton-gas-acquisition-301091121.html
SOURCE Chesapeake Utilities Corporation
Article Date
7/9/2020Chesapeake Utilities Corporation Partners with CleanBay Renewables to Increase Sustainable Energy in the Delmarva Community
Source: PR Newswire
DOVER, Del., July 7, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today announced a new partnership with CleanBay Renewables Inc. (CleanBay), an enviro-tech company focused on the production of sustainable renewable natural gas, which will generate greenhouse gas credits associated with vehicular usage, and provide Chesapeake Utilities the opportunity to bring additional renewable natural gas to its Delmarva operations. Under the arrangement, Chesapeake Utilities Corporation will transport the renewable natural gas produced at CleanBay's planned Westover, Maryland bio-refinery, to Chesapeake Utilities' natural gas infrastructure in the Delmarva region.
The renewable natural gas generated at CleanBay's Westover facility will reach the market through the joint effort of Chesapeake Utilities Corporation and its subsidiaries, Eastern Shore Natural Gas Company (ESNG) and Marlin Gas Services. Using a virtual pipeline concept, Marlin Gas will transport renewable natural gas from the CleanBay facility to Eastern Shore Natural Gas, Chesapeake Utilities Corporation's interstate infrastructure pipeline, where it will be distributed to end use customers, including low-carbon, renewable vehicle fuel customers.
"Through this partnership, Chesapeake Utilities Corporation has an immediate and scalable opportunity to further impact climate change," said Thomas Spangler, CleanBay Renewables' Executive Chairman. "Our process to turn poultry litter into renewable natural gas is a sustainable, environmentally friendly way to both positively influence our region's poultry ecosystem and reduce U.S. greenhouse gas emissions for end use customers including powering vehicle fleets with clean, green energy."
Similar to additional planned CleanBay facilities, the Westover bio-refinery will recycle more than 150,000 tons of chicken litter annually. By repurposing a potential source of excess nutrients, CleanBay can generate 765,000 MMBTUs of sustainable renewable natural gas, the amount of energy used by approximately 10,000 homes.
"Utilizing the renewable natural gas derived from processing excess poultry industry organics in the Delmarva region and transforming that into a carbon-negative sustainable energy source, supports our long-standing commitment to our customers and communities to invest in a resilient, environmentally-friendly and diverse energy supply," said Jeff Householder, President and CEO of Chesapeake Utilities Corporation. "This is a win-win for the region as farmers on the Delmarva Peninsula also need an economical way to dispose of agricultural waste, prevent runoff into local waters, and enrich the soil to increase future agricultural production."
"The clean energy produced at each facility will reduce 550,000 tons annually of greenhouse gas emission equivalents (equal to removing 107,795 gasoline-fueled vehicles off the road)" said Donal Buckley, CleanBay's Chief Executive Officer.
The Westover facility is scaled to be large enough to process meaningful quantities of poultry litter and will include more than $200 million of capital investment by CleanBay. Site preparation is underway, and construction is scheduled to begin later this year.
As Chesapeake Utilities Corporation and its subsidiaries continue to move forward with regional expansion, the goal is to create a renewable natural gas ecosystem directly connected to Chesapeake Utilities' infrastructure. These envisioned direct connection point investments by Chesapeake Utilities will provide the Delmarva community with access to sustainable renewable natural gas at the same time generating regional greenhouse gas reductions.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange, which is engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas (CNG) utility services and solutions; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
About CleanBay Renewables Inc.
Founded in 2013, CleanBay Renewables Inc. is an enviro-tech company that harnesses science, technology and economics to tilt the balance back in favor of nature, while protecting the agricultural sector that provides a vital service to humanity. For more information, visit https://cleanbayrenewables.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
Chesapeake Utilities Corporation
302.217.7050
jmulcahy@chpk.com
Andy Hallmark
Outreach Director
CleanBay Renewables
Andy@cleanbayrenewables.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-partners-with-cleanbay-renewables-to-increase-sustainable-energy-in-the-delmarva-community-301089370.html
SOURCE Chesapeake Utilities Corporation
Article Date
7/7/2020Chesapeake Utilities Corporation (NYSE: CPK) Reiterates It Is Not Affiliated With Chesapeake Energy Corporation
Source: PR Newswire
DOVER, Del., June 10, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation ("Chesapeake Utilities") is an energy delivery company publicly traded on the New York Stock Exchange under the ticker symbol "CPK" (NYSE:CPK). As previously disclosed, Chesapeake Utilities is not, nor has it ever been, affiliated with Chesapeake Energy Corporation.
Chesapeake Utilities Corporation is headquartered in Delaware with operations primarily in the Mid-Atlantic region, Florida and Ohio. Chesapeake Utilities' operations consist of a diversified portfolio of energy delivery businesses including natural gas distribution and transmission; electricity generation and distribution; propane gas operations; mobile Compressed Natural Gas services; and other businesses. Chesapeake Utilities recently announced its latest project which includes entry and investment into the Renewable Natural Gas arena.
Chesapeake Energy Corporation is headquartered in Oklahoma City, Oklahoma, with operations focused on discovering and developing a geographically diverse resource base of unconventional oil and natural gas assets onshore in the United States.
Information about Chesapeake Utilities and its family of businesses is available at www.chpk.com or through its Investor Relations App.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
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SOURCE Chesapeake Utilities Corporation
Article Date
6/10/2020Chesapeake Utilities Corporation Announces New Officer Appointments
Source: PR Newswire
DOVER, Del., May 27, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK), announced today the appointment of Danielle Mulligan to Assistant Vice President of Communications and Marketing for Chesapeake Utilities Corporation and Kevin McCrackin to Assistant Vice President of Business Development for Chesapeake Utilities Corporation and Vice President of Marlin Gas Services.
Ms. Mulligan is responsible for overseeing the Company's communications campaigns to drive internal and external transparency, shape public and energy industry discussions and develop and enhance the Company's reputation. Mr. McCrackin oversees Marlin Gas Services, the Company's mobile CNG transportation business, and the coordination of various business development activities Company-wide.
"Danielle and Kevin are both proven, results-oriented leaders with extensive energy industry experience who will play key leadership roles in advancing the Company's strategies for growth," said Jeff Householder, President and Chief Executive Officer for Chesapeake Utilities Corporation. "These well-deserved promotions recognize Danielle and Kevin for their contributions to Chesapeake Utilities and I look forward to their continued success to positively impact our Company in these critical areas moving forward."
Ms. Mulligan, in her previous roles as Director of Communications and Marketing for Chesapeake Utilities Corporation and Director of Marketing and Energy Conservation for Florida Public Utilities Company (FPU), coordinated communications campaigns for Company-wide initiatives, including the response to Hurricanes Michael and Irma, preparations for Hurricane Dorian and the communications strategy during the current COVID-19 pandemic. She has served as the Vice-Chair of the Growth & Retention Managing Section Committee for the Southern Gas Association (SGA) and as Chair of the Marketing Committee for the Florida Natural Gas Association (FNGA), which named her the 2018 Fred Pryor Marketing Person of the Year. Ms. Mulligan earned a Bachelor of Science in Business Marketing and is currently working on her Master of Strategic Public Relations at George Washington University.
Mr. McCrackin previously served as Director of CNG and LNG for Chesapeake Utilities. Mr. McCrackin has extensive regulated and unregulated business and market development experience in large and complex capital intensive projects, commodity-based products, and complex customer experience and operational processes. Prior to joining Chesapeake Utilities, he was Vice President of Fortress Investment Group (New Fortress Energy) where he identified and developed LNG plants; midstream and gathering pipelines and processing; CNG and LNG transportation services and technologies; and distributed generation. Mr. McCrackin also previously served as Vice President of Utility Marketing at AGL Resources where he was responsible for the utility marketing and sales, business development, midstream development, market research, CNG/NGV, CNG station maintenance and emerging technologies across the seven utilities that made up AGL's Distribution Operations. Mr. McCrackin holds a Master of Science in Administration – Economics from Central Michigan University and a Bachelor of Science degrees in Business Administration in Accounting from Wayne State University and Chemical Engineering from the University of Michigan.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
View original content to download multimedia:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-new-officer-appointments-301066051.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/27/20205/14/2020 - Chesapeake Utilities Corporation To Host Live Webcast During 2020 AGA Virtual Financial Forum
Chesapeake Utilities Corporation To Host Live Webcast During 2020 AGA Virtual Financial Forum
Source: PR Newswire
DOVER, Del., May 14, 2020 /PRNewswire/ -- The Company announced today that Jeffry M. Householder, President & CEO, Beth W. Cooper, Executive Vice President & CFO, and James F. Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy & Risk Officer of Chesapeake Utilities Corporation (NYSE: CPK) will be hosting a live webcast at 11:00 am EST (Eastern Standard Time) on Tuesday, May 19th during the 2020 AGA Financial Forum. Webcast participants will learn about the projects the Company currently has underway and other strategic initiatives which position the Company for future growth.
To listen to the live webcast, visit Chesapeake's website at www.chpk.com, click on Investors/Events and Webcasts/Other Events then click on the "2020 AGA Financial Forum Presentation" link or just click the following: Listen to Webcast. You will be prompted to register for the webcast that will start promptly at 11:00 am EST where the live audio and slides of the presentation being given will be available.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Heidi W. Watkins
Shareholder Services Manager
302.734.6716
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-live-webcast-during-2020-aga-virtual-financial-forum-301059821.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/14/2020Chesapeake Utilities Corporation Raises Dividend By 8.6 Percent
Source: PR Newswire
DOVER, Del., May 7, 2020 /PRNewswire/ -- At their meeting held today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) voted to increase the quarterly cash dividend on the Company's common stock from $0.405 per share to $0.44 per share. The Board's action raises the 2020 annualized dividend $0.14 per share from $1.62 to $1.76 per share, which represents an 8.6 percent increase. The $0.44 per share dividend will be payable July 6, 2020 to all shareholders of record at the close of business on June 15, 2020.
"We continue to seek opportunities to reinvest our retained earnings while also growing our dividend at a rate that represents top quartile performance. Over the last five years, we have made significant capital investments that have fueled our earnings growth while providing dividend growth in the top 10 percent of the utility industry. The $0.14 per share increase in the annualized dividend aligns our five-year earnings growth rate of 9.4 percent from continuing operations with our five-year dividend growth rate of 8.9 percent including this most recent increase," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation.
"The Board's dividend decision reflects the Company's commitment to dividend growth supported by earnings growth, while still maintaining ample liquidity to drive growth and fund operations. The Board and the entire organization reiterate our unwavering commitment to keeping employees, their families, our customers and our communities as safe as possible during these unprecedented times. Chesapeake Utilities provides an essential service to our customers and we are doing everything we can to ensure the uninterrupted delivery of energy services upon which our customers and communities rely," Mr. Householder added.
Chesapeake has paid dividends to its shareholders without interruption for 59 years. This latest increase represents the 17th consecutive year in which the dividend has been increased, and will result in Chesapeake having doubled its annualized dividend over the last ten years.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-raises-dividend-by-8-6-percent-301055182.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/7/2020Chesapeake Utilities Corporation Reports First Quarter 2020 Results
Source: PR Newswire
DOVER, Del., May 6, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced its first quarter financial results. The Company's net income for the quarter ended March 31, 2020 was $28.9 million, compared to $28.7 million for the same quarter of 2019. Earnings per share for the quarter ended March 31, 2020 increased $0.02 to $1.76 per share, compared to the same quarter of 2019.
Earnings for the first quarter reflect increased gross margin from recently completed and ongoing pipeline expansion projects, incremental margins from the acquisition of certain assets of Boulden Inc. ("Boulden"), organic growth in the natural gas distribution operations and higher retail propane margins. Weather during the first quarter, was 20 and 17 percent warmer than the first quarter of 2019 on the Delmarva Peninsula and in Ohio, respectively, which was a significant driver of lower consumption and reduced net income by $3.1 million, or $0.19 per share. The weather impact was essentially offset by gains from two property sales totaling $2.3 million on an after tax basis. The property sales related to operations which have been consolidated into the Company's state-of-the-art Energy Lane campus and through the completion of the conversion of the piped propane system in Ocean City, Maryland to natural gas service. Also absent from the Company's first quarter results was regulatory relief associated with Hurricane Michael. The Company filed a limited proceeding with the Florida Public Service Commission ("PSC") in August 2019 and continues to engage in discussions with the Florida PSC staff and the Office of Public Counsel and expects a final ruling in the second half of 2020. Interim rates related to this limited proceeding were implemented in January 2020 and have been fully reserved pending final resolution with the Florida PSC.
On March 13, 2020, the U.S. Centers for Disease Control and Prevention ("CDC") declared a national emergency due to the rapidly growing outbreak of a novel strain of coronavirus ("COVID-19"). In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country have imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. These restrictions have significantly impacted economic conditions in the United States, and the economic impact is expected to continue as long as the social distancing restrictions remain in place. Chesapeake Utilities is considered an "essential business," which allows the Company to continue its operational activities and construction projects while the social distancing restrictions remain in place. In response to the COVID-19 pandemic and related restrictions, the Company implemented its pandemic response plan, which includes having all employees who can work remotely do so in order to promote social distancing and providing personal protective equipment to field employees to reduce the spread of COVID-19. For the first quarter of 2020, the COVID-19 impact on the Company was immaterial, as slightly lower gross margin was offset by lower operating expenses. The Company is committed to communicating timely updates and will continue to monitor developments affecting its employees, its customers, its suppliers and shareholders and take additional precautions as warranted to operate safely and to comply with the CDC, state and local requirements in order to protect its employees, customers and communities.
"I am pleased with the Company's strong performance during the first quarter despite the many challenges that we faced. Achieving increased performance quarter-over-quarter was a significant accomplishment in the face of significantly warmer temperatures, the absence of regulatory relief associated with Hurricane Michael and the onset of the COVID-19 outbreak. Our employees continue to generate increased performance for the Company, while remaining committed to each other and our customers. Our growth projects are moving forward even in the midst of COVID-19 and we continue to target the higher EPS guidance through 2022 that we introduced in February 2020," stated Jeffry M. Householder, President and Chief Executive Officer. "While our commitment to generating increased shareholder value through continued earnings growth remains at the forefront of our decision making, equally as important during this unprecedented time, have been the decisions and actions we have taken across our special Company to maintain the safety and wellbeing of our employees and their families, to ensure delivery of the essential services our customers expect from us, and to provide financial support in these challenging times to our local communities. We have responded in this fashion not because it's the right thing to do, but because we do this every day. It is part of 'our special sauce'."
Capital Expenditures Forecast and Earnings Guidance Update
In February 2020, the Company reaffirmed its capital expenditures projection of $750 million - $1 billion of capital expenditures from 2018-2022. Additionally, the Company updated its previous EPS guidance increasing the forecasted range for 2022 to $4.70 to $4.90 given the investments already made, those underway and the growth prospects included in the Company's strategic growth plan. The Company expects its EPS should grow at an average annual rate of 7.75 percent to 9.50 percent. The Company has continued to review its projections and is supportive of this guidance, after taking into consideration its strategic plan, the impact of COVID-19 and the anticipated regulatory relief and opportunities for continued collaboration across the enterprise. The Company has historically achieved an average earnings growth at or above this range and therefore continues to view its long-term growth prospects as comparable to its historical growth.
*Unless otherwise noted, EPS information is presented on a diluted basis.
**This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin. 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 "gross margin" by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance.
Operating Results for the Quarters Ended March 31, 2020 and 2019
Consolidated Results
Three Months Ended | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 99,841 | $ | 99,537 | $ | 304 | 0.3 | % | ||||||
Depreciation, amortization and property taxes | 17,009 | 15,357 | 1,652 | 10.8 | % | |||||||||
Other operating expenses | 40,719 | 40,056 | 663 | 1.7 | % | |||||||||
Operating income | $ | 42,113 | $ | 44,124 | $ | (2,011) | (4.6) | % | ||||||
Operating income during the first quarter of 2020 decreased by $2.0 million, or 4.6 percent, compared to the same period in 2019. The decrease in operating income was principally driven by warmer weather in the first quarter of 2020 which reduced gross margin by $4.2 million compared to the prior year quarter. This decrease was largely offset by higher earnings from the Company's organic growth projects and contributions from the December 2019 acquisition of certain propane assets of Boulden.
Regulated Energy Segment
Three Months Ended | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 68,123 | $ | 67,102 | $ | 1,021 | 1.5 | % | ||||||
Depreciation, amortization and property taxes | 13,758 | 12,531 | 1,227 | 9.8 | % | |||||||||
Other operating expenses | 26,477 | 24,830 | 1,647 | 6.6 | % | |||||||||
Operating income | $ | 27,888 | $ | 29,741 | $ | (1,853) | (6.2) | % | ||||||
Operating income for the Regulated Energy segment for the first quarter of 2020 was $27.9 million, a decrease of $1.9 million or 6.2 percent over the same period in 2019. Higher gross margin from organic growth in the Company's natural gas distribution businesses and expansion projects completed by Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), the Company's intrastate transmission subsidiary, were partially offset by the absence of tax savings recorded in the first quarter of 2019 (related to 2018) and lower margin from decreased consumption of natural gas attributable to warmer temperatures. Increased operating expenses and depreciation, amortization and property taxes reflect the higher level of capital invested in growth and expansion projects, as well as increased non-health insurance premiums.
The key components of the increase in gross margin are shown below:
(in thousands) | |||
Natural gas distribution growth (excluding service expansions) | $ | 1,096 | |
Peninsula Pipeline service expansions | 1,039 | ||
Tax savings (net of Gas Reliability Infrastructure Program ("GRIP") refunds) recorded in Q1 2019 for | (910) | ||
Decreased customer consumption - primarily due to warmer weather | (521) | ||
Other variances | 317 | ||
Quarter-over-quarter increase in gross margin | $ | 1,021 | |
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Insurance expense (non-health) - both insured and self-insured components | $ | 834 | |
Outside services, regulatory, and facilities maintenance costs | 540 | ||
Payroll, benefits and other employee-related expenses | 200 | ||
Other variances | 73 | ||
Quarter-over-quarter increase in other operating expenses | $ | 1,647 | |
Unregulated Energy Segment
Three Months Ended | ||||||||||||||
(in thousands) | 2020 | 2019 | Change | Percent | ||||||||||
Gross margin | $ | 31,803 | $ | 32,542 | $ | (739) | (2.3) | % | ||||||
Depreciation, amortization and property taxes | 3,240 | 2,792 | 448 | 16.0 | % | |||||||||
Other operating expenses | 14,722 | 14,492 | 230 | 1.6 | % | |||||||||
Operating income | $ | 13,841 | $ | 15,258 | $ | (1,417) | (9.3) | % | ||||||
Operating income for the Unregulated Energy segment for the first quarter of 2020 was $13.8 million, a 9.3 percent decrease over the same period in 2019. The decreased operating income reflects $3.7 million in lower gross margin primarily due to the impact of warmer weather during the first quarter of 2020, $0.4 million in higher depreciation, amortization and property taxes and $0.2 million in higher operating expenses. These decreases were partially offset by the incremental margin from the Boulden assets and higher propane retail margins per gallon.
The major components of the decrease in gross margin are shown below:
(in thousands) | Margin Impact | |||
Propane Operations | ||||
Decrease in customer consumption - primarily due to warmer weather | $ | (2,799) | ||
Boulden acquisition (assets acquired in December 2019) | 1,888 | |||
Increased retail propane margins per gallon driven by favorable market conditions and | 1,217 | |||
Aspire Energy of Ohio, LLC ("Aspire Energy") | ||||
Decrease in customer consumption - primarily due to warmer weather | (900) | |||
Higher margins from negotiated rate increases | 388 | |||
Marlin Gas Services, LLC ("Marlin Gas Services") - higher level of pipeline integrity services | (982) | |||
Other variances | 449 | |||
Quarter-over-quarter decrease in gross margin | $ | (739) | ||
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Operating expenses for Boulden (assets acquired in December 2019) | $ | 342 | |
Insurance expense (non-health) - both insured and self-insured components | 194 | ||
Payroll, benefits and other employee-related expenses | (292) | ||
Other variances | (14) | ||
Quarter-over-quarter increase in other operating expenses | $ | 230 | |
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 2019 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the first quarter of 2020 for further information on the risks and uncertainties related to the Company's forward-looking statements. In addition, to the risks and uncertainties identified in the Company's 2019 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the first quarter of 2020, risks and uncertainties related to the COVID-19 pandemic could cause actual future results to differ materially from those expressed in any forward-looking statements, including, but not limited to, the duration and scope of the COVID-19 pandemic and impact on the demand for our services; our ability to obtain needed materials and components from our suppliers; actions governments, business, and individuals take in response to the pandemic, including mandatory business closures and restrictions on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; and general economic uncertainty in the United States' and global markets and a worsening of economic conditions in the United States or low levels of economic growth.
Conference Call
Chesapeake Utilities will host a conference call on Thursday, May 7, 2020 at 4:30 p.m. Eastern Time to discuss the Company's financial results for the three months ended March 31, 2020. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2020 First Quarter Results Conference Call. To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, use the link CPK - Conference Call Audio Replay, or visit the Investors/Events and Presentations section of Company's website at www.chpk.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at https://www.chpk.com or through its Investor Relations (IR) App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
Financial Summary (in thousands, except per share data) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Gross Margin | |||||||
Regulated Energy segment | $ | 68,123 | $ | 67,102 | |||
Unregulated Energy segment | 31,803 | 32,542 | |||||
Other businesses and eliminations | (85) | (107) | |||||
Total Gross Margin | $ | 99,841 | $ | 99,537 | |||
Operating Income | |||||||
Regulated Energy segment | $ | 27,888 | $ | 29,741 | |||
Unregulated Energy segment | 13,841 | 15,258 | |||||
Other businesses and eliminations | 384 | (875) | |||||
Total Operating Income | 42,113 | 44,124 | |||||
Other income (expense), net | 3,318 | (57) | |||||
Interest Charges | 5,814 | 5,628 | |||||
Income from Continuing Operations Before Income Taxes | 39,617 | 38,439 | |||||
Income Taxes on Continuing Operations | 10,591 | 9,625 | |||||
Income from Continuing Operations | 29,026 | 28,814 | |||||
Loss from Discontinued Operations (1) | (96) | (150) | |||||
Net Income | $ | 28,930 | $ | 28,664 | |||
Basic Earnings Per Share of Common Stock | |||||||
Earnings from Continuing Operations | $ | 1.77 | $ | 1.76 | |||
Loss from Discontinued Operations (1) | (0.01) | (0.01) | |||||
Basic Earnings Per Share of Common Stock | $ | 1.76 | $ | 1.75 | |||
Diluted Earnings Per Share of Common Stock | |||||||
Earnings from Continuing Operations | $ | 1.77 | $ | 1.75 | |||
Loss from Discontinued Operations (1) | (0.01) | (0.01) | |||||
Diluted Earnings Per Share of Common Stock | $ | 1.76 | $ | 1.74 | |||
(1) During the fourth quarter of 2019, the Company completed the sale of assets and contracts of Peninsula Energy Services Company ("PESCO") and exited the natural gas marketing business. As a result, the Company began to report PESCO as discontinued operations during the third quarter of 2019 and excluded its performance from continuing operations for all periods presented. | |||||||
Financial Summary Highlights | ||||||||||||
Key variances in continuing operations, between the three months ended March 31, 2019 and 2020, included: | ||||||||||||
(in thousands, except per share data) | Pre-tax | Net | Earnings | |||||||||
First Quarter of 2019 Reported Results from Continuing Operations | $ | 38,439 | $ | 28,814 | $ | 1.75 | ||||||
Adjusting for Unusual Items and Discontinued Operations: | ||||||||||||
Decreased customer consumption primarily due to warmer weather | (4,220) | (3,092) | (0.19) | |||||||||
Absence of Florida tax savings (net of GRIP refunds) recorded in Q1 2019 for 2018 | (910) | (667) | (0.04) | |||||||||
Gains from sales of assets | 3,162 | 2,317 | 0.14 | |||||||||
(1,968) | (1,442) | (0.09) | ||||||||||
Increased (Decreased) Gross Margins: | ||||||||||||
Margin contribution from Boulden acquisition (completed December 2019)* | 1,888 | 1,383 | 0.08 | |||||||||
Increased retail propane margins per gallon | 1,217 | 892 | 0.05 | |||||||||
Natural gas distribution growth (excluding service expansions) | 1,096 | 803 | 0.05 | |||||||||
Peninsula Pipeline service expansions* | 1,039 | 761 | 0.05 | |||||||||
Higher Aspire Energy margins from negotiated rate increases | 388 | 284 | 0.02 | |||||||||
Marlin Gas Services - higher level of pipeline integrity services for existing | (982) | (720) | (0.04) | |||||||||
4,646 | 3,403 | 0.21 | ||||||||||
(Increased) Decreased Operating Expenses (Excluding Cost of Sales): | ||||||||||||
Depreciation, amortization and property tax costs due to new capital investments | (1,347) | (987) | (0.06) | |||||||||
Insurance expense (non-health) - both insured and self-insured | (1,028) | (753) | (0.05) | |||||||||
Operating expenses from Boulden acquisition (completed December 2019) | (535) | (392) | (0.02) | |||||||||
Facilities maintenance costs and outside services | (462) | (338) | (0.02) | |||||||||
Payroll, Benefits and other employee-related expenses | 1,293 | 947 | 0.06 | |||||||||
(2,079) | (1,523) | (0.09) | ||||||||||
Interest Charges | (186) | (136) | (0.01) | |||||||||
Other income tax effects | — | (651) | (0.04) | |||||||||
Net other changes | 765 | 561 | 0.04 | |||||||||
579 | (226) | (0.01) | ||||||||||
First Quarter of 2020 Reported Results from Continuing Operations | $ | 39,617 | $ | 29,026 | $ | 1.77 | ||||||
*See the Major Projects and Initiatives table later in this press release. | ||||||||||||
Recently Completed and Ongoing Major Projects and Initiatives | ||||||||||||||||||||
Gross Margin for the Period | ||||||||||||||||||||
Three Months Ended | Year Ended | Estimate for | ||||||||||||||||||
Project/Initiative | March 31, | December 31, | Fiscal | |||||||||||||||||
in thousands | 2020 | 2019 | 2019 | 2020 | 2021 | |||||||||||||||
Expansions: | ||||||||||||||||||||
Western Palm Beach County, Florida Expansion - including | $ | 1,000 | $ | 131 | $ | 2,139 | $ | 5,227 | $ | 5,227 | ||||||||||
Del-Mar Energy Pathway - including interim services | 189 | 165 | 731 | 2,512 | 4,100 | |||||||||||||||
Auburndale | 170 | — | 283 | 679 | 679 | |||||||||||||||
Callahan Intrastate Pipeline | — | — | — | 3,219 | 6,400 | |||||||||||||||
Guernsey Power Station | — | — | — | — | 700 | |||||||||||||||
Marlin Gas Services | 1,347 | 2,329 | 5,410 | 6,400 | 7,000 | |||||||||||||||
Total Expansions | 2,706 | 2,625 | 8,563 | 18,037 | 24,106 | |||||||||||||||
Acquisitions: | ||||||||||||||||||||
Boulden Propane | 1,888 | — | 329 | 3,800 | 4,200 | |||||||||||||||
Elkton Gas Company | — | — | — | TBD | TBD | |||||||||||||||
Total Acquisitions | 1,888 | — | 329 | 3,800 | 4,200 | |||||||||||||||
Regulatory Initiatives | ||||||||||||||||||||
Florida GRIP (1) | 3,695 | 3,782 | 13,528 | 14,858 | 15,831 | |||||||||||||||
Hurricane Michael regulatory proceeding | — | — | — | TBD | TBD | |||||||||||||||
Total Regulatory Initiatives | 3,695 | 3,782 | 13,528 | 14,858 | 15,831 | |||||||||||||||
Total | $ | 8,289 | $ | 6,407 | $ | 22,420 | $ | 36,695 | $ | 44,137 | ||||||||||
(1) In the first quarter of 2020, the Company recorded a reduction in depreciation expense totaling $0.3 million, as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. The Company also recorded $0.2 million in lower GRIP margin due to a concurrent reduction in the surcharge collected from customers as a result of the reduced depreciation rates during the first quarter of 2020. | ||||||||||||||||||||
Detailed Discussion of Major Projects and Initiatives
Expansions
Western Palm Beach County, Florida Expansion
Peninsula Pipeline is constructing four transmission lines to bring additional natural gas to our distribution system in West Palm Beach, Florida. The first phase of this project was placed into service in December 2018 and generated incremental gross margin of $0.9 million, including interim services, for the three months ended March 31, 2020 compared to 2019. The Company expects to complete the remainder of the project in phases through the third quarter of 2020, and estimates that the project will generate gross margin of $5.2 million in 2020 and beyond.
Del-Mar Energy Pathway
In December 2019, the Federal Energy Regulatory Commission issued an order approving the construction of the Del-Mar Energy Pathway project. Eastern Shore anticipates that this project will be fully in-service by the beginning of the fourth quarter of 2021. The new facilities will: (i) ensure an additional 14,300 Dekatherms per day ("Dts/d") of firm service to four customers, (ii) provide additional natural gas transmission pipeline infrastructure in eastern Sussex County, Delaware, and (iii) represent the first extension of Eastern Shore's pipeline system into Somerset County, Maryland. Construction on the project began in January 2020, and interim services in advance of this project generated $0.2 million of gross margin for the three months ended March 31, 2020. The estimated annual gross margin from this project is approximately $2.5 million in 2020, $4.1 million in 2021 and $5.1 million annually thereafter.
Auburndale
In August 2019, the Florida PSC approved Peninsula Pipeline's Transportation Service Agreement with the Florida Division of Chesapeake Utilities. Peninsula Pipeline purchased an existing pipeline owned by the Florida Division of Chesapeake Utilities and Calpine, and has completed the construction of pipeline facilities in Polk County, Florida. Peninsula Pipeline provides transportation service to the Florida Division of Chesapeake Utilities increasing both delivery capacity and downstream pressure as well as introducing a secondary source of natural gas for the Florida Division of Chesapeake Utilities' distribution system. Peninsula Pipeline generated gross margin from this project of $0.2 million for the three months ended March 31, 2020 and expects to generate annual gross margin of $0.7 million in 2020 and beyond.
Callahan Intrastate Pipeline
In May 2018, Peninsula Pipeline announced a plan to construct a jointly owned intrastate transmission pipeline with Seacoast Gas Transmission in Nassau County, Florida. The 26-mile pipeline will serve growing demand in both Nassau and Duval Counties. Construction of the project is ongoing and it is expected to be placed in-service during the third quarter of 2020. Peninsula Pipeline expects to generate gross margin of $3.2 million in 2020 and $6.4 million annually thereafter.
Guernsey Power Station
Guernsey Power Station, LLC ("Guernsey Power Station") and the Company's affiliate, Aspire Energy Express, LLC ("Aspire Energy Express"), entered into a precedent firm transportation capacity agreement whereby Guernsey Power Station will construct a power generation facility and Aspire Energy Express will provide natural gas transportation service to this facility. Guernsey Power Station commenced construction of the project in October 2019. Aspire Energy Express is expected to commence construction of the gas transmission facilities to provide the firm transportation service to the power generation facility in the second quarter of 2021. This project is expected to produce gross margin of approximately $0.7 million in 2021 and $1.5 million for 2022 and beyond.
Marlin Gas Services
Marlin Gas Services provides temporary hold services, pipeline integrity services, emergency services for damaged pipelines and specialized gas services for customers who have unique requirements. We estimate that Marlin Gas Services will generate annual gross margin of approximately $6.4 million in 2020 and $7.0 million in 2021, with the potential for additional growth in future years. Marlin Gas Services continues to actively expand the territories it serves, as well as leverage its patented technology to serve liquefied natural gas transportation needs and to aid in the transportation of renewable natural gas from the diverse supply sources to various pipeline interconnection points.
Acquisitions
Boulden Propane
In December 2019, Sharp Energy, Inc. ("Sharp"), the Company's wholly-owned subsidiary, acquired certain propane customers and operating assets of Boulden which provides propane distribution service to approximately 5,200 customers in Delaware, Maryland and Pennsylvania. The customers and assets acquired from Boulden have been assimilated into Sharp. The operations acquired from Boulden generated $1.9 million of incremental gross margin for the three months ended March 31, 2020. The Company estimates that this acquisition will generate additional gross margin of approximately $3.8 million in 2020, and $4.2 million in 2021, with the potential for additional growth in future years.
Elkton Gas Company
In December 2019, the Company entered into an agreement with South Jersey Industries, Inc. ("SJI") to acquire Elkton Gas Company, which provides natural gas distribution service to approximately 7,000 residential and commercial customers in Cecil County, Maryland contiguous to the existing franchise territory in Cecil County. The acquisition is expected to close in the third quarter of 2020, subject to approval by the Maryland PSC.
Regulatory Initiatives
Florida GRIP
Florida GRIP is a natural gas pipe replacement program approved by the Florida PSC that allows automatic recovery, through rates, of costs associated with the replacement of mains and services. Since the program's inception in August 2012, the Company has invested $148.7 million of capital expenditures to replace 303 miles of qualifying distribution mains, including $4.8 million of new pipes during the first three months of 2020. GRIP gross margin increased by $0.1 million for the three months ended March 31, 2020 compared to 2019, on a gross basis.
In the first quarter of 2020, the Company recorded a reduction in depreciation expense totaling $0.3 million, as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. The Company also recorded $0.2 million in lower GRIP margin due to a concurrent reduction in the surcharge collected from customers as a result of the reduced depreciation rates during the first quarter of 2020. Including this impact, gross margin generated from Florida GRIP for the first quarter of 2020 decreased on a net basis by $0.1 million.
Hurricane Michael
In October 2018, Hurricane Michael passed through FPU's electric distribution operation's service territory in Northwest Florida. The hurricane caused widespread and severe damage to FPU's infrastructure resulting in 100 percent of its customers in the Northwest Florida service territory losing electrical service. FPU expended more than $65.0 million to restore service as quickly as possible, which has been recorded as new plant and equipment, charged against FPU's accumulated depreciation or charged against FPU's storm reserve. Additionally, amounts currently being reviewed by the Florida PSC for regulatory asset treatment have been recorded as receivables and other deferred charges.
In August 2019, FPU filed a limited proceeding requesting recovery of storm-related costs associated with Hurricane Michael (plant investment and expenses) through a change in base rates. FPU also requested treatment and recovery of certain storm-related costs as a regulatory asset for items currently not allowed to be recovered through the storm reserve as well as the recovery of plant investment replaced as a result of the storm. FPU has proposed an overall return component on both the plant additions and the proposed regulatory assets. In the fourth quarter of 2019, FPU along with the Office of Public Counsel in Florida, filed a joint motion with the Florida PSC to approve an interim rate increase, subject to refund, pending the final ruling on the recovery of the restoration costs incurred. The petition was approved by the Florida PSC in November 2019 and interim rate increases were implemented effective January 2020. At this time, the Company has recorded a reserve for the interim rate increases, pending a final resolution of the proceeding.
In March 2020, FPU filed an update to the original filing to account for actual charges incurred through December 2019, revised the amortization period of the storm-related costs from 30 years as originally requested to 10 years, and included costs related to Hurricane Dorian of approximately $1.2 million in this filing. FPU continues to work with the Florida PSC and the petition is currently on the schedule for approval at the Florida PSC Agenda in September 2020.
Other major factors influencing gross margin
Weather and Consumption
Significantly warmer temperatures during the three months ended March 31, 2020, had a negative impact on gross margin for the quarter. Lower customer consumption, directly attributable to warmer than normal temperatures during the three months ended March 31, 2020, reduced gross margin by $4.2 million compared to the same quarter in 2019 and $5.1 million compared to normal temperatures as defined below. The following table summarizes heating degree day ("HDD") and cooling degree day ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three months ended March 31, 2020 and 2019.
Three Months Ended | ||||||||
March 31, | ||||||||
2020 | 2019 | Variance | ||||||
Delmarva | ||||||||
Actual HDD | 1,859 | 2,322 | (463) | |||||
10-Year Average HDD ("Normal") | 2,349 | 2,362 | (13) | |||||
Variance from Normal | (490) | (40) | ||||||
Florida | ||||||||
Actual HDD | 334 | 361 | (27) | |||||
10-Year Average HDD ("Normal") | 495 | 518 | (23) | |||||
Variance from Normal | (161) | (157) | ||||||
Ohio | ||||||||
Actual HDD | 2,496 | 2,996 | (500) | |||||
10-Year Average HDD ("Normal") | 3,019 | 3,045 | (26) | |||||
Variance from Normal | (523) | (49) | ||||||
Florida | ||||||||
Actual CDD | 226 | 134 | 92 | |||||
10-Year Average CDD ("Normal") | 105 | 97 | 8 | |||||
Variance from Normal | 121 | 37 | ||||||
Natural Gas Distribution Margin Growth
Customer growth for the Company's natural gas distribution operations, as a result of the addition of new customers and the conversion of customers from alternative fuel sources to natural gas service, generated $1.1 million of additional margin for the three months ended March 31, 2020 compared to 2019. The average number of residential customers served on the Delmarva Peninsula and in Florida increased by 3.9 percent and 3.8 percent, respectively, during the first quarter of 2020. Growth in commercial and industrial customers also contributed additional margin during 2020. The details are provided in the following table:
Gross Margin Increase | ||||||||
Three Months Ended March 31, 2020 | ||||||||
Customer growth: | Delmarva Peninsula | Florida | ||||||
Residential | $ | 441 | $ | 223 | ||||
Commercial and industrial | 154 | 278 | ||||||
Total customer growth | $ | 595 | $ | 501 | ||||
Capital Investment Growth and Associated Financing Plans
The Company's capital expenditures were $41.2 million for the three months ended March 31, 2020. The following table shows a range of the 2020 capital expenditures forecast by segment and by business line:
2020 | |||||||
(dollars in thousands) | Low | High | |||||
Regulated Energy: | |||||||
Natural gas distribution | $ | 72,000 | $ | 83,000 | |||
Natural gas transmission | 83,000 | 96,000 | |||||
Electric distribution | 5,000 | 7,000 | |||||
Total Regulated Energy | 160,000 | 186,000 | |||||
Unregulated Energy: | |||||||
Propane distribution | 10,000 | 11,000 | |||||
Energy transmission | 6,000 | 6,000 | |||||
Other unregulated energy | 6,000 | 8,000 | |||||
Total Unregulated Energy | 22,000 | 25,000 | |||||
Other: | |||||||
Corporate and other businesses | 3,000 | 4,000 | |||||
Total Other | 3,000 | 4,000 | |||||
Total 2019 Expected Capital Expenditures | $ | 185,000 | $ | 215,000 | |||
The capital expenditure projection is subject to continuous review and modification. Actual capital requirements may vary from the above estimates due to a number of factors, including changing economic conditions, capital delays because of COVID-19 that are greater than currently anticipated, customer growth in existing areas, regulation, new growth or acquisition opportunities and availability of capital. Historically, actual capital expenditures have typically lagged behind the budgeted amounts.
Management reaffirms its capital expenditure guidance of $750 million to $1 billion for 2018 to 2022. From January 1, 2018 through March 31, 2020, the Company has invested $523.0 million in new capital expenditures.
The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. The Company's equity to total capitalization ratio, including short term borrowings, was 45 percent as of March 31, 2020.
The Company may utilize more temporary short-term debt, when the financing cost is attractive, as a bridge to the permanent long-term financing, or if the equity markets are more volatile. The Company also maintains an effective shelf registration statement with the Securities and Exchange Commission for the issuance of shares under its Dividend Reinvestment and Direct Stock Purchase Plan (the "DRIP"). Depending on the Company's capital needs and subject to market conditions, in addition to other debt and equity offerings, the Company may consider issuing additional shares under the direct stock purchase component of the DRIP.
As of March 31, 2020, the Company had approximately $117 million available under its existing short-term lines of credit and syndicated revolver facility. Since March 31, 2020, to ensure the Company has access to additional debt capital, as needed and also given the uncertainty regarding the length and depth of the impacts of the COVID-19 pandemic, the Company has received commitments for an additional $95 million of short-term debt capacity with four existing lenders. The Company also renewed two of its long-term shelf agreements for $150 million each, for a total availability of $300 million of long-term debt capital. The terms of any financings under these shelf agreements would be negotiated between the parties. More information about these additional lines of credit and the renewal of the respective shelf agreements is included in the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2020.
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Operating Revenues | |||||||
Regulated Energy | $ | 102,955 | $ | 103,618 | |||
Unregulated Energy and other | 49,755 | 56,846 | |||||
Total Operating Revenues | 152,710 | 160,464 | |||||
Operating Expenses | |||||||
Regulated Energy cost of sales | 34,832 | 36,516 | |||||
Unregulated Energy and other cost of sales | 18,036 | 24,411 | |||||
Operations | 35,992 | 35,413 | |||||
Maintenance | 3,836 | 3,680 | |||||
Depreciation and amortization | 12,252 | 10,928 | |||||
Other taxes | 5,649 | 5,392 | |||||
Total operating expenses | 110,597 | 116,340 | |||||
Operating Income | 42,113 | 44,124 | |||||
Other income (expense), net | 3,318 | (57) | |||||
Interest charges | 5,814 | 5,628 | |||||
Income from Continuing Operations Before Income Taxes | 39,617 | 38,439 | |||||
Income Taxes on Continuing Operations | 10,591 | 9,625 | |||||
Income from Continuing Operations | 29,026 | 28,814 | |||||
Loss from Discontinued Operations, Net of Tax (1) | (96) | (150) | |||||
Net Income | $ | 28,930 | $ | 28,664 | |||
Weighted Average Common Shares Outstanding: | |||||||
Basic | 16,414,773 | 16,384,927 | |||||
Diluted | 16,471,827 | 16,432,852 | |||||
Basic Earnings Per Share of Common Stock: | |||||||
Earnings from Continuing Operations | $ | 1.77 | $ | 1.76 | |||
Loss from Discontinued Operations (1) | (0.01) | (0.01) | |||||
Basic Earnings Per Share of Common Stock | $ | 1.76 | $ | 1.75 | |||
Diluted Earnings Per Share of Common Stock: | |||||||
Earnings from Continuing Operations | $ | 1.77 | $ | 1.75 | |||
Loss from Discontinued Operations (1) | (0.01) | (0.01) | |||||
Diluted Earnings Per Share of Common Stock | $ | 1.76 | $ | 1.74 | |||
(1) During the fourth quarter of 2019, the Company completed the sale of assets and contracts of PESCO and has exited the natural gas marketing business. As a result, the Company began to report PESCO as discontinued operations during the third quarter of 2019 and excluded its performance from continuing operations for all periods presented. | |||||||
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
Assets | March 31, 2020 | December 31, 2019 | ||||||
(in thousands, except shares and per share data) | ||||||||
Property, Plant and Equipment | ||||||||
Regulated Energy | $ | 1,447,089 | $ | 1,441,473 | ||||
Unregulated Energy | 274,970 | 265,209 | ||||||
Other businesses and eliminations | 39,370 | 39,850 | ||||||
Total property, plant and equipment | 1,761,429 | 1,746,532 | ||||||
Less: Accumulated depreciation and amortization | (345,206) | (336,876) | ||||||
Plus: Construction work in progress | 75,510 | 54,141 | ||||||
Net property, plant and equipment | 1,491,733 | 1,463,797 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 3,982 | 6,985 | ||||||
Trade and other receivables | 46,730 | 50,899 | ||||||
Less: Allowance for credit losses | (1,421) | (1,337) | ||||||
Trade receivables, net | 45,309 | 49,562 | ||||||
Accrued revenue | 16,931 | 20,846 | ||||||
Propane inventory, at average cost | 5,136 | 5,824 | ||||||
Other inventory, at average cost | 5,621 | 6,067 | ||||||
Regulatory assets | 4,441 | 5,144 | ||||||
Storage gas prepayments | 753 | 3,541 | ||||||
Income taxes receivable | 15,230 | 20,050 | ||||||
Prepaid expenses | 10,707 | 13,928 | ||||||
Derivative assets, at fair value | 151 | — | ||||||
Other current assets | 3,666 | 2,879 | ||||||
Total current assets | 111,927 | 134,826 | ||||||
Deferred Charges and Other Assets | ||||||||
Goodwill | 32,668 | 32,668 | ||||||
Other intangible assets, net | 7,824 | 8,129 | ||||||
Investments, at fair value | 7,217 | 9,229 | ||||||
Operating lease right-of-use assets | 11,696 | 11,563 | ||||||
Regulatory assets | 73,552 | 73,407 | ||||||
Receivables and other deferred charges | 51,602 | 49,579 | ||||||
Total deferred charges and other assets | 184,559 | 184,575 | ||||||
Total Assets | $ | 1,788,219 | $ | 1,783,198 | ||||
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
Capitalization and Liabilities | March 31, 2020 | December 31, 2019 | ||||||
(in thousands, except shares and per share data) | ||||||||
Capitalization | ||||||||
Stockholders' equity | ||||||||
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares | $ | — | $ | — | ||||
Common stock, par value $0.4867 per share (authorized 50,000,000 shares) | 7,998 | 7,984 | ||||||
Additional paid-in capital | 259,521 | 259,253 | ||||||
Retained earnings | 322,804 | 300,607 | ||||||
Accumulated other comprehensive loss | (6,194) | (6,267) | ||||||
Deferred compensation obligation | 5,468 | 4,543 | ||||||
Treasury stock | (5,468) | (4,543) | ||||||
Total stockholders' equity | 584,129 | 561,577 | ||||||
Long-term debt, net of current maturities | 440,183 | 440,168 | ||||||
Total capitalization | 1,024,312 | 1,001,745 | ||||||
Current Liabilities | ||||||||
Current portion of long-term debt | 15,600 | 45,600 | ||||||
Short-term borrowing | 254,339 | 247,371 | ||||||
Accounts payable | 52,568 | 54,068 | ||||||
Customer deposits and refunds | 29,122 | 30,939 | ||||||
Accrued interest | 5,014 | 2,554 | ||||||
Dividends payable | 6,655 | 6,644 | ||||||
Accrued compensation | 7,518 | 16,236 | ||||||
Regulatory liabilities | 13,524 | 5,991 | ||||||
Derivative liabilities, at fair value | 1,986 | 1,844 | ||||||
Other accrued liabilities | 16,170 | 12,077 | ||||||
Total current liabilities | 402,496 | 423,324 | ||||||
Deferred Credits and Other Liabilities | ||||||||
Deferred income taxes | 186,431 | 180,656 | ||||||
Regulatory liabilities | 128,027 | 127,744 | ||||||
Environmental liabilities | 6,046 | 6,468 | ||||||
Other pension and benefit costs | 28,043 | 30,569 | ||||||
Operating lease - liabilities | 10,165 | 9,896 | ||||||
Deferred investment tax credits and other liabilities | 2,699 | 2,796 | ||||||
Total deferred credits and other liabilities | 361,411 | 358,129 | ||||||
Environmental and other commitments and contingencies (1) | ||||||||
Total Capitalization and Liabilities | $ | 1,788,219 | $ | 1,783,198 | ||||
(1)Refer to Note 6 and 7 in the Company's Quarterly Report on Form 10-Q for further information. | ||||||||
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2020 | For the Three Months Ended March 31, 2019 | |||||||||||||||||||||||||||||||
Delmarva NG Distribution | Chesapeake Utilities Florida NG Division | FPU NG Distribution | FPU Electric Distribution | Delmarva NG Distribution | Chesapeake Utilities Florida NG Division | FPU NG Distribution | FPU Electric Distribution | |||||||||||||||||||||||||
Operating Revenues (in thousands) | ||||||||||||||||||||||||||||||||
Residential | $ | 28,878 | $ | 1,861 | $ | 11,198 | $ | 7,227 | $ | 29,971 | $ | 1,785 | $ | 10,720 | $ | 9,859 | ||||||||||||||||
Commercial | 12,239 | 1,784 | 7,972 | 6,948 | 13,141 | 1,738 | 7,707 | 7,816 | ||||||||||||||||||||||||
Industrial | 2,396 | 3,338 | 7,669 | 64 | 2,388 | 3,266 | 5,994 | 610 | ||||||||||||||||||||||||
Other (1) | (1,517) | 1,494 | (1,395) | (19) | (822) | 1,111 | (635) | (3,907) | ||||||||||||||||||||||||
Total Operating | $ | 41,996 | $ | 8,477 | $ | 25,444 | $ | 14,220 | $ | 44,678 | $ | 7,900 | $ | 23,786 | $ | 14,378 | ||||||||||||||||
Volume (in Dts for natural gas and KWHs for electric) | ||||||||||||||||||||||||||||||||
Residential | 1,909,131 | 139,189 | 516,933 | 64,947 | 2,220,375 | 132,872 | 505,326 | 65,511 | ||||||||||||||||||||||||
Commercial | 1,540,111 | 1,199,123 | 519,583 | 64,679 | 1,653,320 | 1,248,764 | 504,046 | 61,829 | ||||||||||||||||||||||||
Industrial | 1,324,409 | 7,714,393 | 1,363,365 | 11,612 | 1,511,308 | 7,333,850 | 1,347,237 | 7,750 | ||||||||||||||||||||||||
Other | 76,914 | — | 588,813 | — | 17,859 | — | 555,391 | — | ||||||||||||||||||||||||
Total | 4,850,565 | 9,052,705 | 2,988,694 | 141,238 | 5,402,862 | 8,715,486 | 2,912,000 | 135,090 | ||||||||||||||||||||||||
Average Customers | ||||||||||||||||||||||||||||||||
Residential | 76,870 | 17,661 | 58,937 | 24,893 | 73,976 | 16,988 | 56,829 | 24,379 | ||||||||||||||||||||||||
Commercial | 7,244 | 1,581 | 3,981 | 7,260 | 7,148 | 1,529 | 3,897 | 7,232 | ||||||||||||||||||||||||
Industrial | 173 | 16 | 2,498 | 2 | 168 | 17 | 2,415 | 2 | ||||||||||||||||||||||||
Other | 18 | — | 14 | — | 9 | — | 12 | — | ||||||||||||||||||||||||
Total | 84,305 | 19,258 | 65,430 | 32,155 | 81,301 | 18,534 | 63,153 | 31,613 | ||||||||||||||||||||||||
(1) Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties and adjustments for pass-through taxes. | ||||||||||||||||||||||||||||||||
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-reports-first-quarter-2020-results-301054310.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/6/20204/22/2020 - Chesapeake Utilities Corporation To Host Conference Call To Review First Quarter 2020 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review First Quarter 2020 Financial Results
Source: PR Newswire
DOVER, Del., April 22, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Thursday, May 7, 2020, at 4:30 p.m. ET to discuss the Company's financial results for the first quarter of 2020. The earnings press release will be issued on Wednesday, May 6, 2020, after the market closes.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2020 First Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-first-quarter-2020-financial-results-301045570.html
SOURCE Chesapeake Utilities Corporation
Article Date
4/22/20204/7/2020 - Chesapeake Utilities Corporation to Participate In SunTrust Robinson Humphrey Midstream Summit
Chesapeake Utilities Corporation to Participate In SunTrust Robinson Humphrey Midstream Summit
Source: PR Newswire
DOVER, Del., April 7, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today announced that Beth Cooper, Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary and Tom Mahn, Vice President and Treasurer, will be participating in a virtual conference sponsored by SunTrust Robinson Humphrey on April 7, 2020. Ms. Cooper and Mr. Mahn will provide one-on-one virtual presentations to separate investors.
Chesapeake's presentation for the conference is available on the Company's website at www.chpk.com in the "Investors" section under the sub-tab "Events and Presentations" and the Investor Relations App.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
bcooper@chpk.com
or
Tom Mahn
Vice President and Treasurer
302.734.6799
tmahn@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-participate-in-suntrust-robinson-humphrey-midstream-summit-301036741.html
SOURCE Chesapeake Utilities Corporation
Article Date
4/7/2020Chesapeake Utilities Corporation Donating $200,000 to Support Communities During Coronavirus Response
Source: PR Newswire
DOVER, Del., April 2, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today announced the Company will donate $200,000 to support response and relief organizations assisting communities affected by the COVID-19 pandemic. The Company also announced a special one-time grant from its SHARING program for customers economically impacted by the spread of the coronavirus. The SHARING program is a nonprofit organization assisting natural gas and propane gas customers living on the Delmarva Peninsula who need financial assistance to pay their gas and propane bills.
"At Chesapeake Utilities, we care about the communities we serve, and we recognize the personal impact and uncertainty the unprecedented COVID-19 pandemic has had on our customers," said Jeff Householder, President and Chief Executive Officer for Chesapeake Utilities Corporation. "Our new COVID-19 SHARING grant helps customers facing financial hardships. These donations will help support organizations such as Feeding America, United Way and The Salvation Army as they provide food assistance, financial resources and address short-term and long-term community needs."
Chesapeake Utilities has taken several steps to assist its customers during the COVID-19 pandemic. To minimize potential financial hardships, the Company's regulated businesses suspended service disconnections and waived late payment fees until at least May 1, 2020. As a reminder to customers, the Company provides alternate payment options such as pay by mail, online, over the phone and through various retail cash payment locations. The Company's subsidiary, Florida Public Utilities Company (FPU), offers special payment schedules for customers who need assistance paying their bills. In addition, FPU's Budget Billing program allows customers to manage their monthly energy costs by averaging payments over a 12-month period.
For important customer information and updates on the Company's coronavirus response, customers are encouraged to visit www.CHPKResponds.com.
To learn more about Chesapeake Utilities' SHARING program or to apply for the COVID-19 grant, go to www.chesapeakesharing.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy delivery company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-donating-200-000-to-support-communities-during-coronavirus-response-301034219.html
SOURCE Chesapeake Utilities Corporation
Article Date
4/2/20203/16/2020 - Chesapeake Utilities Corporation Takes Actions to Protect Community During Coronavirus Pandemic
Chesapeake Utilities Corporation Takes Actions to Protect Community During Coronavirus Pandemic
Source: PR Newswire
DOVER, Del., March 16, 2020 /PRNewswire/ -- In light of the national emergency declaration over the COVID-19 pandemic, Chesapeake Utilities Corporation (NYSE: CPK) today announced the Company has taken several preventative measures to help keep employees, customers and communities safe. The Company's Pandemic Response Plan follows the guidance and recommendations of federal, state and local governments, health authorities and relevant industry agencies. Based on recent developments, all walk-in customer access to any of Chesapeake's natural gas, propane or electric office locations has been temporarily suspended effective at the close of business today. This suspension of walk-in traffic will continue until the COVID-19 risk has subsided.
"The health, wellness and safety of our employees, customers and communities is our top priority," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Our thoughts are with all those who have been affected by the virus, and we recognize the uncertainty and personal impact this situation may have on our customers. We will continue to take additional steps as needed to help limit the spread of the virus in our communities, but we will keep our customers in mind as we make those decisions."
For important customer information and updates on the Company's coronavirus response, customers are encouraged to visit Chesapeake's landing page at CHPKResponds.com.
Chesapeake is taking several steps to assist its customers during the Covid-19 Pandemic. To minimize potential financial hardships, the Company's regulated businesses are suspending service disconnections and waiving late payment fees until at least May 1, 2020. As a reminder to customers, the Company provides alternate payment options such as pay by mail, online, over the phone and through various retail cash payment locations. Chesapeake's subsidiary, Florida Public Utilities Company (FPU), offers special payment schedules for customers who need assistance paying their bill. In addition, FPU's Budget Billing program allows customers to manage their monthly energy costs by averaging payments over a 12-month period.
Chesapeake also supports its customers through its SHARING program, a nonprofit organization that provides funds to the Company's natural gas and propane gas customers living on the Delmarva Peninsula who need financial assistance to pay their gas and propane bills. Annual grants for as much as $1,000 are available to customers who meet the specific requirements. To learn more about SHARING as well as LIHEAP, the Low-Income Home Energy Assistance Program, go to www.chesapeakesharing.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-takes-actions-to-protect-community-during-coronavirus-pandemic-301025102.html
SOURCE Chesapeake Utilities Corporation
Article Date
3/16/2020Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
DOVER, Del., Feb. 26, 2020 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.405 per share on the Company's common stock. The $0.405 per share dividend will be paid on April 6, 2020 to all shareholders of record at the close of business on March 13, 2020.
Chesapeake has paid dividends to its shareholders without interruption for 59 years. During those 59 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-quarterly-dividend-301011987.html
SOURCE Chesapeake Utilities Corporation
Article Date
2/26/2020Chesapeake Utilities Corporation To Host Conference Call To Review Fourth Quarter And Annual 2019 Financial Results
Source: PR Newswire
DOVER, Del., Jan. 28, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Thursday, February 27, 2020, at 4:15 p.m. ET to discuss the Company's financial results for the fourth quarter and year ended December 31, 2019. The earnings press release will be issued on Wednesday, February 26, 2020, after the market closes.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2019 Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-fourth-quarter-and-annual-2019-financial-results-300994560.html
SOURCE Chesapeake Utilities Corporation
Article Date
1/28/2020FERC Approves Eastern Shore Natural Gas Company Expansion
Source: PR Newswire
DOVER, Del., Jan. 7, 2020 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) announced today that the Federal Energy Regulatory Commission (FERC) has issued an order approving the Company's proposed Del-Mar Energy Pathway Project (Docket No. CP18-548-000). The order, which was applied for in September of 2018 by Eastern Shore Natural Gas Company, Chesapeake Utilities' interstate natural gas transmission subsidiary, approves the construction and operation of new infrastructure facilities in Kent and Sussex counties in Delaware, and Wicomico and Somerset counties in Maryland.
"Bringing natural gas to a new area results in many positive enhancements for the community, both environmental and economic," said Jeff Sylvester, Senior Vice President for Chesapeake Utilities Corporation, responsible for the Company's natural gas transmission and regulated distribution businesses. "Studies have shown that a project like this will create more job growth and expansion of services, particularly increased demand and additional local services."
According to a recent study from the Regional Economic Studies Institute of Towson University, the infrastructure project would bring the following economic benefits to the region:
"The FERC's approval enables our Company to continue to meet the growing customer demand for natural gas service in the region," said Jeff Tietbohl, Vice President of Eastern Shore Natural Gas Company. "This project further expands our partnership in the local communities in which we live and work, bringing natural gas service to Somerset County for the first time and providing a cleaner, reliable and more cost-effective energy choice for customers on the Delmarva Peninsula."
The project will add approximately 12 miles of natural gas infrastructure in Kent and Sussex counties and nearly seven miles of infrastructure in Wicomico and Somerset counties. Construction of the Del-Mar Energy Pathway Project is expected to commence within the first quarter of 2020. The estimated completion date will be the fourth quarter of 2021.
Once in service, the new natural gas infrastructure will provide approximately 11.8 million cubic feet per day of additional natural gas firm transportation service and 2.5 million cubic feet of off-peak transportation service to Chesapeake Utilities' natural gas distribution subsidiaries on the Delmarva Peninsula and one industrial customer.
The estimated cost of the project is approximately $37 million. The anticipated annual gross margin for the Del-Mar Energy Pathway Project is $5.1 million. For more information on the project, visit https://bit.ly/2GNiBef.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
About Eastern Shore Natural Gas Company
Eastern Shore Natural Gas Company, a subsidiary of Chesapeake Utilities Corporation, owns and operates a 486-mile interstate pipeline that transports natural gas from various points in Pennsylvania to customers in Delaware, Maryland and Pennsylvania. For more information, visit www.esng.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/ferc-approves-eastern-shore-natural-gas-company-expansion-300982768.html
SOURCE Chesapeake Utilities Corporation
Article Date
1/7/202012/16/2019 - Chesapeake Utilities Corporation Subsidiary Acquires Propane Operating Assets of Boulden Brothers Propane
Chesapeake Utilities Corporation Subsidiary Acquires Propane Operating Assets of Boulden Brothers Propane
Source: PR Newswire
DOVER, Del., Dec. 16, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that its propane subsidiary, Sharp Energy, executed an agreement to acquire the propane operating assets of Boulden Brothers Propane in Newark, Delaware. The parties closed on this transaction on December 13, 2019. Terms of the transaction were not publicly disclosed.
"This acquisition is a strategic fit for our Company as it allows Sharp Energy to further expand the availability of its propane services and resources in our existing Maryland, Delaware and Pennsylvania footprint," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Sharp Energy has been a significant growth engine within our Company and a market leader in the areas we serve, consistently identifying new product and service offerings to meet customer demand, including our community gas systems, wholesale capabilities, and our AutoGas offerings. Adding the propane operating assets of Boulden Brothers will further build upon our strong propane distribution foundation."
Boulden Brothers Propane, a family-owned and operated company, has been providing propane service since 1968. Boulden provides propane service to approximately 5,200 residential and commercial customers and sells approximately three million gallons of propane throughout Delaware, Maryland and Pennsylvania.
"We are excited to join forces with Boulden Brothers, a long-standing company in the region that shares the same values as Sharp Energy -- a commitment to environmental responsibility, safety and exceptional customer service," said Andy Hesson, Vice President of Sharp Energy. "We look forward to welcoming the Boulden team members into the Sharp organization, and will work toward a seamless transition for all customers."
About Sharp Energy
Sharp Energy, headquartered in Georgetown, Delaware, distributes propane to approximately 42,000 residential, commercial and industrial customers in Maryland, Delaware, Virginia and Pennsylvania. With four rail facilities and over three million gallons of propane storage, Sharp Energy has established a solid supply portfolio. Sharp Energy is a proud partner of Alliance AutoGas, a national network of companies that have joined together to deliver a comprehensive alternative fueling solution including EPA-certified propane AutoGas vehicle conversions, on-site fueling infrastructure, fuel supply, safety and operational training, and ongoing technical support. To learn more about Sharp Energy, visit www.sharpenergy.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-subsidiary-acquires-propane-operating-assets-of-boulden-brothers-propane-300975289.html
SOURCE Chesapeake Utilities Corporation
Article Date
12/16/201912/13/2019 - Chesapeake Utilities Corporation to Participate In Midwest Road Show Sponsored By Janney Montgomery Scott
Chesapeake Utilities Corporation to Participate In Midwest Road Show Sponsored By Janney Montgomery Scott
Source: PR Newswire
DOVER, Del., Dec. 12, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today announced that Beth Cooper, Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary; Michael Galtman, Vice President and Chief Accounting Officer; and Tom Mahn, Vice President and Treasurer, will be participating in a Road Show sponsored by Janney Montgomery Scott, on December 17-18, 2019. Ms. Cooper and Messrs. Galtman and Mahn will be participating in a series of scheduled one-on-one meetings with members of the investment communities in Chicago, Milwaukee/Madison and Kansas City.
The presentation for the conference will be available on the Company's website at www.chpk.com in the "Investors" section under the sub-tab "Events and Presentations" and the Investor Relations App.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
bcooper@chpk.com
or
Tom Mahn
Vice President and Treasurer
302.734.6799
tmahn@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-participate-in-midwest-road-show-sponsored-by-janney-montgomery-scott-300974467.html
SOURCE Chesapeake Utilities Corporation
Article Date
12/13/2019Chesapeake Utilities Corporation to Acquire Elkton Gas
Source: PR Newswire
DOVER, Del., Dec. 9, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (Chesapeake Utilities) (NYSE: CPK) and South Jersey Industries (SJI) (NYSE: SJI) today announced they have entered into an agreement, dated Dec. 5, 2019, under which Chesapeake Utilities will acquire SJI subsidiary Elkton Gas, which operates in Cecil County, Maryland. Upon completion of the transaction, Elkton Gas will become a wholly-owned subsidiary of Chesapeake Utilities. The transaction was approved by the SJI Board of Directors and by Chesapeake Utilities' Investment Committee, which is comprised of five of the Company's Board members. The acquisition, which is expected to close in the first half of 2020, is subject to approval by the Maryland Public Service Commission.
Incorporated in 1863, Elkton Gas delivers safe, reliable and affordable natural gas to approximately 7,000 residential and commercial customers within a franchised area of Cecil County, Maryland. Elkton Gas will continue to operate out of its existing office with the same local personnel. Customers can expect to continue to receive the same high quality service that they have experienced with the local office and its team members. Elkton Gas has also been a long-term customer of Eastern Shore Natural Gas Company, an interstate transmission pipeline company that is a wholly-owned subsidiary of Chesapeake Utilities Corporation.
Chesapeake Utilities currently serves another franchised area of Cecil County, Maryland with natural gas service and has been managing its expansion into this area largely from its Delaware operations.
"This is an exciting fit and aligns with our Company's growth strategy to identify new investment opportunities to further our future earnings growth. The acquisition of Elkton Gas is significant in that it jumpstarts our current operation, enabling us to more quickly expand our footprint in Cecil County," said Jeff Householder, President and CEO of Chesapeake Utilities Corporation. "We are excited about our prospects for natural gas distribution growth in this growing area and are committed to delivering superior service to the customers and communities we serve by: increasing their energy options; growing our systems and infrastructure in order to provide safe and reliable delivery of energy to customers; and providing exceptional customer service."
"Acquiring these operational resources in Cecil County offers close proximity to the I-95 interstate corridor and to our existing Cecil County service territory which will better position us for the commercial, industrial and residential growth opportunities projected for the area," said Shane Breakie, Vice President of Chesapeake Utilities Corporation, who oversees the Company's Delmarva natural gas operations including Cecil County. "Adding the Elkton Gas platform including their talented team of employees to our existing presence creates a stronger consolidated operation to better support customers and the natural gas infrastructure in the area."
The specific terms of the transaction were not publicly disclosed. The transaction is expected to close in the first half of 2020.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
About SJI
SJI, an energy services holding company based in Folsom, NJ, delivers safe, reliable, affordable natural gas service to approximately 681,000 customers in New Jersey and Maryland through its three regulated natural gas utilities - South Jersey Gas, Elizabethtown Gas and Elkton Gas. SJI's non-utility businesses within South Jersey Energy Solutions promote efficiency, clean technology and renewable energy by providing customized wholesale commodity marketing and fuel management services; and developing, owning and operating on-site energy production facilities. SJI Midstream houses the company's interest in the PennEast Pipeline Project. Visit sjindustries.com for more information about SJI and its subsidiaries.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-acquire-elkton-gas-300971329.html
SOURCE Chesapeake Utilities Corporation
Article Date
12/9/2019Jeffrey Sylvester Joins Chesapeake Utilities Corporation as Senior Vice President
Source: PR Newswire
DOVER, Del., Dec. 6, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) today announced that Jeffrey Sylvester has joined the Company as Senior Vice President responsible for the Company's natural gas transmission and regulated distribution businesses.
In his new role, Mr. Sylvester will be responsible for the Company's regulated operations including the interstate natural gas transmission pipeline and distribution businesses on the Delmarva Peninsula; the intrastate natural gas pipeline and natural gas and electric distribution businesses in Florida; and the unregulated natural gas pipeline infrastructure operation in Ohio. The customer care operation that services customers on the Delmarva Peninsula and in Florida will also report to him.
"As we continue to evolve and grow as a company with expanded energy delivery service offerings, it's important that we position our organization to continue to deliver the best results possible to our stakeholders," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Jeff is a proven leader and his wealth of operational experience and energy industry knowledge will be of great benefit to the Company."
Prior to joining Chesapeake Utilities, Mr. Sylvester spent over seven years with Black Hills Corporation. Most recently, he served as Vice President of Nebraska Gas Operations, responsible for all financial and operational results associated with the continued safe, reliable delivery of natural gas to 300,000 customers in 300 Nebraska communities. In this role, he provided leadership and oversight for the natural gas distribution operations, which included over 10,000 miles of pipeline; the development of growth opportunities in these communities; and stakeholder engagement among various key constituencies, including external relationships with customers, regulators and government officials.
With his new position, Mr. Sylvester will be returning to Chesapeake Utilities Corporation. During his earlier tenure with the Company from 2004 to 2012, he held a series of leadership positions in the information technology, gas marketing and customer care operations.
Mr. Sylvester is a Board member for the Southern Gas Association. He earned both his Bachelor of Science in Financial Management and his MBA from Clemson University.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content to download multimedia:http://www.prnewswire.com/news-releases/jeffrey-sylvester-joins-chesapeake-utilities-corporation-as-senior-vice-president-300970603.html
SOURCE Chesapeake Utilities Corporation
Article Date
12/6/2019Chesapeake Utilities Corporation to Attend Wells Fargo Securities 18th Annual Midstream and Utility Symposium
Source: PR Newswire
DOVER, Del., Dec. 4, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today announced that Beth Cooper, Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary, and Tom Mahn, Vice President and Treasurer, will be attending the Wells Fargo Securities 18th Annual Midstream and Utility Symposium at the New York Hilton Midtown in New York City on December 11 and 12, 2019.
Ms. Cooper and Mr. Mahn will be participating in a series of scheduled one-on-one meetings with members of the investment community in attendance at the conference.
The presentation for the conference will be available before the event on the Company's website at www.chpk.com in the "Investors" section under the sub-tab "Events and Presentations."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
bcooper@chpk.com
or
Tom Mahn
Vice President and Treasurer
302.734.6799
tmahn@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-attend-wells-fargo-securities-18th-annual-midstream-and-utility-symposium-300969476.html
SOURCE Chesapeake Utilities Corporation
Article Date
12/4/201912/2/2019 - Chesapeake Utilities Corporation Receives Corporate Secretary's 2019 Governance Team of the Year Award
Chesapeake Utilities Corporation Receives Corporate Secretary's 2019 Governance Team of the Year Award
Source: PR Newswire
DOVER, Del., Dec. 2, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (Chesapeake Utilities) (NYSE: CPK) today announced that its Corporate Governance team was named Governance Team of the Year at the Corporate Secretary magazine's 12th annual Corporate Governance Awards ceremony in New York City on November 21, 2019. The award recognizes the best overall corporate governance team among small to mid-cap companies throughout the country.
"At Chesapeake Utilities, corporate governance is the foundation of our processes and our decision-making throughout the Company, beginning with our Board of Directors and extending to every employee," said Jeff Householder, President and Chief Executive Officer for Chesapeake Utilities Corporation. "This award recognizes the depth of strong governance practices throughout our organization and acknowledges our special culture of discipline, integrity, accountability, authenticity, and diversity. The inclusive nature of the Chesapeake Utilities' team, their commitment to each other, our shareholders and the communities we serve is at the core of who we are."
This is the fourth year the Company has been recognized by Corporate Secretary magazine for its outstanding Corporate Governance practices, and the third time it has taken top honors. Other award winners included General Motors Company, AT&T, IBM, NorthWestern Energy, VF Corporation, Royal Bank of Canada, and The Guardian Life Insurance Company of America.
"This is a wonderful recognition, especially as our long-standing ESG story continues to unfold, and we are honored to be recognized among our peers in the corporate governance industry," said James F. Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer for Chesapeake Utilities Corporation. "Congratulations to Stacie Roberts, Assistant Vice President of Corporate Governance, and our entire team across the Company, for their unwavering commitment to our employees, communities and investors."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-receives-corporate-secretarys-2019-governance-team-of-the-year-award-300967677.html
SOURCE Chesapeake Utilities Corporation
Article Date
12/2/2019Lila A. Jaber Appointed to Chesapeake Utilities Corporation Board of Directors
Source: PR Newswire
DOVER, Del., Nov. 12, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) today announced that as part of its Board's ongoing succession planning, Lila A. Jaber, regional managing shareholder who leads the regulatory and legislative government affairs practice in Florida for Gunster Yoakley & Stewart, P.A., was appointed to serve as a member of the Board of Directors of Chesapeake Utilities effective January 1, 2020. Ms. Jaber served two terms as both Commissioner and Chair of the Florida Public Service Commission overseeing the state's implementation of economic regulatory policy and procedures for the energy and natural gas industries.
"On behalf of the entire Board, we are very pleased to welcome Lila as the newest independent director of the Board effective January 1, 2020," said John R. Schimkaitis, Chair of the Board of Directors of Chesapeake Utilities. "Lila joins the Board of Chesapeake Utilities at a time in the Company's history when we have many exciting opportunities in Florida and beyond that will further enrich the communities we serve by providing them with safe and reliable energy solutions."
"In addition to her remarkable years in public service and civic engagement, Lila complements the Company's culture of leadership, ethics, entrepreneurial passion and diversity," said Jeffry M. Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Lila is the architect of Florida's Women in Energy Leadership Forum, focusing on the workforce and economic development contributions of the electric and natural gas industries; founding member of the Big Bend Minority Chamber of Commerce, supporting women and minority-owned businesses; Chair of the City of Tallahassee's inaugural Ethics Board as appointed by then Mayor Gillum and members of the City Commission; member of the Leon County Office of Economic Vitality Council; and former Chair of Leadership Florida."
"It is an honor to join the Chesapeake Utilities' Board which has an industry leading record of extraordinary performance. The leadership and strategic oversight of the Board, along with the dedication of the management team, has contributed to innovative energy solutions and economic development in Florida and in the Mid-Atlantic and Mid-West regions of the U.S. Beyond the numbers, Chesapeake Utilities enjoys a diverse, inclusive and special culture of which I am proud to be a part," said Ms. Jaber.
Ms. Jaber has earned a variety of honors and recognitions throughout her career including being named by the Big Bend Minority Chamber of Commerce as the 2019 Lifetime Advocacy honoree. Ms. Jaber has received the Tallahassee Women Lawyers Diversity & Inclusion Award, and in 2016, she received the commission of Kentucky Colonel by Kentucky's Governor for her noteworthy accomplishments and outstanding service.
In May 2019, Ms. Jaber was appointed to the Board of Trustees of Stetson University, her alma mater, where she received her Bachelor of Arts and Sciences degree in 1988 and her Juris Doctor from Stetson University College of Law in 1990.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
James F. Moriarty
Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer
302.382.0338
View original content:http://www.prnewswire.com/news-releases/lila-a-jaber-appointed-to-chesapeake-utilities-corporation-board-of-directors-300956401.html
SOURCE Chesapeake Utilities Corporation
Article Date
11/12/2019Chesapeake Utilities Corporation Appoints Shane Breakie to Vice President
Source: PR Newswire
DOVER, Del., Nov. 12, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK), announced today that Shane E. Breakie has been promoted from Assistant Vice President to Vice President of Chesapeake Utilities. Mr. Breakie is responsible for overseeing the day-to-day activities of the Company's Delmarva Natural Gas (DNG) and Sandpiper Energy gas distribution systems on the Delmarva Peninsula.
"Shane has considerable energy experience and strategic marketing expertise that will continue to serve him well in this leadership role and in further positioning our gas distribution business on Delmarva for growth," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "His commitment to customer and community service truly exemplifies our core values as a Company."
Mr. Breakie has 26 years of experience with the Company. He is actively involved in the community, holding leadership roles including President of Chesapeake's Emergency Energy Recipient Program/Sharing Program, Chairman of the Central Delaware Chamber of Commerce, Board Member of the Energy Solutions Center and Past Treasurer of Connecting Generations. He also is a member of the Kent Economic Partnership Board and the Greater Salisbury Committee.
Mr. Breakie earned Bachelor of Science degrees in Accounting and Finance from the University of Delaware and an MBA from Wilmington University.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
About Chesapeake Utilities
Chesapeake Utilities, the corporation's Delmarva natural gas distribution operation, serves approximately 78,000 residential, commercial and industrial customers in Delaware and Maryland. Chesapeake's Delaware division serves southern New Castle, Kent and Sussex Counties. Chesapeake's Maryland division operates on Maryland's Eastern Shore in Wicomico, Dorchester, Caroline, and Cecil Counties. Its subsidiary Sandpiper Energy operates a natural gas and propane distribution system in Worcester County, Maryland. Chesapeake Utilities, headquartered in Dover, Delaware, operates the only public natural gas fueling station on the Delmarva Peninsula.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-appoints-shane-breakie-to-vice-president-300956088.html
SOURCE Chesapeake Utilities Corporation
Article Date
11/12/2019Chesapeake Utilities Corporation Reports Third Quarter 2019 Results
Source: PR Newswire
DOVER, Del., Nov. 7, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced third quarter financial results. The Company's net income for the quarter ended September 30, 2019 was $5.6 million, compared to $5.5 million for the same quarter of 2018. Consolidated earnings per share ("EPS") for both quarters ended September 30, 2019 and 2018 was $0.34 per share. Net income for the nine months ended September 30, 2019 was $42.6 million, or $2.59 per share, compared to $38.8 million, or $2.36 per share, for the same period in 2018.
On October 9, 2019, the Company announced its exit from the natural gas marketing business through the sale of the majority of the assets of Peninsula Energy Services Company, Inc. (PESCO), the Company's natural gas marketing subsidiary. As a result of this decision and announcement, PESCO's results for all periods presented have been separately reported as discontinued operations and its assets and liabilities have been reclassified as held for sale. Additional details on the transactions to sell PESCO's assets and contracts are included on page 8 of this press release.
The Company's income from continuing operations for the quarter ended September 30, 2019 was $6.2 million, compared to $6.1 million for the same quarter of 2018. EPS from continuing operations for the quarter ended September 30, 2019 increased $0.01 to $0.38 per share compared to the same quarter of 2018. Higher earnings for the third quarter primarily reflect increased gross margin from recently completed and ongoing pipeline expansion projects, organic growth in the natural gas distribution operations and higher retail propane margins per gallon. These increases were largely offset by an increase in operating expenses and higher interest expense associated with financing the Company's expansion projects.
For the nine months ended September 30, 2019, the Company reported income from continuing operations of $44.0 million, or $2.67 per share. This represents an increase of $4.9 million or $0.29 per share compared to the same period in 2018. Year-to-date earnings were impacted by the factors noted above, along with strong contributions from incremental margin from the acquisition of certain assets of the Marlin Gas Transport, Inc. ("Marlin Gas Transport") and R. F. Ohl Fuel Oil, Inc. ("Ohl") asset acquisitions, a Florida Public Service Commission ("PSC") regulatory order that enabled the Company to retain tax savings associated with lower federal tax rates resulting from the United States Tax Cuts and Jobs Act ("TCJA") in several natural gas distribution operations and continued growth in gross margin from Aspire Energy of Ohio ("Aspire Energy"). These increases were partially offset by higher interest expense. A detailed discussion of operating results begins on page 4.
"For the first nine months of 2019, we have delivered strong financial performance largely driven by new pipeline expansions, organic growth, key regulatory initiatives and contributions from the Marlin Gas Transport and Ohl acquisitions," stated Jeffrey Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "As previously disclosed, as part of our ongoing strategic planning process, we decided to exit the natural gas marketing business and announced the sale of the PESCO assets. These actions will improve our earnings outlook, reduce the volatility of future earnings and recover our investment in the business. While the exit of any business is never easy, the same conviction, drive and determination to do what is right for the Company and our constituents guided our decision and remains at the forefront of each and every employee. I am proud of our employees who are driving the growth of the Company in so many different ways."
Significant Items Impacting Earnings from Continuing Operations
There were no significant items impacting earnings from continuing operations during the third quarter of 2019 compared to the same period in 2018, however, results for the nine months ended September 30, 2019 and 2018 were impacted by the following significant items:
For the Nine Months Ended September 30, | 2019 | 2018 | |||||||||
(in thousands, except per share data) | Net Income | EPS | Net Income | EPS | |||||||
Reported (GAAP) Earnings from Continuing Operations | $ | 43,977 | $ | 2.67 | $ | 39,118 | $ | 2.38 | |||
2018 portion of the retained tax savings for certain Florida natural gas distribution operations associated with the TCJA income tax rate reduction | (990) | (0.06) | — | — | |||||||
Nonrecurring separation expenses associated with a former executive | — | — | 1,421 | 0.09 | |||||||
Adjusted (Non-GAAP) Earnings from Continuing Operations | $ | 42,987 | $ | 2.61 | $ | 40,539 | $ | 2.47 | |||
For the nine months ended September 30, 2019, adjusted earnings from continuing operations were $43.0 million, or $2.61 per share, an increase of 5.7 percent compared to $40.5 million, or $2.47 per share, for the nine months ended September 30, 2018.
*Unless otherwise noted, earnings per share information is presented for continuing operations on a diluted basis.
**This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin, adjusted earnings and adjusted EPS from continuing operations. 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 "gross margin" by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance. The Company calculates "adjusted earnings" by adjusting reported (GAAP) earnings from continuing operations to exclude the impact of certain significant non-cash items, including the impact of one-time charges, such as severance charges, and any prior year tax savings retained by our regulated businesses as a result of current year regulatory authorizations. The Company calculates "adjusted EPS" from continuing operations by dividing adjusted earnings from continuing operations by the weighted average common shares outstanding.
Operating Results for the Quarters Ended September 30, 2019 and 2018
Consolidated Results | |||||||||||
Three Months Ended September 30, | |||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | |||||||
Gross margin | $ | 67,298 | $ | 62,387 | $ | 4,911 | 7.9 | % | |||
Depreciation, amortization and property taxes | 16,010 | 14,548 | 1,462 | 10.0 | % | ||||||
Other operating expenses | 36,930 | 34,960 | 1,970 | 5.6 | % | ||||||
Operating income (1) | $ | 14,358 | $ | 12,879 | $ | 1,479 | 11.5 | % | |||
(1) | These results exclude operating results from PESCO that are now reflected as discontinued operations. |
Operating income during the third quarter of 2019 increased by $1.5 million, or 11.5 percent, compared to the same period in 2018. The increase in operating income was driven by gross margin growth of $4.9 million, or 7.9 percent, primarily in the Company's natural gas transmission and distribution operations. These increases were partially offset by higher operating expenses associated with growth.
Regulated Energy Segment | |||||||||||
Three Months Ended September 30, | |||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | |||||||
Gross margin | $ | 54,961 | $ | 51,269 | $ | 3,692 | 7.2 | % | |||
Depreciation, amortization and property taxes | 13,076 | 12,085 | 991 | 8.2 | % | ||||||
Other operating expenses | 24,345 | 23,269 | 1,076 | 4.6 | % | ||||||
Operating income | $ | 17,540 | $ | 15,915 | $ | 1,625 | 10.2 | % | |||
Operating income for the Regulated Energy segment for the three months ended September 30, 2019 was $17.5 million, a 10.2 percent increase over the same period in 2018. The growth in operating income resulted primarily from increased gross margin of $3.7 million partially offset by $1.0 million in higher depreciation, amortization and property taxes, and $1.1 million in higher other operating expenses associated with growth.
The key components of the increase in gross margin are shown below:
(in thousands) | ||
Eastern Shore Natural Gas Company ("Eastern Shore") and Peninsula Pipeline Company ("Peninsula Pipeline") service expansions (including related Florida natural gas distribution operation expansions) | $ | 2,312 |
Natural gas distribution growth (excluding service expansions) | 791 | |
Sandpiper Energy, Inc.'s ("Sandpiper") margin primarily from natural gas conversions | 224 | |
Increased margin primarily from the storm recovery surcharge for Florida electric distribution operations | 169 | |
TCJA impact from the 2019 retained tax savings for certain Florida natural gas operations | 109 | |
Florida GRIP (1) | (144) | |
Other variances | 231 | |
Quarter-over-quarter increase in gross margin | $ | 3,692 |
(1) In the third quarter of 2019, the Company recorded a reduction in depreciation expense totaling $0.8 million retroactive to January 1, 2019, as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. The Company also recorded $0.4 million in lower GRIP margin due to a concurrent reduction in surcharge collected from customers as a result of the reduced depreciation rates during the third quarter of 2019. |
The major components of the increase in other operating expenses are as follows:
(in thousands) | ||
Insurance expense - both insured and self-insured components | $ | 718 |
Payroll, benefits and other employee-related expenses | 345 | |
Other variances | 13 | |
Quarter-over-quarter increase in other operating expenses | $ | 1,076 |
Unregulated Energy Segment | |||||||||||
Three Months Ended September 30, | |||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | |||||||
Gross margin | $ | 12,418 | $ | 11,202 | $ | 1,216 | 10.9 | % | |||
Depreciation, amortization and property taxes | 2,901 | 2,425 | 476 | 19.6 | % | ||||||
Other operating expenses | 12,685 | 11,867 | 818 | 6.9 | % | ||||||
Operating loss (1) | $ | (3,168) | $ | (3,090) | $ | (78) | 2.5 | % | |||
(1) | These results exclude operating results from PESCO that are now reflected as discontinued operations. |
Operating loss for the Unregulated Energy segment remained largely unchanged for the three months ended September 30, 2019 compared to 2018, as higher gross margin was offset by higher expenses to support growth. Due to the seasonality of the Company's business, results for interim periods are not necessarily indicative of results for the entire fiscal year. Revenue and earnings are typically greater during the first and fourth quarters, when consumption of energy is highest due to colder temperatures. The third quarter has historically contributed the smallest amount of a full year's results.
The major components of the increase in gross margin are shown below:
(in thousands) | |||
Marlin Gas Services (assets acquired in December 2018) | $ | 993 | |
Propane Operations | |||
Increased retail propane margins per gallon driven by favorable market conditions and supply management | 470 | ||
Ohl acquisition (assets acquired in December 2018) | 95 | ||
Aspire Energy | |||
Higher gas supply costs | (233) | ||
Other variances | (109) | ||
Quarter-over-quarter increase in gross margin | $ | 1,216 | |
The major components of the increase in other operating expenses are as follows:
(in thousands) | ||
Operating expenses for Marlin Gas Services and Ohl (Assets acquired in December 2018) including costs to expand the future growth prospects for the businesses | $ | 746 |
Insurance expense - both insured and self-insured components | 179 | |
Other variances | (107) | |
Quarter-over-quarter increase in other operating expenses | $ | 818 |
Operating Results for the Nine Months Ended September 30, 2019 and 2018
Consolidated Results | |||||||||||
Nine Months Ended | |||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | |||||||
Gross margin | $ | 236,203 | $ | 217,165 | $ | 19,038 | 8.8 | % | |||
Depreciation, amortization and property taxes | 47,337 | 41,694 | 5,643 | 13.5 | % | ||||||
Other operating expenses | 112,222 | 109,503 | 2,719 | 2.5 | % | ||||||
Operating income (1) | $ | 76,644 | $ | 65,968 | $ | 10,676 | 16.2 | % | |||
(1) | These results exclude operating results from PESCO that are now reflected as discontinued operations. |
Operating income for the nine months ended September 30, 2019 increased by $10.7 million, or 16.2 percent, compared to the same period in 2018. The increase in operating income reflects continued growth across the Company, generated by organic growth within existing businesses, recent expansion investments, regulatory initiatives and rate/pricing mechanisms, the successful integration of the Ohl acquisition, higher retail propane margins per gallon and the strong performance of Marlin Gas Services. The impact of warmer weather on 2019 results was offset by the positive impact of the absence of a one-time non-recurring severance charge recorded in 2018.
Regulated Energy Segment | |||||||||||
Nine Months Ended | |||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | |||||||
Gross margin | $ | 177,149 | $ | 162,926 | $ | 14,223 | 8.7 | % | |||
Depreciation, amortization and property taxes | 38,694 | 34,402 | 4,292 | 12.5 | % | ||||||
Other operating expenses | 73,145 | 71,594 | 1,551 | 2.2 | % | ||||||
Operating income | $ | 65,310 | $ | 56,930 | $ | 8,380 | 14.7 | % | |||
Operating income for the Regulated Energy segment for the nine months ended September 30, 2019 was $65.3 million, an increase of $8.4 million or 14.7 percent, compared to the same period in 2018. The increase in operating income resulted from $14.2 million in additional gross margin, offset by $4.3 million in higher depreciation, amortization and property taxes and a $1.5 million increase in other operating expenses. On February 25, 2019, the Florida PSC issued a final order regarding the treatment of the TCJA, allowing us to retain the savings associated with lower federal tax rates for certain of our natural gas distribution operations. As a result, $1.3 million in reserves for customer refunds, recorded in 2018, were reversed in the first quarter of 2019. Excluding the impact of the reversal, gross margin and operating income for the nine months ended September 30, 2019 increased by $12.9 million and $7.1 million, or 7.9 percent and 12.4 percent, respectively.
The key components of the increase in gross margin are shown below:
(in thousands) | |||
Eastern Shore and Peninsula Pipeline service expansions (including related Florida natural gas distribution operation expansions) | $ | 10,452 | |
Natural gas distribution - customer growth (excluding service expansions) | 3,446 | ||
2018 retained tax savings for certain Florida natural gas distribution operations | 1,321 | ||
TCJA impact from the 2019 retained tax savings for certain Florida natural gas operations | 1,117 | ||
Sandpiper's margin primarily from natural gas conversions | 837 | ||
Florida GRIP (1) | 391 | ||
Decreased customer consumption - primarily due to warmer weather | (3,248) | ||
Other variances | (93) | ||
Period-over-period increase in gross margin | $ | 14,223 | |
(1) In the third quarter of 2019, the Company recorded a reduction in depreciation expense totaling $0.8 million retroactive to January 1, 2019, as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. The Company also recorded $0.4 million in lower GRIP margin due to a concurrent reduction in surcharge collected from customers as a result of the reduced depreciation rates during the third quarter of 2019. |
The major components of the increase in other operating expenses are as follows:
(in thousands) | ||
Payroll, benefits and other employee-related expenses | $ | 2,299 |
Insurance expense - both insured and self-insured components | 975 | |
Vehicle expenses due to additional fleet to support growth | 168 | |
Facilities and maintenance costs due to the consolidation of facilities | (1,194) | |
Outside services and regulatory costs due to lower consulting fees and timing of expense | (1,062) | |
Other variances | 365 | |
Period-over-period increase in other operating expenses | $ | 1,551 |
Unregulated Energy Segment | |||||||||||
Nine Months Ended | |||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | |||||||
Gross margin | $ | 59,340 | $ | 54,636 | $ | 4,704 | 8.6 | % | |||
Depreciation, amortization and property taxes | 8,543 | 7,182 | 1,361 | 19.0 | % | ||||||
Other operating expenses | 39,481 | 36,935 | 2,546 | 6.9 | % | ||||||
Operating income (1) | $ | 11,316 | $ | 10,519 | $ | 797 | 7.6 | % | |||
(1) | These results exclude operating results from PESCO that are now reflected as discontinued operations. |
Operating income for the Unregulated Energy segment increased by $0.8 million for the nine months ended September 30, 2019, compared to the same period in 2018. The increase in operating income was driven by $4.7 million in additional gross margin, partially offset by $1.4 million in higher depreciation, amortization and property taxes and $2.5 million in higher other operating expenses.
The major components of the $4.7 million increase in gross margin are shown below:
(in thousands) | |||
Marlin Gas Services (acquired assets of Marlin Gas Transport in December 2018) | $ | 4,353 | |
Propane Operations | |||
Increased retail propane margins per gallon driven by favorable market conditions and supply management | 1,689 | ||
Ohl acquisition (assets acquired in December 2018) | 683 | ||
Decrease in customer consumption due primarily to the absence of the 2018 Bomb Cyclone | (1,559) | ||
Decrease in wholesale propane margins due primarily to the absence of the 2018 Bomb Cyclone | (785) | ||
Aspire Energy | |||
Rate increases | 858 | ||
Customer consumption growth | 296 | ||
Higher gas supply costs | (429) | ||
Other variances | (402) | ||
Period-over-period increase in gross margin | $ | 4,704 | |
The major components of the increase in other operating expenses are as follows:
(in thousands) | ||
Operating expenses for Marlin Gas Services and Ohl (Asset acquisitions in December 2018) including costs to expand the future growth prospects for the businesses | $ | 2,435 |
Insurance expense - both insured and self-insured components | 244 | |
Facilities and maintenance costs primarily due to lower level of tank refurbishments for propane operations | (380) | |
Other variances | 247 | |
Period-over-period increase in other operating expenses | $ | 2,546 |
Discontinued Operations - Natural Gas Marketing Business
On October 9, 2019, the Company announced that it was exiting the natural gas marketing business with the sale of a majority of the assets of PESCO, the Company's natural gas marketing subsidiary. To date, the Company has executed the following three separate transactions to sell PESCO's assets and contracts:
In addition to these transactions, the Company is actively marketing PESCO's producer services portfolio and is targeting a sale by the end of 2019. The Company expects to recognize a pre-tax gain ranging from $5.0 million to $7.0 million in connection with the closing of the three transactions during the fourth quarter of 2019. The expected gain on the sale of the assets will be included as a component of discontinued operations in the fourth quarter of 2019.
As a result of the sales agreements, the Company began to report PESCO as discontinued operations during the third quarter and has excluded PESCO's performance from continuing operations and segment results for all periods presented. The assets and liabilities of PESCO presented have also been classified as assets and liabilities held for sale for all periods shown.
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 2018 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
Conference Call
Chesapeake Utilities will host a conference call on Friday, November 8, 2019 at 10:30 a.m. Eastern Time to discuss the Company's financial results for the three and nine months ended September 30, 2019. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2019 Third Quarter Results Conference Call. To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, use the link CPK - Conference Call Audio Replay, or visit the Investors/Events and Presentations section of Company's website at www.chpk.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at www.chpk.com or through its Investor Relations (IR) App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
Financial Summary | |||||||||||
(in thousands, except per share data) | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Gross Margin | |||||||||||
Regulated Energy segment | $ | 54,961 | $ | 51,269 | $ | 177,149 | $ | 162,926 | |||
Unregulated Energy segment | 12,418 | 11,202 | 59,340 | 54,636 | |||||||
Other businesses and eliminations | (81) | (84) | (286) | (397) | |||||||
Total Gross Margin | $ | 67,298 | $ | 62,387 | $ | 236,203 | $ | 217,165 | |||
Operating Income | |||||||||||
Regulated Energy segment | $ | 17,540 | $ | 15,915 | $ | 65,310 | $ | 56,930 | |||
Unregulated Energy segment | (3,168) | (3,090) | 11,316 | 10,519 | |||||||
Other businesses and eliminations | (14) | 54 | 18 | (1,481) | |||||||
Total Operating Income | 14,358 | 12,879 | 76,644 | 65,968 | |||||||
Other expense, net | (350) | (4) | (729) | (168) | |||||||
Interest Charges | 5,403 | 4,357 | 16,583 | 11,764 | |||||||
Income from Continuing Operations Before Income Taxes | 8,605 | 8,518 | 59,332 | 54,036 | |||||||
Income Taxes on Continuing Operations | 2,360 | 2,428 | 15,355 | 14,918 | |||||||
Income from Continuing Operations | 6,245 | 6,090 | 43,977 | 39,118 | |||||||
Loss from Discontinued Operations | (624) | (552) | (1,388) | (339) | |||||||
Net Income | $ | 5,621 | $ | 5,538 | $ | 42,589 | $ | 38,779 | |||
Basic Earnings Per Share of Common Stock | |||||||||||
Earnings from Continuing Operations | $ | 0.38 | $ | 0.37 | $ | 2.68 | $ | 2.39 | |||
Earnings from Discontinued Operations | (0.04) | (0.03) | (0.08) | (0.02) | |||||||
Basic Earnings Per Share of Common Stock | $ | 0.34 | $ | 0.34 | $ | 2.60 | $ | 2.37 | |||
Diluted Earnings Per Share of Common Stock | |||||||||||
Earnings from Continuing Operations | $ | 0.38 | $ | 0.37 | $ | 2.67 | $ | 2.38 | |||
Earnings from Discontinued Operations | (0.04) | (0.03) | (0.08) | (0.02) | |||||||
Diluted Earnings Per Share of Common Stock | $ | 0.34 | $ | 0.34 | $ | 2.59 | $ | 2.36 | |||
Financial Summary Highlights
Key variances in continuing operations, between the three months ended September 30, 2018 and 2019, included:
(in thousands, except per share data) | Pre-tax Income | Net Income | Earnings Per Share | ||||||
Third Quarter of 2018 Reported Results from Continuing Operations | $ | 8,518 | $ | 6,090 | $ | 0.37 | |||
Increased (Decreased) Gross Margins: | |||||||||
Eastern Shore and Peninsula Pipeline service expansions (including related Florida natural gas distribution operation expansions)* | 2,312 | 1,678 | 0.10 | ||||||
Margin contribution from Marlin Gas Services and Ohl* | 1,088 | 790 | 0.05 | ||||||
Natural gas distribution growth (excluding service expansions) | 791 | 574 | 0.04 | ||||||
Increased retail propane margins per gallon | 470 | 341 | 0.02 | ||||||
Sandpiper's margin from natural gas conversions | 224 | 162 | 0.01 | ||||||
Increased margin primarily from the storm recovery surcharge for Florida electric distribution operations | 169 | 122 | 0.01 | ||||||
TCJA impact from the 2019 retained tax savings for certain Florida natural gas operations* | 109 | 79 | 0.01 | ||||||
Aspire Energy higher gas supply costs | (233) | (169) | (0.01) | ||||||
Florida GRIP* (1) | (144) | (104) | (0.01) | ||||||
4,786 | 3,473 | 0.22 | |||||||
(Increased) Decreased Operating Expenses (Excluding Cost of Sales): | |||||||||
Depreciation, amortization and property tax costs due to growth investments | (1,152) | (836) | (0.05) | ||||||
Operating expenses for Marlin Gas Services and Ohl including costs to expand the future growth prospects for the businesses | (1,055) | (766) | (0.05) | ||||||
Insurance - both insured and self-insured components | (790) | (573) | (0.03) | ||||||
Payroll, benefits and other employee-related expenses | (392) | (285) | (0.02) | ||||||
(3,389) | (2,460) | (0.15) | |||||||
Change in effective tax rate | — | 23 | — | ||||||
Interest charges | (1,046) | (759) | (0.05) | ||||||
Net other changes | (264) | (122) | (0.01) | ||||||
(1,310) | (858) | (0.06) | |||||||
Third Quarter of 2019 Reported Results from Continuing Operations | $ | 8,605 | $ | 6,245 | $ | 0.38 | |||
*See the Major Projects and Initiatives table later in this press release. |
(1) In the third quarter of 2019, the Company recorded a reduction in depreciation expense totaling $0.8 million retroactive to January 1, 2019, as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. The Company also recorded $0.4 million in lower GRIP margin due to a concurrent reduction in surcharge collected from customers as a result of the reduced depreciation rates during the third quarter of 2019. |
Key variances in continuing operations, between the nine months ended September 30, 2018 and 2019, included:
(in thousands, except per share data) | Pre-tax Income | Net Income | Earnings Per Share | ||||||
Nine Months Ended September 30, 2018 Reported Results from Continuing Operations | $ | 54,036 | $ | 39,118 | $ | 2.38 | |||
Adjusting for Unusual Items: | |||||||||
Decreased customer consumption - primarily due to warmer weather | (4,511) | (3,344) | (0.20) | ||||||
Nonrecurring separation expenses associated with a former executive | 1,548 | 1,421 | 0.09 | ||||||
2018 retained tax savings for certain Florida natural gas operations* | 1,321 | 990 | 0.06 | ||||||
(1,642) | (933) | (0.05) | |||||||
Increased (Decreased) Gross Margins: | |||||||||
Eastern Shore and Peninsula Pipeline service expansions (including new service in Northwest Florida for related Florida natural gas distribution operations)* | 10,452 | 7,747 | 0.47 | ||||||
Margin contribution from Marlin Gas Services and Ohl* | 5,036 | 3,733 | 0.23 | ||||||
Natural gas distribution growth (excluding service expansions) | 3,446 | 2,554 | 0.16 | ||||||
Increased retail propane margins per gallon | 1,689 | 1,252 | 0.08 | ||||||
TCJA impact from the 2019 retained tax savings for certain Florida natural gas operations* | 1,117 | 828 | 0.05 | ||||||
Aspire Energy rate increases | 858 | 636 | 0.04 | ||||||
Sandpiper's margin from natural gas conversions | 837 | 621 | 0.04 | ||||||
Florida GRIP* (1) | 391 | 290 | 0.02 | ||||||
Absence of Bomb Cyclone impact on wholesale propane margins | (785) | (582) | (0.04) | ||||||
Aspire Energy higher gas supply costs | (429) | (318) | (0.02) | ||||||
22,612 | 16,761 | 1.03 | |||||||
(Increased) Decreased Other Operating Expenses (Excluding Cost of Sales): | |||||||||
Depreciation, amortization and property tax costs due to new capital investments | (4,711) | (3,492) | (0.21) | ||||||
Operating expenses for Marlin Gas Services and Ohl including costs to expand the future growth prospects for the businesses | (3,367) | (2,496) | (0.15) | ||||||
Payroll, benefits and other employee-related expenses | (2,471) | (1,832) | (0.11) | ||||||
Insurance - both insured and self-insured components | (1,223) | (907) | (0.06) | ||||||
Vehicle expenses due to additional fleet to support growth | (331) | (246) | (0.01) | ||||||
Facilities and maintenance costs due to consolidation of facilities and lower levels of tank refurbishments | 1,425 | 1,056 | 0.06 | ||||||
Outside services and regulatory costs due to lower consulting costs, absence of Eastern Shore rate case and the timing of expenses | 865 | 641 | 0.04 | ||||||
(9,813) | (7,276) | (0.44) | |||||||
Change in effective tax rate | — | 556 | 0.03 | ||||||
Interest Charges | (4,819) | (3,572) | (0.22) | ||||||
Net other changes | (1,042) | (677) | (0.06) | ||||||
(5,861) | (3,693) | (0.25) | |||||||
Nine Months Ended September 30, 2019 Reported Results from Continuing Operations | $ | 59,332 | $ | 43,977 | $ | 2.67 | |||
*See the Major Projects and Initiatives table later in this press release. |
(1) In the third quarter of 2019, the Company recorded a reduction in depreciation expense totaling $0.8 million retroactive to January 1, 2019, as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. The Company also recorded $0.4 million in lower GRIP margin due to a concurrent reduction in surcharge collected from customers as a result of the reduced depreciation rates during the third quarter of 2019. |
Recently Completed and Ongoing Major Projects and Initiatives
The Company constantly pursues and develops additional projects and initiatives to serve existing and new customers, and to further grow its businesses and earnings, with the intention to increase shareholder value. The following represent the major projects/initiatives recently completed and currently underway. In the future, the Company will add new projects and initiatives to this table once negotiations are substantially final and the associated earnings can be estimated.
Gross Margin for the Period | |||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Year Ended | Estimate for | ||||||||||||||||||||||||
Project/Initiative | September 30, | September 30, | December 31, | Fiscal | |||||||||||||||||||||||
in thousands | 2019 | 2018 | 2019 | 2018 | 2018 | 2019 | 2020 | ||||||||||||||||||||
Expansions: | |||||||||||||||||||||||||||
2017 Eastern Shore System Expansion - including interim services | $ | 3,671 | $ | 2,409 | $ | 12,116 | $ | 5,527 | $ | 9,103 | $ | 16,209 | $ | 15,799 | |||||||||||||
Northwest Florida Expansion (including related natural gas distribution services) | 1,592 | 1,589 | 4,881 | 2,741 | 4,350 | 6,500 | 6,500 | ||||||||||||||||||||
Western Palm Beach County, Florida Expansion | 745 | — | 1,068 | — | 54 | 2,254 | 5,047 | ||||||||||||||||||||
Del-Mar Energy Pathway - including interim services | 189 | — | 542 | — | — | 725 | 3,039 | ||||||||||||||||||||
Auburndale | 113 | — | 113 | — | — | 283 | 679 | ||||||||||||||||||||
Callahan Intrastate Pipeline | — | — | — | — | — | — | 3,219 | ||||||||||||||||||||
Total Expansions | 6,310 | 3,998 | 18,720 | 8,268 | 13,507 | 25,971 | 34,283 | ||||||||||||||||||||
Acquisitions: | |||||||||||||||||||||||||||
Marlin Gas Services | 993 | — | 4,353 | — | 110 | 5,500 | 6,400 | ||||||||||||||||||||
Ohl Propane Acquisition | 95 | — | 683 | — | — | 1,200 | 1,236 | ||||||||||||||||||||
Total Acquisitions | 1,088 | — | 5,036 | — | 110 | 6,700 | 7,636 | ||||||||||||||||||||
Regulatory Initiatives | |||||||||||||||||||||||||||
Florida GRIP (1) (2) | 3,145 | 3,289 | 10,050 | 9,659 | 13,323 | 13,587 | 14,854 | ||||||||||||||||||||
Tax benefit retained by certain Florida entities(3) | 109 | — | 2,438 | — | — | 2,980 | 1,879 | ||||||||||||||||||||
Total Regulatory Initiatives | 3,254 | 3,289 | 12,488 | 9,659 | 13,323 | 16,567 | 16,733 | ||||||||||||||||||||
Total | $ | 10,652 | $ | 7,287 | $ | 36,244 | $ | 17,927 | $ | 26,940 | $ | 49,238 | $ | 58,652 | |||||||||||||
(1) All periods shown have been adjusted to reflect the lower customer rates as a result of the TCJA. Lower customer rates are offset by the corresponding decrease in federal income tax expense and have no negative impact on net income. |
(2) In the third quarter of 2019, the Company recorded a reduction in depreciation expense totaling $0.8 million retroactive to January 1, 2019, as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. The Company also recorded $0.4 million in lower GRIP margin due to a concurrent reduction in surcharge collected from customers as a result of the reduced depreciation rates during the third quarter of 2019. |
(3) The amount disclosed for the nine months ended September 30, 2019 includes tax savings of $1.3 million for the year ended December 31, 2018. The tax savings were recorded in the first quarter of 2019 due to an order by the Florida PSC allowing reversal of a TCJA refund reserve, recorded in 2018, which increased gross margin for the nine months ended by that amount. |
Detailed Discussion of Major Projects and Initiatives
Expansions
2017 Eastern Shore System Expansion
Eastern Shore has completed the construction of a system expansion project that increased its capacity by 26 percent. The project generated $1.3 million and $6.6 million in incremental gross margin during the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018. The project is expected to produce gross margin of approximately $16.2 million in 2019; $15.8 million annually from 2020 through 2022 and $13.2 million annually thereafter based on current customer capacity commitments.
Northwest Florida Expansion
In May 2018, Peninsula Pipeline completed construction of transmission lines, and our Florida natural gas division completed construction of lateral distribution lines, to serve customers in Northwest Florida. The project generated incremental gross margin of $2.1 million for the nine months ended September 30, 2019, compared to the same periods in 2018. The estimated annual gross margin from this project is $6.5 million for 2019 and beyond, with the opportunity for additional margin as the remaining capacity is sold.
Western Palm Beach County, Florida Expansion
Peninsula Pipeline is constructing four transmission lines to bring additional natural gas to the Company's distribution system in West Palm Beach, Florida. The first phase of this project was placed into service in December 2018 and generated $0.7 million and $1.1 million in additional gross margin for the three and nine months ended September 30, 2019, respectively. The Company expects to complete the remainder of the project in phases through early 2020, and estimates that it will generate gross margin of $2.3 million in 2019, $5.0 million in 2020 and $5.2 million annually thereafter.
Del-Mar Energy Pathway
In September 2018, Eastern Shore filed for FERC authorization to construct the Del-Mar Energy Pathway project to provide an additional 14,300 dekatherms per day of capacity to four customers. The project will provide additional natural gas transmission pipeline infrastructure in eastern Sussex County, Delaware, and it will represent the first extension of Eastern Shore's pipeline system into Somerset County, Maryland. Interim services in advance of this project generated $0.2 million and $0.5 million for the three and nine months ended September 30, 2019, respectively. The estimated annual gross margin from this project is approximately $0.7 million in 2019, $3.0 million in 2020, $4.1 million in 2021 and $5.1 million annually thereafter. Eastern Shore anticipates that this project will be fully in-service by the beginning of the fourth quarter of 2021, contingent upon FERC issuing authorization for the project in the fourth quarter of 2019.
Auburndale
In August 2019, the Florida PSC approved Peninsula Pipeline's Transportation Service Agreement with the Florida Division of Chesapeake Utilities. Peninsula Pipeline will purchase existing pipeline owned by the Florida Division of Chesapeake Utilities and Calpine and construct pipeline facilities in Polk County, Florida, increasing both delivery capacity and introducing a secondary source of natural gas for the Company's distribution system. Peninsula Pipeline generated gross margin of $0.1 million in the three and nine months ended September 30, 2019 from this project. This project is expected to generate $0.3 million in 2019 and $0.7 million annually thereafter.
Callahan Intrastate Pipeline
In May 2018, Peninsula Pipeline announced a plan to construct a jointly owned intrastate transmission pipeline in Nassau County, Florida with Seacoast Gas Transmission. The 26-mile pipeline, having an initial capacity of 148,000 dekatherms per day, will serve growing demand in both Nassau and Duval counties, Florida. The project is expected to be placed in-service during the third quarter of 2020 and is expected to generate gross margin of $3.2 million in 2020 and $6.4 million annually thereafter.
Guernsey Power Station
In December 2017, Guernsey Power Station, LLC, ("Guernsey Power Station") and a Chesapeake Utilities affiliate, Aspire Energy Express, LLC, ("Aspire Energy Express") entered into a precedent firm transportation capacity agreement whereby Guernsey Power Station will construct a power generation facility and Aspire Energy Express will provide natural gas transportation service to this facility. Aspire Energy Express will construct gas transmission facilities connecting to a third party natural gas supplier to provide the firm transportation service to the power generation facility. The Aspire Energy Express facilities are expected to be placed in service during the first quarter of 2021. This project is expected to produce gross margin of approximately $1.4 million annually once placed into service in 2021.
Acquisitions
Marlin Gas Services
In December 2018, the Company acquired certain operating assets of Marlin Gas Transport, a supplier of mobile compressed natural gas distribution and pipeline solutions, and created Marlin Gas Services, a new subsidiary which offers compressed natural gas solutions to supply interruption scenarios and provides other unique applications where pipeline supplies are unavailable or inadequate to meet customer requirements. Marlin Gas Services generated $1.0 million and $4.4 million of gross margin for the three and nine months ended September 30, 2019, respectively. The Company estimates that Marlin Gas Services will generate gross margin of approximately $5.5 million in 2019 and $6.4 million in 2020, and we expect gross margin to continue to grow beyond 2020 as Marlin Gas Services continues to actively expand the territories it serves as well as leverages its patented technology to potentially serve liquefied natural gas transportation needs.
Ohl Propane Acquisition
In December 2018, Sharp Energy, Inc.'s ("Sharp") acquired certain propane customers and operating assets of Ohl. Located between two of Sharp's existing districts, Ohl provided propane distribution service to approximately 2,500 residential and commercial customers in Pennsylvania. The customers and assets acquired from Ohl have been assimilated into Sharp. The operations acquired from Ohl generated $0.1 million and $0.7 million of incremental gross margin for the three and nine months ended September 30, 2019, respectively. The Company estimates that this acquisition will generate additional gross margin of approximately $1.2 million for Sharp in 2019, with the potential for additional growth in future years.
Regulatory Initiatives
Florida GRIP
Florida GRIP is a natural gas pipe replacement program approved by the Florida PSC that allows automatic recovery, through rates, of costs associated with the replacement of mains and services. Since the program's inception in August 2012, the Company has invested $139.8 million of capital expenditures to replace 299 miles of qualifying distribution mains, including $12.5 million of new pipes during the first nine months of 2019. GRIP generated additional gross margin of $0.4 million for the nine months ended September 30, 2019, compared to the same period in 2018.
In the third quarter of 2019, the Company recorded a reduction in depreciation expense totaling $0.8 million retroactive to January 1, 2019, as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. The Company also recorded $0.4 million in lower GRIP margin due to a concurrent reduction in surcharge collected from customers as a result of the reduced depreciation rates during the third quarter of 2019.
Florida Tax Savings Related to TCJA
In February 2019, the Florida PSC issued orders authorizing certain of the Company's natural gas distribution operations to retain a portion of the tax savings associated with the lower federal tax rates resulting from the TCJA. In accordance with the PSC orders, the Company recognized $1.3 million in margin during the first quarter of 2019, reflecting the reversal of reserves recorded during 2018. The Company expects the annual savings beginning in 2019 to continue in future years, and recognized additional margin of $0.1 million and $1.1 million during the three and nine months ended September 30, 2019, respectively.
Hurricane Michael
In October 2018, Hurricane Michael passed through Florida Public Utilities Company's ("FPU") electric distribution service territory in Northwest Florida. The hurricane caused widespread and severe damage to FPU's infrastructure resulting in 100 percent of its customers in the Northwest Florida service territory losing electrical service. FPU, after exerting extraordinary hurricane restoration efforts, restored service to those customers who were able to accept it. FPU expended more than $65.0 million to restore service, which has been recorded as new plant and equipment, charged against FPU's accumulated depreciation or charged against FPU's storm reserve. In conjunction with the hurricane-related expenditures, the Company executed two 13-month unsecured term loans as temporary financing, each in the amount of $30 million. The interest cost associated with these loans is the one-month LIBOR rate plus 75 points. One of the term loans was executed in December 2018; the other was executed in January 2019.
In August 2019, FPU filed a limited proceeding requesting recovery of storm-related costs associated with Hurricane Michael (capital and expenses) through a change in base rates. FPU also requested treatment and recovery of certain storm-related costs as regulatory asset for items currently not allowed to be recovered through the storm reserve as well as the recovery of capital replaced as a result of the storm. Recovery of these costs includes a component of an overall return on capital additions and regulatory assets. In the fourth quarter of 2019, FPU along with the Office of Public Counsel in Florida, filed a joint motion with the Florida PSC to approve an interim rate increase, subject to refund, pending the final ruling on the recovery of the restoration costs incurred. The petition was approved by the Florida PSC on November 5, 2019 and interim rate increases will be effective January 2, 2020. While there is a short-term negative impact, the storm is not expected to have a significant impact on our financial results going forward, assuming permanent recovery is granted through the regulatory process.
Other major factors influencing gross margin
Weather and Consumption
Weather was not a factor during the third quarter of 2019, compared to the same period in 2018. For the nine months ended September 30, 2019, compared to the same period in 2018, weather conditions accounted for a $4.5 million decrease in gross margin. Lower period-over-period heating degree days ("HDD") in all of the Company's service territories and extreme conditions due to the absence of the impact of the "Bomb Cyclone" in early 2018 reduced consumption in the first nine months of 2019 compared to the same period in 2018 and impacted both Regulated and Unregulated Energy segments. In terms of normal temperatures, the Company's results for the first nine months of 2019 were negatively impacted by $2.6 million due to warmer temperatures.
The following table summarizes HDD and cooling degree day ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three and nine months ended September 30, 2019 and 2018.
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2019 | 2018 | Variance | 2019 | 2018 | Variance | |||||||
Delmarva | ||||||||||||
Actual HDD | 7 | 10 | (3) | 2,576 | 2,729 | (153) | ||||||
10-Year Average HDD ("Normal") | 55 | 61 | (6) | 2,803 | 2,846 | (43) | ||||||
Variance from Normal | (48) | (51) | (227) | (117) | ||||||||
Florida | ||||||||||||
Actual HDD | — | — | — | 379 | 507 | (128) | ||||||
10-Year Average HDD ("Normal") | — | — | — | 532 | 533 | (1) | ||||||
Variance from Normal | — | — | (153) | (26) | ||||||||
Ohio | ||||||||||||
Actual HDD | 2 | 55 | (53) | 3,533 | 3,707 | (174) | ||||||
10-Year Average HDD ("Normal") | 90 | 91 | (1) | 3,742 | 3,774 | (32) | ||||||
Variance from Normal | (88) | (36) | (209) | (67) | ||||||||
Florida | ||||||||||||
Actual CDD | 1,620 | 1,613 | 7 | 2,840 | 2,704 | 136 | ||||||
10-Year Average CDD ("Normal") | 1,553 | 1,535 | 18 | 2,625 | 2,593 | 32 | ||||||
Variance from Normal | 67 | 78 | 215 | 111 | ||||||||
Natural Gas Distribution Margin Growth
New customer growth in the Company's natural gas distribution operations generated $0.8 million and $3.4 million of additional margin for the three and nine months ended September 30, 2019, respectively. The details for the three and nine months ended September 30, 2019 are provided in the following table:
Three Months Ended | Nine Months Ended | |||||
(in thousands) | September 30, 2019 | September 30, 2019 | ||||
Customer Growth: | ||||||
Residential | $ | 358 | $ | 1,450 | ||
Commercial and industrial | 433 | 1,996 | ||||
Total Customer Growth | $ | 791 | $ | 3,446 | ||
The additional margin from new customers reflects an increase of approximately 3.8 percent in the average number of residential customers served on the Delmarva Peninsula for both the three and nine months ended September 30, 2019, and approximately 4.3 percent and 3.8 percent growth in new residential customers served in Florida. Additional gross margin was also generated by growth in commercial and industrial customers in Florida.
Capital Investment Growth and Associated Financing Plans
The Company's capital expenditures were $124.2 million for the nine months ended September 30, 2019. The following table shows a range of the expected 2019 capital expenditures by segment and by business line:
2019 | ||||||
(dollars in thousands) | Low | High | ||||
Regulated Energy: | ||||||
Natural gas distribution | $ | 63,000 | $ | 65,000 | ||
Natural gas transmission | 62,000 | 64,000 | ||||
Electric distribution | 4,000 | 6,000 | ||||
Total Regulated Energy | 129,000 | 135,000 | ||||
Unregulated Energy: | ||||||
Propane distribution | 12,000 | 13,000 | ||||
Energy transmission | 11,000 | 12,000 | ||||
Other unregulated energy | 8,000 | 14,000 | ||||
Total Unregulated Energy | 31,000 | 39,000 | ||||
Other: | ||||||
Corporate and other businesses | 10,000 | 11,000 | ||||
Total Other | 10,000 | 11,000 | ||||
Total 2019 Expected Capital Expenditures | $ | 170,000 | $ | 185,000 | ||
Beginning in this press release, the Company is providing a range of capital expenditures for 2019 rather than a definitive number to reflect the impact in timing of the approval of several projects. The capital expenditure projection is subject to continuous review and modification. Actual capital requirements may vary from the above estimates due to a number of factors, including changing economic conditions, customer growth in existing areas, regulation, new growth or acquisition opportunities and availability of capital. Historically, actual capital expenditures have typically lagged behind the budgeted amounts.
The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. The Company's equity to total capitalization ratio, including short term borrowings, was 45 percent as of September 30, 2019. Excluding the funds expended for Hurricane Michael restoration activities, the Company's equity to total capitalization ratio, including short-term borrowings, would have been approximately 47 percent.
The Company seeks to align permanent financing with the in-service dates of its capital projects. The Company may utilize more temporary short-term debt, when the financing cost is attractive, as a bridge to the permanent long-term financing. In October 2019, the Company reached commercial terms with four financial institutions with respect to the anticipated issuance of $70.0 million of 2.98% uncollateralized senior notes. The note issuance to these institutions is subject to the negotiation and execution of a note purchase agreement and satisfaction of customary conditions included therein. The Company expects to issue the notes in December 2019, with the notes having a maturity date of December 2034. If issued, the Company anticipates using the proceeds to refinance the term notes used as temporary financing for Hurricane Michael restoration activities.
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Operating Revenues | ||||||||||||||
Regulated Energy | $ | 74,580 | $ | 72,770 | $ | 251,601 | $ | 252,667 | ||||||
Unregulated Energy and other | 18,046 | 20,630 | 96,029 | 103,435 | ||||||||||
Total Operating Revenues | 92,626 | 93,400 | 347,630 | 356,102 | ||||||||||
Operating Expenses | ||||||||||||||
Regulated Energy cost of sales | 19,619 | 21,501 | 74,452 | 89,741 | ||||||||||
Unregulated Energy and other cost of sales | 5,709 | 9,512 | 36,975 | 49,196 | ||||||||||
Operations | 32,623 | 31,449 | 99,596 | 97,723 | ||||||||||
Maintenance | 3,920 | 3,208 | 11,199 | 10,419 | ||||||||||
Gain from a settlement | — | — | (130) | (130) | ||||||||||
Depreciation and amortization | 11,219 | 10,487 | 33,612 | 29,739 | ||||||||||
Other taxes | 5,178 | 4,364 | 15,282 | 13,446 | ||||||||||
Total operating expenses | 78,268 | 80,521 | 270,986 | 290,134 | ||||||||||
Operating Income | 14,358 | 12,879 | 76,644 | 65,968 | ||||||||||
Other expense, net | (350) | (4) | (729) | (168) | ||||||||||
Interest charges | 5,403 | 4,357 | 16,583 | 11,764 | ||||||||||
Income from Continuing Operations Before Income Taxes | 8,605 | 8,518 | 59,332 | 54,036 | ||||||||||
Income Taxes on Continuing Operations | 2,360 | 2,428 | 15,355 | 14,918 | ||||||||||
Income from Continuing Operations | 6,245 | 6,090 | 43,977 | 39,118 | ||||||||||
Loss from Discontinued Operations, Net of Tax | (624) | (552) | (1,388) | (339) | ||||||||||
Net Income | $ | 5,621 | $ | 5,538 | $ | 42,589 | $ | 38,779 | ||||||
Weighted Average Common Shares Outstanding: | ||||||||||||||
Basic | 16,403,776 | 16,378,545 | 16,396,646 | 16,366,608 | ||||||||||
Diluted | 16,453,867 | 16,428,439 | 16,444,231 | 16,416,255 | ||||||||||
Basic Earnings Per Share of Common Stock: | ||||||||||||||
Earnings from Continuing Operations | $ | 0.38 | $ | 0.37 | $ | 2.68 | $ | 2.39 | ||||||
Earnings from Discontinued Operations | (0.04) | (0.03) | (0.08) | (0.02) | ||||||||||
Basic Earnings Per Share of Common Stock | $ | 0.34 | $ | 0.34 | $ | 2.60 | $ | 2.37 | ||||||
Diluted Earnings Per Share of Common Stock: | ||||||||||||||
Earnings from Continuing Operations | $ | 0.38 | $ | 0.37 | $ | 2.67 | $ | 2.38 | ||||||
Earnings from Discontinued Operations | (0.04) | (0.03) | (0.08) | (0.02) | ||||||||||
Diluted Earnings Per Share of Common Stock | $ | 0.34 | $ | 0.34 | $ | 2.59 | $ | 2.36 | ||||||
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | |||||||
Assets | September 30, 2019 | December 31, 2018 | |||||
(in thousands, except shares and per share data) | |||||||
Property, Plant and Equipment | |||||||
Regulated Energy | $ | 1,407,371 | $ | 1,297,416 | |||
Unregulated Energy | 250,826 | 236,440 | |||||
Other businesses and eliminations | 30,596 | 34,585 | |||||
Total property, plant and equipment | 1,688,793 | 1,568,441 | |||||
Less: Accumulated depreciation and amortization | (330,479) | (294,089) | |||||
Plus: Construction work in progress | 102,640 | 108,584 | |||||
Net property, plant and equipment | 1,460,954 | 1,382,936 | |||||
Current Assets | |||||||
Cash and cash equivalents | 4,320 | 6,089 | |||||
Trade and other receivables (less allowance for uncollectible accounts of $1,350 and $1,058, respectively) | 34,504 | 53,837 | |||||
Accrued revenue | 11,538 | 22,640 | |||||
Propane inventory, at average cost | 4,370 | 9,791 | |||||
Other inventory, at average cost | 6,037 | 7,127 | |||||
Regulatory assets | 6,633 | 4,796 | |||||
Storage gas prepayments | 2,158 | 3,433 | |||||
Income taxes receivable | 11,100 | 15,300 | |||||
Prepaid expenses | 10,571 | 10,079 | |||||
Derivative assets, at fair value | — | 82 | |||||
Other current assets | 2,489 | 5,682 | |||||
Current assets held for sale | 21,155 | 52,681 | |||||
Total current assets | 114,875 | 191,537 | |||||
Deferred Charges and Other Assets | |||||||
Goodwill | 21,516 | 21,568 | |||||
Other intangible assets, net | 3,272 | 3,850 | |||||
Investments, at fair value | 8,536 | 6,711 | |||||
Operating lease right-of-use assets (1) | 12,004 | — | |||||
Regulatory assets | 77,030 | 72,422 | |||||
Other assets | 8,874 | 6,985 | |||||
Noncurrent assets held for sale | 7,179 | 7,662 | |||||
Total deferred charges and other assets | 138,411 | 119,198 | |||||
Total Assets | $ | 1,714,240 | $ | 1,693,671 | |||
(1) During the first quarter of 2019, the Company adopted a new lease accounting standard, resulting in additional assets and liabilities (both current and non-current portions) which total $12.0 million at September 30, 2019. |
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | |||||||
Capitalization and Liabilities | September 30, 2019 | December 31, 2018 | |||||
(in thousands, except shares and per share data) | |||||||
Capitalization | |||||||
Stockholders' equity | |||||||
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding | $ | — | $ | — | |||
Common stock, par value $0.4867 per share (authorized 50,000,000 shares) | 7,984 | 7,971 | |||||
Additional paid-in capital | 257,436 | 255,651 | |||||
Retained earnings | 284,694 | 261,530 | |||||
Accumulated other comprehensive loss | (5,403) | (6,713) | |||||
Deferred compensation obligation | 4,505 | 3,854 | |||||
Treasury stock | (4,505) | (3,854) | |||||
Total stockholders' equity | 544,711 | 518,439 | |||||
Long-term debt, net of current maturities | 375,810 | 316,020 | |||||
Total capitalization | 920,521 | 834,459 | |||||
Current Liabilities | |||||||
Current portion of long-term debt | 75,600 | 11,935 | |||||
Short-term borrowing | 224,744 | 294,458 | |||||
Accounts payable | 53,150 | 98,681 | |||||
Customer deposits and refunds | 29,629 | 32,620 | |||||
Accrued interest | 4,891 | 2,317 | |||||
Dividends payable | 6,644 | 6,060 | |||||
Accrued compensation | 10,362 | 13,923 | |||||
Regulatory liabilities | 5,691 | 7,883 | |||||
Derivative liabilities, at fair value | 2,216 | 1,604 | |||||
Other accrued liabilities (1) | 15,210 | 10,081 | |||||
Current liabilities held for sale | 18,110 | 48,672 | |||||
Total current liabilities | 446,247 | 528,234 | |||||
Deferred Credits and Other Liabilities | |||||||
Deferred income taxes | 165,492 | 156,820 | |||||
Regulatory liabilities | 133,966 | 135,039 | |||||
Environmental liabilities | 6,713 | 7,638 | |||||
Other pension and benefit costs | 27,890 | 28,513 | |||||
Operating lease - liabilities (1) | 10,392 | — | |||||
Deferred investment tax credits and other liabilities | 3,019 | 2,968 | |||||
Total deferred credits and other liabilities | 347,472 | 330,978 | |||||
Total Capitalization and Liabilities | $ | 1,714,240 | $ | 1,693,671 | |||
(1) During the first quarter of 2019, the Company adopted a new lease accounting standard, resulting in additional assets and liabilities (both current and non-current portions) which total $12.0 million at September 30, 2019. |
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | |||||||||||||||||||||||||||||||
For the Three Months Ended September 30, 2019 | For the Three Months Ended September 30, 2018 | ||||||||||||||||||||||||||||||
Delmarva | Chesapeake | FPU NG | FPU Electric | Delmarva NG | Chesapeake | FPU NG | FPU Electric | ||||||||||||||||||||||||
Operating Revenues (in thousands) | |||||||||||||||||||||||||||||||
Residential | $ | 7,314 | $ | 1,349 | $ | 5,671 | $ | 14,460 | $ | 5,497 | $ | 1,290 | $ | 5,601 | $ | 13,991 | |||||||||||||||
Commercial | 3,812 | 1,471 | 5,588 | 11,216 | 4,961 | 1,424 | 5,354 | 11,245 | |||||||||||||||||||||||
Industrial | 1,678 | 3,063 | 5,707 | 591 | 1,722 | 3,068 | 4,723 | 361 | |||||||||||||||||||||||
Other (1) | 456 | 827 | 942 | (2,093) | 854 | 500 | 1,712 | (1,767) | |||||||||||||||||||||||
Total Operating Revenues | $ | 13,260 | $ | 6,710 | $ | 17,908 | $ | 24,174 | $ | 13,034 | $ | 6,282 | $ | 17,390 | $ | 23,830 | |||||||||||||||
Volume (in Dts for natural gas and KWHs for electric) | |||||||||||||||||||||||||||||||
Residential | 183,998 | 52,805 | 214,521 | 97,537 | 180,396 | 53,051 | 214,213 | 96,218 | |||||||||||||||||||||||
Commercial | 483,382 | 1,045,666 | 344,727 | 92,571 | 427,173 | 1,158,545 | 337,091 | 92,416 | |||||||||||||||||||||||
Industrial | 1,233,019 | 7,019,573 | 1,114,359 | 7,460 | 1,213,527 | 6,511,997 | 1,130,299 | 3,180 | |||||||||||||||||||||||
Other | 59,635 | — | 583,267 | — | 26,648 | — | 434,976 | 1,913 | |||||||||||||||||||||||
Total | 1,960,034 | 8,118,044 | 2,256,874 | 197,568 | 1,847,744 | 7,723,593 | 2,116,579 | 193,727 | |||||||||||||||||||||||
Average Customers | |||||||||||||||||||||||||||||||
Residential | 73,454 | 17,342 | 57,999 | 24,624 | 70,795 | 16,484 | 55,763 | 24,811 | |||||||||||||||||||||||
Commercial(2) | 7,040 | 1,555 | 3,934 | 7,240 | 6,907 | 1,509 | 3,912 | 7,507 | |||||||||||||||||||||||
Industrial(2) | 168 | 17 | 2,440 | 2 | 161 | 17 | 2,329 | 2 | |||||||||||||||||||||||
Other | 18 | — | 12 | — | 5 | — | 12 | — | |||||||||||||||||||||||
Total | 80,680 | 18,914 | 64,385 | 31,866 | 77,868 | 18,010 | 62,016 | 32,320 | |||||||||||||||||||||||
For the Nine Months Ended September 30, 2019 | For the Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||||||||
Delmarva NG | Chesapeake | FPU NG | FPU Electric | Delmarva NG | Chesapeake | FPU NG | FPU Electric | ||||||||||||||||||||||||
Operating Revenues (in thousands) | |||||||||||||||||||||||||||||||
Residential | $ | 47,729 | $ | 4,645 | $ | 23,848 | $ | 35,121 | $ | 54,819 | $ | 4,510 | $ | 24,488 | $ | 35,338 | |||||||||||||||
Commercial | 23,307 | 4,796 | 19,924 | 28,838 | 28,655 | 4,669 | 20,489 | 28,879 | |||||||||||||||||||||||
Industrial | 5,839 | 9,450 | 17,767 | 1,617 | 6,015 | 7,794 | 16,314 | 1,131 | |||||||||||||||||||||||
Other (1) | (4,013) | 2,734 | (1,182) | (6,560) | (4,498) | 1,489 | (2,406) | (4,415) | |||||||||||||||||||||||
Total Operating Revenues | $ | 72,862 | $ | 21,625 | $ | 60,357 | $ | 59,016 | $ | 84,991 | $ | 18,462 | $ | 58,885 | $ | 60,933 | |||||||||||||||
Volume (in Dts for natural gas and KWHs for electric) | |||||||||||||||||||||||||||||||
Residential | 2,962,532 | 268,993 | 1,036,872 | 235,406 | 3,180,160 | 278,976 | 1,066,559 | 241,428 | |||||||||||||||||||||||
Commercial | 2,810,391 | 3,348,307 | 1,275,328 | 233,940 | 2,844,296 | 3,526,943 | 1,304,827 | 233,223 | |||||||||||||||||||||||
Industrial | 3,960,447 | 21,419,122 | 3,688,370 | 18,383 | 4,030,716 | 13,278,643 | 3,680,779 | 11,810 | |||||||||||||||||||||||
Other | 138,009 | — | 1,771,243 | — | 56,941 | — | 1,419,623 | 5,716 | |||||||||||||||||||||||
Total | 9,871,379 | 25,036,422 | 7,771,813 | 487,729 | 10,112,113 | 17,084,562 | 7,471,788 | 492,177 | |||||||||||||||||||||||
Average Customers | |||||||||||||||||||||||||||||||
Residential | 73,698 | 17,178 | 57,444 | 24,511 | 71,022 | 16,366 | 55,541 | 24,723 | |||||||||||||||||||||||
Commercial(2) | 7,090 | 1,543 | 3,923 | 7,233 | 6,975 | 1,509 | 3,923 | 7,494 | |||||||||||||||||||||||
Industrial(2) | 168 | 17 | 2,430 | 2 | 155 | 16 | 2,289 | 2 | |||||||||||||||||||||||
Other | 14 | — | 12 | — | 5 | — | 11 | — | |||||||||||||||||||||||
Total | 80,970 | 18,738 | 63,809 | 31,746 | 78,157 | 17,891 | 61,764 | 32,219 | |||||||||||||||||||||||
(1) | Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties, and adjustments or changes in taxes, such as the TCJA, which are passed through to customers. This amount also includes the reserve for estimated customer refunds associated with the TCJA. |
(2) | Certain volumes and customers have been reclassified when compared to the prior year for consistency with current year presentation. |
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-reports-third-quarter-2019-results-300953337.html
SOURCE Chesapeake Utilities Corporation
Article Date
11/7/2019Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
DOVER, Del., Nov. 6, 2019 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.405 per share on the Company's common stock. The $0.405 per share dividend will be paid on January 6, 2020 to all shareholders of record at the close of business on December 16, 2019.
Chesapeake has paid dividends to its shareholders without interruption for 59 years. During those 59 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-quarterly-dividend-300953085.html
SOURCE Chesapeake Utilities Corporation
Article Date
11/6/201910/28/2019 - Gas South Acquires Natural Gas Marketing Operations In Florida From Peninsula Energy Services Company, Inc.
Gas South Acquires Natural Gas Marketing Operations In Florida From Peninsula Energy Services Company, Inc.
Source: PR Newswire
ATLANTA, Oct. 28, 2019 /PRNewswire/ -- Gas South, one of the Southeast's leading natural gas providers, will purchase the Florida assets of Peninsula Energy Services Company (PESCO). PESCO is a subsidiary of Chesapeake Utilities Corporation (NYSE: CPK), a diversified energy company.
"Our team at Gas South has always been impressed with how PESCO built its gas marketing business in Florida by providing exceptional value and building mutually beneficial business relationships," said Kevin Greiner, Gas South president and CEO. "When we had the opportunity to acquire this business, we viewed it as a great strategic and cultural fit. We're excited to have PESCO employees join Gas South to help us expand our retail natural gas business in Florida and elsewhere. We also look forward to continuing a very positive long-term relationship with Chesapeake Utilities as we continue to expand our respective businesses."
Gas South entered Florida's commercial and industrial natural gas market in 2014, and will begin serving the acquired customers on November 1, 2019.
"We're excited to be able to offer Gas South's competitive rates and outstanding service to more customers in Florida," added Greiner. "We look forward to increasing our engagement with Florida's dynamic business and civic communities."
About Gas South:
Gas South is a natural gas provider in competitive markets throughout the southeastern U.S. The company serves more than 300,000 residential, business and governmental customers in Georgia, Florida, North Carolina and South Carolina. Gas South offers simple and competitively priced rate plans, outstanding local customer service, and a promise to give back 5% of its profits to help children in need. Since 2016, Gas South has been recognized as one of the "Top Workplaces in Atlanta" by the Atlanta Journal-Constitution. Gas South is a wholly-owned subsidiary of Cobb EMC, one of the country's largest electric cooperatives. For more information, visit www.GasSouth.com.
Contact:
Rachael Sejnoha
Senior Public Relations Coordinator
770-763-4687
Rachael.Sejnoha@GasSouth.com
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SOURCE Gas South, LLC.
Article Date
10/28/201910/22/2019 - Gas South Acquires Natural Gas Marketing Operations In Florida From Peninsula Energy Services Company, Inc.
Gas South Acquires Natural Gas Marketing Operations In Florida From Peninsula Energy Services Company, Inc.
Source: PR Newswire
ATLANTA, Oct. 22, 2019 /PRNewswire/ -- Gas South, one of the Southeast's leading natural gas providers, will purchase the Florida assets of Peninsula Energy Services Company (PESCO). PESCO is a subsidiary of Chesapeake Utilities Corporation (NYSE: CPK), a diversified energy company.
"Our team at Gas South has always been impressed with how PESCO built its gas marketing business in Florida by providing exceptional value and building mutually beneficial business relationships," said Kevin Greiner, Gas South president and CEO. "When we had the opportunity to acquire this business, we viewed it as a great strategic and cultural fit. We're excited to have PESCO employees join Gas South to help us expand our retail natural gas business in Florida and elsewhere. We also look forward to continuing a very positive long-term relationship with Chesapeake Utilities as we continue to expand our respective businesses."
Gas South entered Florida's commercial and industrial natural gas market in 2014, and will begin serving the acquired customers on November 1, 2019.
"We're excited to be able to offer Gas South's competitive rates and outstanding service to more customers in Florida," added Greiner. "We look forward to increasing our engagement with Florida's dynamic business and civic communities."
About Gas South:
Gas South is a natural gas provider in competitive markets throughout the southeastern U.S. The company serves more than 300,000 residential, business and governmental customers in Georgia, Florida, North Carolina and South Carolina. Gas South offers simple and competitively priced rate plans, outstanding local customer service, and a promise to give back 5% of its profits to help children in need. Since 2016, Gas South has been recognized as one of the "Top Workplaces in Atlanta" by the Atlanta Journal-Constitution. Gas South is a wholly-owned subsidiary of Cobb EMC, one of the country's largest electric cooperatives. For more information, visit www.GasSouth.com.
Contact:
Rachael Sejnoha
Senior Public Relations Coordinator
770-763-4687
Rachael.Sejnoha@GasSouth.com
View original content to download multimedia:http://www.prnewswire.com/news-releases/gas-south-acquires-natural-gas-marketing-operations-in-florida-from-peninsula-energy-services-company-inc-300942755.html
SOURCE Gas South, LLC.
Article Date
10/22/201910/11/2019 - Chesapeake Utilities Corporation To Host Conference Call To Review Third Quarter 2019 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review Third Quarter 2019 Financial Results
Source: PR Newswire
DOVER, Del., Oct. 11, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, November 8, 2019, at 10:30 a.m. ET to discuss the Company's financial results for the third quarter ended September 30, 2019. The earnings press release will be issued on Thursday, November 7, 2019, before market hours.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2019 Third Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-third-quarter-2019-financial-results-300937347.html
SOURCE Chesapeake Utilities Corporation
Article Date
10/11/2019Chesapeake Utilities Corporation to Exit the Natural Gas Marketing Business; Selling Peninsula Energy Services Company, Inc. Assets
Source: PR Newswire
DOVER, Del., Oct. 9, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (Chesapeake Utilities) (NYSE: CPK) today announced that it is exiting the natural gas marketing business through the sale of the majority of the assets of Peninsula Energy Services Company, Inc. (PESCO), the Company's natural gas marketing subsidiary. To date, the Company has executed three separate transactions to sell PESCO's assets and contracts:
The Company expects to recognize a gain from the sale of the assets in 2019 upon the closing of the transactions. More information will be provided in the Company's third quarter earnings press release and Form 10-Q report as well as subsequent filings.
"After performing a strategic review of the PESCO business unit, we determined that our efforts should be focused on the strategies that support our core energy delivery businesses. The level of investment in infrastructure required to achieve the scale needed for future growth meant that PESCO would not achieve the target returns we expect," noted Jeff Householder, President and CEO of Chesapeake Utilities Corporation. "As a result, we made the decision to exit this business, and have done so in a way that reduces future volatility in our earnings, recovers our investment and improves our earnings outlook going forward."
"Commitment to quality service, access to supply, and service offerings were the driving factors for the selected counterparties. We are working closely with Gas South, UET, and NJRES to ensure each transaction is executed in an efficient manner with minimal impact to the respective customers," added Bill Hancock, Assistant Vice President of PESCO. "We have one remaining small book of business, our Producer Services portfolio, which we are targeting to sell by the end of the year."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
About Gas South LLC
Gas South is a leading provider of natural gas in competitive markets throughout the southeastern U.S., serving more than 300,000 residential, business and governmental customers in Georgia, Florida, North Carolina and South Carolina. Gas South is a wholly-owned subsidiary of Cobb EMC, one of the country's largest electric cooperatives.
About United Energy Trading, LLC
United Energy Trading, LLC is a fully integrated energy marketing and logistics organization with operations throughout the continental United States and Canada. UET purchases, transports, and/or sells approximately 2 billion cubic feet/day of natural gas on over 80 pipelines, approximately 400,000 barrels/day of crude oil on over 20 pipelines and over 2.5 million gallons per day throughout North America.
About NJR Energy Services Company
NJR Energy Services, a subsidiary of New Jersey Resources (NYSE: NJR), manages a diversified portfolio of natural gas transportation and storage assets and provides physical natural gas services and customized energy solutions to its customers across North America.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-exit-the-natural-gas-marketing-business-selling-peninsula-energy-services-company-inc-assets-300934651.html
SOURCE Chesapeake Utilities Corporation
Article Date
10/9/2019Chesapeake Utilities Corporation Named Top Workplace for Eighth Consecutive Year
Source: PR Newswire
DOVER, Del., Aug. 26, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that the Company has been recognized as a Top Workplace by Energage, a research firm that specializes in organizational health and workplace engagement. Chesapeake was named a top place to work in Delaware for the eighth consecutive year, and in central Florida, Chesapeake's subsidiary, Florida Public Utilities Company, also earned Top Workplace recognition. These honors are based entirely on feedback from employees who were surveyed by Energage, a research firm that specializes in organizational health and workplace engagement. In Delaware, Energage partners with The News Journal and in central Florida, with the Orlando Sentinel to publish the survey results.
To measure organizational health and workplace engagement, Energage administers anonymous, reliable employee engagement surveys to identify top-ranking organizations. The survey measures how well companies set a clear direction for the future, create a culture of high performance and foster strong connections with and among their employees.
"Our employees' strategic focus, innovative approach to the market and commitment to our customers and communities is the secret to our Company's success," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "I'm honored to work alongside this group of engaged employees who care about each other and the customers and communities we serve."
According to the survey results, approximately nine out of 10 Chesapeake employees surveyed said they would "highly recommend" working for the Company. Employees highlighted the Company's strong values and ethics, confidence in the direction of the Company, feeling a part of something meaningful, and genuine appreciation of employee efforts. Survey responses included comments about the positive work environment, the family-like atmosphere, and the opportunity to volunteer for community organizations during work hours.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com, through the Company's Investor Relations App and on the Annual Report Microsite at cpkannualreport.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
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SOURCE Chesapeake Utilities Corporation
Article Date
8/26/2019Chesapeake Utilities Corporation Reports Second Quarter 2019 Results
Source: PR Newswire
DOVER, Del., Aug. 8, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced second quarter financial results. The Company's net income for the quarter ended June 30, 2019 was $8.3 million, compared to $6.4 million for the same quarter of 2018. Earnings per share ("EPS") for the quarter ended June 30, 2019 were $0.50, compared to $0.39 per share for the same quarter of 2018. Higher earnings for the second quarter primarily reflect contributions from recently completed and ongoing pipeline expansion projects, organic growth in the natural gas distribution operations and lower operating expenses. These increases were partially offset by lower results from Peninsula Energy Services Company, Inc. ("PESCO") and higher interest expense. The absence of a one-time non-recurring severance charge recorded in the second quarter of 2018, was offset by the impact of warmer weather in the second quarter of 2019.
For the six months ended June 30, 2019, the Company reported net income of $37.0 million, or $2.25 per share. This represents an increase of $3.7 million or $0.22 per share compared to the same period in 2018. Year-to-date earnings were impacted by the factors noted above, along with incremental margin from the acquisition of certain assets of Marlin Gas Transport, Inc. ("Marlin Gas Transport") and R. F. Ohl Fuel Oil, Inc. ("Ohl"), a Florida Public Service Commission ("PSC") regulatory order that enabled the Company to retain tax savings associated with lower federal tax rates resulting from the United States Tax Cuts and Jobs Act ("TCJA") in several natural gas distribution operations and continued growth in gross margin from Aspire Energy of Ohio ("Aspire Energy"). These increases were partially offset by lower results for PESCO, lower energy consumption due to warmer weather in the Company's service territories, and higher interest expense. A detailed discussion of operating results begins on page 3.
"In the first half of 2019, we have delivered strong financial results to our shareholders driven by our organic growth initiatives and increased margin from the Marlin Gas Transport and Ohl assets we acquired at the end of 2018. The unwavering commitment of our employees to provide safe, clean, reliable energy services while growing the footprint of our businesses and continually generating increased financial results is truly impressive," stated Jeffry M. Householder, President and Chief Executive Officer. "As we move into the second half of 2019, I'm excited to continue working with such a determined group of employees in further expanding the footprint of our existing businesses and realizing new investment opportunities like the West Palm Beach expansion, Del-Mar Energy Pathway and our recently announced Callahan Intrastate Pipeline project," added Mr. Householder.
Significant Items Impacting Earnings
Results for the three and six months ended June 30, 2019 and 2018 were impacted by the following significant items:
For the Three Months Ended June 30, | 2019 | 2018 | |||||||||||||
(in thousands, except per share data) | Net Income | EPS | Net Income | EPS | |||||||||||
Reported (GAAP) Earnings | $ | 8,304 | $ | 0.50 | $ | 6,387 | $ | 0.39 | |||||||
Change in unrealized mark-to-market ("MTM") activity | (41) | — | (251) | (0.02) | |||||||||||
Nonrecurring separation expenses associated with a former executive | — | — | 1,421 | 0.09 | |||||||||||
Adjusted (Non-GAAP) Earnings** | $ | 8,263 | $ | 0.50 | $ | 7,557 | $ | 0.46 | |||||||
Adjusted earnings for the second quarter of 2019 were $8.3 million, or $0.50 per share, an increase of 8.7 percent compared to $7.6 million, or $0.46 per share, for the second quarter of 2018.
For the Six Months Ended June 30, | 2019 | 2018 | |||||||||||||
(in thousands, except per share data) | Net Income | EPS | Net Income | EPS | |||||||||||
Reported (GAAP) Earnings | $ | 36,968 | $ | 2.25 | $ | 33,241 | $ | 2.03 | |||||||
Change in unrealized MTM activity | 38 | — | (4,229) | (0.26) | |||||||||||
2018 portion of the retained tax savings for certain Florida natural gas distribution operations associated with the TCJA income tax rate reduction | (990) | (0.06) | — | — | |||||||||||
Nonrecurring separation expenses associated with a former executive | — | — | 1,421 | 0.09 | |||||||||||
Adjusted (Non-GAAP) Earnings | $ | 36,016 | $ | 2.19 | $ | 30,433 | $ | 1.86 | |||||||
For the six months ended June 30, 2019, adjusted earnings were $36.0 million, or $2.19 per share, an increase of 17.7 percent compared to $30.4 million, or $1.86 per share, for the six months ended June 30, 2018.
*Unless otherwise noted, earnings per share information is presented on a diluted basis.
**This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin, adjusted earnings 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 "gross margin" by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance. The Company calculates "adjusted earnings" by adjusting reported (GAAP) earnings to exclude the impact of certain significant non-cash items, including the impact of unrealized MTM gains (losses) and one-time charges, such as severance charges, and any prior year tax savings retained by our regulated businesses as a result of current year regulatory authorizations. The Company calculates "adjusted EPS" by dividing adjusted earnings by the weighted average common shares outstanding.
Operating Results for the Quarters Ended June 30, 2019 and 2018 | ||||||||||||||
Consolidated Results | ||||||||||||||
Three Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent Change | ||||||||||
Gross margin | $ | 70,110 | $ | 67,261 | $ | 2,849 | 4.2 | % | ||||||
Depreciation, amortization and property taxes | 16,124 | 13,749 | 2,375 | 17.3 | % | |||||||||
Other operating expenses | 36,550 | 40,264 | (3,714) | (9.2) | % | |||||||||
Operating income | $ | 17,436 | $ | 13,248 | $ | 4,188 | 31.6 | % | ||||||
Operating income during the second quarter of 2019 increased by $4.2 million, or 31.6 percent, compared to the same period in 2018. The increase in operating income primarily reflects strong performance by the Company's natural gas transmission and distribution operations and a $2.2 million decrease in operating expenses which excludes the one-time nonrecurring severance charge recorded in 2018 associated with a former company executive. A $1.8 million decrease in operating income at PESCO partially offset these gains. In addition, the absence of the one-time nonrecurring severance charge recorded in 2018 associated with a former company executive, largely offset lower gross margin due to the impact of warmer weather on the Delmarva Peninsula and Ohio operations.
Regulated Energy Segment | ||||||||||||||
Three Months Ended | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent Change | ||||||||||
Gross margin | $ | 55,086 | $ | 50,494 | $ | 4,592 | 9.1 | % | ||||||
Depreciation, amortization and property taxes | 13,087 | 11,161 | 1,926 | 17.3 | % | |||||||||
Other operating expenses | 23,247 | 25,029 | (1,782) | (7.1) | % | |||||||||
Operating income | $ | 18,752 | $ | 14,304 | $ | 4,448 | 31.1 | % | ||||||
Operating income for the Regulated Energy segment for the three months ended June 30, 2019 was $18.8 million, an increase of $4.4 million compared to the same period in 2018. The increased operating income resulted primarily from increased gross margin of $4.6 million. Depreciation, amortization, and property taxes expense increased by $1.9 million, and was offset by a decrease of $1.8 million in other operating expenses.
The key components of the increase in gross margin are shown below:
(in thousands) | |||
Eastern Shore and Peninsula Pipeline service expansions (including related Florida natural gas distribution operation expansions) | $ | 3,680 | |
Natural gas distribution growth (excluding service expansions) | 867 | ||
Electric operations consumption growth | 316 | ||
Florida Gas Reliability and Infrastructure Program ("GRIP") | 310 | ||
TCJA impact primarily from retained tax savings from Florida natural gas distribution operations | 255 | ||
Sandpiper Energy, Inc.'s (Sandpiper) margin from natural gas conversions | 231 | ||
Decreased customer consumption - primarily due to warmer weather | (1,159) | ||
Other variances | 92 | ||
Quarter-over-quarter increase in gross margin | $ | 4,592 | |
The major components of the decrease in other operating expenses are as follows:
(in thousands) | |||
Outside services, regulatory, facilities and maintenance costs | $ | (1,466) | |
Incentive compensation costs (including timing of accruals) | (328) | ||
Payroll, benefits and other employee-related expenses(1) | (257) | ||
Other variances | 269 | ||
Quarter-over-quarter decrease in other operating expenses | $ | (1,782) | |
(1) Since the Company self-insures for healthcare costs, benefits costs fluctuate depending upon filed claims. | |||
Unregulated Energy Segment | ||||||||||||||
Three Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent Change | ||||||||||
Gross margin | $ | 15,121 | $ | 16,915 | $ | (1,794) | (10.6) | % | ||||||
Depreciation, amortization and property taxes | 3,003 | 2,553 | 450 | 17.6 | % | |||||||||
Other operating expenses | 13,466 | 13,872 | (406) | (2.9) | % | |||||||||
Operating (loss) income | $ | (1,348) | $ | 490 | $ | (1,838) | NMF | |||||||
Non-Meaningful Figure (NMF) | ||||||||||||||
Given the impact of PESCO on the Unregulated Energy segment, the Company continues to present the segment excluding PESCO's results:
Unregulated Energy Segment, excluding PESCO | ||||||||||||||
Three Months Ended | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent Change | ||||||||||
Gross margin | $ | 14,380 | $ | 14,309 | $ | 71 | 0.5 | % | ||||||
Depreciation, amortization and property taxes | 2,850 | 2,399 | 451 | 18.8 | % | |||||||||
Other operating expenses | 11,805 | 12,108 | (303) | (2.5) | % | |||||||||
Operating loss | $ | (275) | $ | (198) | $ | (77) | 38.9 | % | ||||||
Excluding PESCO, operating loss for the Unregulated Energy segment increased by $0.1 million for the three months ended June 30, 2019, compared to the same period in 2018. The increased operating loss was driven by $0.5 million in higher depreciation, amortization and property taxes, partially offset by a $0.1 million increase in gross margin and $0.3 million in lower other operating expenses. While Marlin Gas Services, LLC ("Marlin Gas Services"), the Company's newly created subsidiary, generated an additional $1.0 million of margin for the segment, this was largely offset by warmer weather during the quarter which decreased customer consumption in the propane operations and Aspire Energy.
The major components of the increase in gross margin are shown below:
(in thousands) | ||||
Marlin Gas Services (assets acquired in December 2018) | $ | 1,030 | ||
Propane Operations | ||||
Ohl acquisition (assets acquired in December 2018) | 112 | |||
Decreased customer consumption - primarily due to warmer weather | (818) | |||
Decrease in retail and wholesale propane margins | (166) | |||
Aspire Energy | ||||
Rate increases | 203 | |||
Decreased customer consumption - primarily due to warmer weather | (104) | |||
Other variances | (186) | |||
Quarter-over-quarter increase in gross margin | $ | 71 | ||
The major components of the decrease in other operating expenses are as follows:
(in thousands) | |||
Operating expenses for Marlin Gas Services and Ohl (Assets acquired in December 2018) including costs to expand the future growth prospects for the businesses (1) | $ | 835 | |
Outside services and facilities maintenance costs | (469) | ||
Payroll, benefits and other employee-related expenses(2) | (361) | ||
Incentive compensation costs (including timing of accruals) | (239) | ||
Other variances | (69) | ||
Quarter-over-quarter decrease in other operating expenses | $ | (303) | |
(1) The Ohl and Marlin Gas Services other operating expenses have been aggregated and are excluded from the expense changes shown in the remainder of the table. | |||
(2) Since the Company self-insures for healthcare costs, benefits costs fluctuate depending upon filed claims. | |||
PESCO | ||||||||||||||
Three Months Ended | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent Change | ||||||||||
Gross margin | $ | 741 | $ | 2,606 | $ | (1,865) | (71.6) | % | ||||||
Depreciation, amortization and property taxes | 153 | 154 | (1) | (0.6) | % | |||||||||
Other operating expenses | 1,661 | 1,764 | (103) | (5.8) | % | |||||||||
Operating (loss) income | $ | (1,073) | $ | 688 | $ | (1,761) | NMF | |||||||
Operating income for PESCO decreased by $1.8 million for the three months ended June 30, 2019, compared to the same period in 2018. The decline in operating income was driven by a $1.9 million decrease in PESCO's gross margin compared to the same period in 2018 resulting from the following:
(in thousands) | |||
Increased supply costs | $ | (742) | |
Absence of nonrecurring margin in 2018 associated with the Southeast portfolio | (642) | ||
Net impact of PESCO's MTM activity | (302) | ||
Other variances | (179) | ||
Quarter-over-quarter decrease in gross margin for PESCO | $ | (1,865) | |
Operating Results for the Six Months Ended June 30, 2019 and 2018 | ||||||||||||||
Consolidated Results | ||||||||||||||
Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent Change | ||||||||||
Gross margin | $ | 171,507 | $ | 158,560 | $ | 12,947 | 8.2 | % | ||||||
Depreciation, amortization and property taxes | 31,628 | 27,447 | 4,181 | 15.2 | % | |||||||||
Other operating expenses | 78,450 | 77,459 | 991 | 1.3 | % | |||||||||
Operating income | $ | 61,429 | $ | 53,654 | $ | 7,775 | 14.5 | % | ||||||
Operating income during the six months ended June 30, 2019 increased by $7.8 million, or 14.5 percent, compared to the same period in 2018. The increase in operating income reflects continued strong growth across the Company, generated by organic growth within existing businesses, recent expansion investments, regulatory initiatives and rate/pricing mechanisms, the successful integration of the Ohl acquisition and strong performance of Marlin Gas Services.
Regulated Energy Segment | ||||||||||||||
Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent Change | ||||||||||
Gross margin | $ | 122,188 | $ | 111,656 | $ | 10,532 | 9.4 | % | ||||||
Depreciation, amortization and property taxes | 25,618 | 22,317 | 3,301 | 14.8 | % | |||||||||
Other operating expenses | 48,801 | 48,324 | 477 | 1.0 | % | |||||||||
Operating income | $ | 47,769 | $ | 41,015 | $ | 6,754 | 16.5 | % | ||||||
Operating income for the Regulated Energy segment for the six months ended June 30, 2019 was $47.8 million, an increase of $6.8 million or 16.5 percent, compared to the same period in 2018. The increase in operating income resulted from $10.5 million in additional gross margin, offset by $3.3 million in higher depreciation, amortization and property taxes and a $0.5 million increase in other operating expenses. On February 25, 2019, the Florida PSC issued a final order regarding the treatment of the TCJA, allowing us to retain the savings associated with lower federal tax rates for certain of our natural gas distribution operations. As a result, $1.3 million in reserves for customer refunds, recorded in 2018, were reversed in the first quarter of 2019. Excluding the impact of the reversal, gross margin and operating income for the six months ended June 30, 2019 increased by $9.2 million and $5.4 million, or 8.2 percent and 13.2 percent, respectively.
The key components of the increase in gross margin are shown below:
(in thousands) | |||
Eastern Shore and Peninsula Pipeline service expansions (including related Florida natural gas distribution operation expansions) | $ | 8,140 | |
Natural gas distribution - customer growth (excluding service expansions) | 2,253 | ||
2018 retained tax savings for certain Florida natural gas distribution operations | 1,321 | ||
TCJA impact - primarily from the 2019 retained tax savings for certain Florida natural gas operations | 810 | ||
Sandpiper's margin from natural gas conversions | 614 | ||
Florida GRIP | 534 | ||
Decreased customer consumption - primarily due to warmer weather | (2,841) | ||
Other variances | (299) | ||
Period-over-period increase in gross margin | $ | 10,532 | |
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Payroll, benefits and other employee-related expenses(1) | $ | 1,619 | |
Incentive compensation costs (including timing of accruals) | 331 | ||
Outside services and regulatory costs | (1,070) | ||
Facilities maintenance costs | (1,005) | ||
Other variances | 602 | ||
Period-over-period increase in other operating expenses | $ | 477 | |
(1) Since the Company self-insures for healthcare costs, benefits costs fluctuate depending upon filed claims. | |||
Unregulated Energy Segment | ||||||||||||||
Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent Change | ||||||||||
Gross margin | $ | 49,523 | $ | 47,216 | $ | 2,307 | 4.9 | % | ||||||
Depreciation, amortization and property taxes | 5,942 | 5,059 | 883 | 17.5 | % | |||||||||
Other operating expenses | 29,953 | 27,983 | 1,970 | 7.0 | % | |||||||||
Operating income | $ | 13,628 | $ | 14,174 | $ | (546) | (3.9) | % | ||||||
The Company continues to present the Unregulated Energy segment excluding PESCO's results:
Unregulated Energy Segment, excluding PESCO | ||||||||||||||
Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent Change | ||||||||||
Gross margin | $ | 46,922 | $ | 43,435 | $ | 3,487 | 8.0 | % | ||||||
Depreciation, amortization and property taxes | 5,641 | 4,757 | 884 | 18.6 | % | |||||||||
Other operating expenses | 26,048 | 24,428 | 1,620 | 6.6 | % | |||||||||
Operating income | $ | 15,233 | $ | 14,250 | $ | 983 | 6.9 | % | ||||||
Excluding PESCO, operating income for the Unregulated Energy segment increased by $1.0 million for the six months ended June 30, 2019, compared to the same period in 2018. The increase in operating income was driven by $3.5 million in additional gross margin, partially offset by $1.6 million in higher operating expenses and $0.9 million in higher depreciation and taxes.
The major components of the $3.5 million increase in gross margin are shown below:
(in thousands) | ||||
Marlin Gas Services (acquired assets of Marlin Gas Transport in December 2018) | $ | 3,359 | ||
Propane Operations | ||||
Increased retail margins per gallon | 1,159 | |||
Ohl acquisition (assets acquired in December 2018) | 588 | |||
Decrease in customer consumption due to the absence of the 2018 Bomb Cyclone and warmer weather in 2019 | (1,623) | |||
Lower wholesale propane margins and sales | (534) | |||
Aspire Energy | ||||
Rate increases | 892 | |||
Customer consumption growth | 200 | |||
Other variances | (554) | |||
Period-over-period increase in gross margin | $ | 3,487 | ||
The major components of the increase in other operating expenses are as follows:
(in thousands) | |||
Operating expenses for Marlin Gas Services and Ohl (Assets acquired in December 2018) including costs to expand the future growth prospects for the businesses (1) | $ | 1,689 | |
Incentive compensation costs (including timing of accruals) | 255 | ||
Outside services | 117 | ||
Facilities maintenance costs | (336) | ||
Payroll, benefits and other employee-related expenses(2) | (39) | ||
Other variances | (66) | ||
Period-over-period increase in other operating expenses | $ | 1,620 | |
(1) The Ohl and Marlin Gas Services other operating expenses have been aggregated and are excluded from the expense changes shown in the remainder of the table. | |||
(2) Since the Company self-insures for healthcare costs, benefits costs fluctuate depending upon filed claims. | |||
PESCO | ||||||||||||||
Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent Change | ||||||||||
Gross margin | $ | 2,601 | $ | 3,781 | $ | (1,180) | (31.2) | % | ||||||
Depreciation, amortization and property taxes | 301 | 302 | (1) | (0.3) | % | |||||||||
Other operating expenses | 3,905 | 3,555 | 350 | 9.8 | % | |||||||||
Operating loss | $ | (1,605) | $ | (76) | $ | (1,529) | NMF | |||||||
For the six months ended June 30, 2019, PESCO's gross margin decreased by $1.2 million compared to the same period in 2018. Lower gross margin from PESCO for the six months ended June 30, 2019 resulted from the following:
(in thousands) | |||
Net impact of extraordinary costs associated with the 2018 Bomb Cyclone for the Mid-Atlantic wholesale portfolio (1) | $ | 5,545 | |
Net impact of PESCO's MTM activity | (5,892) | ||
Absence of nonrecurring margin in 2018 associated with the Southeast portfolio | (642) | ||
Other variances | (191) | ||
Period-over-period decrease in gross margin for PESCO | $ | (1,180) | |
(1) The 2018 Bomb Cyclone refers to the high-intensity winter storms in early January 2018 that impacted the Mid-Atlantic region and had a residual impact on our businesses through the month of February. The exceedingly high demand and associated impacts on pipeline capacity and gas supply in the Mid-Atlantic region created significant, unusual costs for PESCO. While such concerted impacts are not expected to occur frequently, our management revisited and refined its risk management strategies and implemented additional controls. | |||
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 2018 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
Conference Call
Chesapeake Utilities will host a conference call on Friday, August 9, 2019 at 10:30 a.m. Eastern Time to discuss the Company's financial results for the three and six months ended June 30, 2019. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2019 Second Quarter Results Conference Call. To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, use the link CPK - Conference Call Audio Replay, or visit the Investors/Events and Presentations section of Company's website at www.chpk.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its Investor Relations (IR) App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
Financial Summary | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Gross Margin | |||||||||||||||
Regulated Energy segment | $ | 55,086 | $ | 50,494 | $ | 122,188 | $ | 111,656 | |||||||
Unregulated Energy segment | 15,121 | 16,915 | 49,523 | 47,216 | |||||||||||
Other businesses and eliminations | (97) | (148) | (204) | (312) | |||||||||||
Total Gross Margin | $ | 70,110 | $ | 67,261 | $ | 171,507 | $ | 158,560 | |||||||
Operating Income (Loss) | |||||||||||||||
Regulated Energy segment | $ | 18,752 | $ | 14,304 | $ | 47,769 | $ | 41,015 | |||||||
Unregulated Energy segment | (1,348) | 490 | 13,628 | 14,174 | |||||||||||
Other businesses and eliminations | 32 | (1,546) | 32 | (1,535) | |||||||||||
Total Operating Income (Loss) | 17,436 | 13,248 | 61,429 | 53,654 | |||||||||||
Other expense, net | (316) | (262) | (361) | (194) | |||||||||||
Interest Charges | 5,655 | 3,881 | 11,365 | 7,545 | |||||||||||
Pre-tax Income | 11,465 | 9,105 | 49,703 | 45,915 | |||||||||||
Income Taxes | 3,161 | 2,718 | 12,735 | 12,674 | |||||||||||
Net Income | $ | 8,304 | $ | 6,387 | $ | 36,968 | $ | 33,241 | |||||||
Earnings Per Share of Common Stock | |||||||||||||||
Basic | $ | 0.51 | $ | 0.39 | $ | 2.26 | $ | 2.03 | |||||||
Diluted | $ | 0.50 | $ | 0.39 | $ | 2.25 | $ | 2.03 | |||||||
Financial Summary Highlights
Key variances, between the three months ended June 30, 2018 and 2019, included:
(in thousands, except per share data) | Pre-tax | Net | Earnings | |||||||||
Second Quarter of 2018 Reported Results | $ | 9,105 | $ | 6,387 | $ | 0.39 | ||||||
Adjusting for Unusual Items: | ||||||||||||
Nonrecurring separation expenses associated with a former executive | 1,548 | 1,421 | 0.09 | |||||||||
Decreased customer consumption - primarily due to warmer weather | (2,081) | (1,507) | (0.09) | |||||||||
Net impact of PESCO's MTM activity | (302) | (210) | (0.02) | |||||||||
(835) | (296) | (0.02) | ||||||||||
Increased (Decreased) Gross Margins: | ||||||||||||
Eastern Shore and Peninsula Pipeline service expansions (including related Florida natural gas distribution operation expansions)* | 3,680 | 2,666 | 0.16 | |||||||||
Margin contribution from Marlin Gas Services (acquired assets of Marlin Gas Transport in December 2018) and Ohl acquisition (assets acquired in December 2018)* | 1,142 | 827 | 0.05 | |||||||||
Natural gas distribution growth (excluding service expansions) | 867 | 628 | 0.04 | |||||||||
Florida GRIP* | 310 | 225 | 0.01 | |||||||||
TCJA impact - primarily from the 2019 retained tax savings for certain Florida natural gas operations* | 255 | 185 | 0.01 | |||||||||
Sandpiper's margin from natural gas conversions | 231 | 167 | 0.01 | |||||||||
Aspire Energy rate increases | 203 | 147 | 0.01 | |||||||||
Other margin change for PESCO operations | (1,563) | (1,132) | (0.07) | |||||||||
5,125 | 3,713 | 0.22 | ||||||||||
(Increased) Decreased Operating Expenses (Excluding Cost of Sales): | ||||||||||||
Depreciation, asset removal and property tax costs due to growth investments | (2,055) | (1,488) | (0.09) | |||||||||
Operating expenses for Marlin Gas Services and Ohl (Assets acquired in December 2018) including costs to expand the future growth prospects for the businesses | (1,155) | (837) | (0.05) | |||||||||
Outside services, regulatory, and facilities maintenance costs | 1,866 | 1,351 | 0.08 | |||||||||
Payroll, benefits and other employee-related expenses | 678 | 491 | 0.03 | |||||||||
Incentive compensation costs (including timing of accruals) | 512 | 371 | 0.03 | |||||||||
(154) | (112) | — | ||||||||||
Change in effective tax rate | — | (100) | (0.01) | |||||||||
Interest charges | (1,774) | (1,285) | (0.08) | |||||||||
Net other changes | (2) | (3) | — | |||||||||
(1,776) | (1,388) | (0.09) | ||||||||||
Second Quarter of 2019 Reported Results | $ | 11,465 | $ | 8,304 | $ | 0.50 | ||||||
*See the Major Projects and Initiatives table later in this press release. | ||||||||||||
Key variances, between the six months ended June 30, 2018 and 2019, included:
(in thousands, except per share data) | Pre-tax | Net | Earnings | |||||||||
Six Month Ended June 30, 2018 Reported Results | $ | 45,915 | $ | 33,241 | $ | 2.03 | ||||||
Adjusting for Unusual Items: | ||||||||||||
Nonrecurring separation expenses associated with a former executive | 1,548 | 1,421 | 0.09 | |||||||||
2018 retained tax savings for certain Florida natural gas operations* | 1,321 | 990 | 0.06 | |||||||||
Net impact of PESCO's MTM activity | (5,892) | (4,267) | (0.26) | |||||||||
Decreased customer consumption - primarily due to warmer weather | (4,264) | (3,171) | (0.19) | |||||||||
(7,287) | (5,027) | (0.30) | ||||||||||
Increased (Decreased) Gross Margins: | ||||||||||||
Eastern Shore and Peninsula Pipeline service expansions (including new service in Northwest Florida for related Florida natural gas distribution operations)* | 8,140 | 6,055 | 0.37 | |||||||||
Absence of the 2018 Bomb Cyclone and capacity constraints cost for PESCO | 5,545 | 4,124 | 0.25 | |||||||||
Margin contribution from Marlin Gas Services (acquired assets of Marlin Gas Transport) and Ohl acquisition (assets acquired in December 2018)* | 3,947 | 2,936 | 0.18 | |||||||||
Natural gas distribution growth (excluding service expansions) | 2,253 | 1,675 | 0.10 | |||||||||
Higher propane retail margins per gallon | 1,159 | 862 | 0.05 | |||||||||
Aspire Energy rate increases | 892 | 664 | 0.04 | |||||||||
TCJA impact - primarily from the 2019 retained tax savings for certain Florida natural gas operations* | 810 | 602 | 0.04 | |||||||||
Sandpiper's margin from natural gas conversions | 614 | 456 | 0.03 | |||||||||
Florida GRIP* | 534 | 397 | 0.02 | |||||||||
Other margin change for PESCO operations | (832) | (619) | (0.04) | |||||||||
Wholesale propane margins and sales | (534) | (398) | (0.02) | |||||||||
22,528 | 16,754 | 1.02 | ||||||||||
(Increased) Decreased Other Operating Expenses (Excluding Cost of Sales): | ||||||||||||
Depreciation, asset removal and property tax costs due to new capital investments | (3,559) | (2,647) | (0.16) | |||||||||
Operating expenses for Marlin Gas Services and Ohl (Assets acquired in December 2018) including costs to expand the future growth prospects for the businesses | (2,312) | (1,720) | (0.10) | |||||||||
Payroll, benefits and other employee-related expenses | (1,568) | (1,166) | (0.07) | |||||||||
Incentive compensation costs (including timing of accruals) | (578) | (430) | (0.03) | |||||||||
Operating expenses to support PESCO | (349) | (259) | (0.02) | |||||||||
Facilities maintenance costs | 1,201 | 893 | 0.05 | |||||||||
Outside services and regulatory costs | 952 | 708 | 0.04 | |||||||||
(6,213) | (4,621) | (0.29) | ||||||||||
Change in effective tax rate | — | 516 | 0.03 | |||||||||
Interest Charges | (3,820) | (2,841) | (0.17) | |||||||||
Net other changes | (1,420) | (1,054) | (0.07) | |||||||||
(5,240) | (3,379) | (0.21) | ||||||||||
Six Month Ended June 30, 2019 Reported Results | $ | 49,703 | $ | 36,968 | $ | 2.25 | ||||||
*See the Major Projects and Initiatives table later in this press release. | ||||||||||||
Recently Completed and Ongoing Major Projects and Initiatives
The Company constantly pursues and develops additional projects and initiatives to serve existing and new customers, further grow its businesses and earnings, with the intention to increase shareholder value. The following represent the major projects/initiatives recently completed and currently underway. In the future, the Company will add new projects and initiatives to this table once negotiations are substantially final and the associated earnings can be estimated.
Gross Margin for the Period | ||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | Year Ended | Estimate for | |||||||||||||||||||||||||
Project/Initiative | June 30, | June 30, | December 31, | Fiscal | ||||||||||||||||||||||||
in thousands | 2019 | 2018 | 2019 | 2018 | 2018 | 2019 | 2020 | |||||||||||||||||||||
Florida GRIP (1) | $ | 3,530 | $ | 3,220 | $ | 6,904 | $ | 6,370 | $ | 13,323 | $ | 14,172 | $ | 15,491 | ||||||||||||||
2017 Eastern Shore System Expansion - including interim services | 3,645 | 859 | 8,445 | 3,117 | 9,103 | 16,183 | 15,799 | |||||||||||||||||||||
Northwest Florida Expansion (including related natural gas distribution services) | 1,691 | 1,147 | 3,289 | 1,152 | 4,350 | 6,500 | 6,500 | |||||||||||||||||||||
Western Palm Beach County, Florida Expansion | 161 | — | 322 | — | 54 | 676 | 4,581 | |||||||||||||||||||||
Marlin Gas Services | 1,030 | — | 3,359 | — | 110 | 5,400 | 6,300 | |||||||||||||||||||||
Ohl Propane Acquisition | 112 | — | 588 | — | — | 1,200 | 1,236 | |||||||||||||||||||||
Del-Mar Energy Pathway - including interim services | 189 | — | 353 | — | — | 725 | 3,039 | |||||||||||||||||||||
Callahan Intrastate Pipeline | — | — | — | — | — | — | 2,250 | |||||||||||||||||||||
Tax benefit retained by certain Florida entities(2) | 249 | — | 2,329 | — | — | 3,039 | 1,879 | |||||||||||||||||||||
Total | $ | 10,607 | $ | 5,226 | $ | 25,589 | $ | 10,639 | $ | 26,940 | $ | 47,895 | $ | 57,075 | ||||||||||||||
(1) All periods shown have been adjusted to reflect the lower customer rates as a result of the TCJA. Lower customer rates are offset by the corresponding decrease in federal income tax expense and have no negative impact on net income. | ||||||||||||||||||||||||||||
(2) The amount disclosed for the six months ended 2019 includes tax savings of $1.3 million for the year ended December 31, 2018. The tax savings were recorded in the first quarter of 2019 due to an order by the Florida PSC allowing reversal of a TCJA refund reserve, recorded in 2018, which increased gross margin for the six months ended by that amount. | ||||||||||||||||||||||||||||
Major Projects and Initiatives
Florida GRIP
Florida GRIP is a natural gas pipe replacement program approved by the Florida PSC that allows automatic recovery, through rates, of costs associated with the replacement of mains and services. Since the program's inception in August 2012, the Company has invested $135.2 million of capital expenditures to replace 298 miles of qualifying distribution mains, including $7.9 million of new pipes during the first six months of 2019. GRIP generated additional gross margin of $0.3 million and $0.5 million for the three and six months ended June 30, 2019, respectively, compared to the same periods in 2018.
2017 Eastern Shore System Expansion
Eastern Shore has substantially completed the construction of a system expansion project that increased its capacity by 26 percent. Two remaining segments are expected to be placed into service in various phases during the third quarter of 2019. The project generated $2.8 million and $5.3 million in incremental gross margin during the three and six months ended June 30, 2019, respectively, compared to the same periods in 2018. The project is expected to produce gross margin of approximately $16.2 million in 2019; $15.8 million annually from 2020 through 2022; and $13.2 million annually thereafter based on current customer capacity commitments.
Northwest Florida Expansion
In May 2018, Peninsula Pipeline completed construction of transmission lines, and our Florida natural gas division completed construction of lateral distribution lines, to serve customers in Northwest Florida. The project generated incremental gross margin of $0.5 million and $2.1 million for the three and six months ended June 30, 2019, respectively, compared to the same periods in 2018. The estimated annual gross margin from this project is $6.5 million for 2019 and beyond, with the opportunity for additional margin as the remaining capacity is sold.
Western Palm Beach County, Florida Expansion
Peninsula Pipeline is constructing four transmission lines to bring natural gas to the Company's distribution system in West Palm Beach, Florida. The first phase of this project was placed into service in December 2018 and generated $0.2 million and $0.3 million in additional gross margin for the three and six months ended June 30, 2019, respectively. The Company expects to complete the remainder of the project in phases through early 2020, and estimates that it will generate gross margin of $0.7 million in 2019 and $4.6 million annually thereafter.
Marlin Gas Services
In December 2018, the Company acquired certain operating assets of Marlin Gas Transport, a supplier of mobile compressed natural gas distribution and pipeline solutions, and created Marlin Gas Services, a new subsidiary which offers compressed natural gas solutions to supply interruption scenarios and provides other unique applications where pipeline supplies are unavailable or inadequate to meet customer requirements. Marlin Gas Services generated $1.0 million and $3.4 million of gross margin for the three and six months ended June 30, 2019, respectively. The Company estimates that Marlin Gas Services will generate additional gross margin of approximately $5.4 million in 2019 and $6.3 million in 2020, and expects gross margin to grow beyond 2020 as Marlin Gas Services continues to actively expand the territories it serves as well as leverages its patented technology to potentially serve liquefied natural gas transportation needs.
Ohl Propane Acquisition
In December 2018, Sharp acquired certain propane customers and operating assets of Ohl. Located between two of Sharp's existing districts, Ohl provided propane distribution service to approximately 2,500 residential and commercial customers in Pennsylvania. The customers and assets acquired from Ohl have been assimilated into Sharp. The operations acquired from Ohl generated $0.1 million and $0.6 million of incremental gross margin for the three and six months ended June 30, 2019, respectively. The Company estimates that this acquisition will generate additional gross margin of approximately $1.2 million for Sharp in 2019, with the potential for additional growth in future years.
Del-Mar Energy Pathway
In September 2018, Eastern Shore filed for FERC authorization to construct the Del-Mar Energy Pathway project to provide an additional 14,300 dekatherms per day of capacity to four customers. The project will provide additional natural gas transmission pipeline infrastructure in eastern Sussex County, Delaware, and it will represent the first extension of Eastern Shore's pipeline system into Somerset County, Maryland. Interim services in advance of this project generated $0.2 million and $0.4 million for the three and six months ended June 30, 2019, respectively. The estimated annual gross margin from this project is approximately $0.7 million in 2019, $3.0 million in 2020, $4.6 million in 2021 and $5.1 million annually thereafter. Eastern Shore anticipates that this project will be fully in-service by mid-2021, contingent upon FERC issuing authorization for the project in the third quarter of 2019.
Callahan Intrastate Pipeline
In May 2018, Peninsula Pipeline announced its plan to construct a jointly owned intrastate transmission pipeline with Seacoast Gas Transmission in Nassau County, Florida. The 26-mile pipeline, having an initial capacity of 148,000 dekatherms per day, will serve growing demand in both Nassau and Duval counties, Florida. The project is expected to be placed in-service during the third quarter of 2020 and will generate gross margin for Peninsula Pipeline of $2.3 million in 2020 and $6.0 million annually thereafter.
Regulatory Initiatives
Florida Tax Savings Related to TCJA
In February 2019, the Florida PSC issued orders authorizing certain of the Company's natural gas distribution operations to retain a portion of the tax savings associated with the lower federal tax rates resulting from the TCJA. In accordance with the PSC orders, the Company recognized $1.3 million in margin during the first quarter of 2019, reflecting the reversal of reserves recorded during 2018. The Company expects the annual savings beginning in 2019 to continue in future years, and recognized additional margin of $0.2 million and $1.0 million during the three and six months ended June 30, 2019, respectively.
Other major factors influencing gross margin
Weather and Consumption
Weather conditions accounted for a $2.1 million decrease in gross margin during the second quarter of 2019, compared to the same period in 2018. For the second quarter, period-over-period heating degree-days ("HDD") declined 42 percent on the Delmarva Peninsula and 19 percent in the Company's Ohio service territory. For the six months ended June 30, 2019, weather conditions accounted for a $4.3 million decrease in gross margin. Lower period-over-period HDD's in all of our service territories and extreme conditions due to the "Bomb Cyclone" in early 2018 reduced consumption in the first six months of 2019 compared to the same period in 2018 impacting both our Regulated and Unregulated Energy segments. The following table summarizes HDD and cooling degree day ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three and six months ended June 30, 2019 and 2018.
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2019 | 2018 | Variance | 2019 | 2018 | Variance | ||||||||||||
Delmarva | |||||||||||||||||
Actual HDD | 247 | 424 | (177) | 2,569 | 2,719 | (150) | |||||||||||
10-Year Average HDD ("Normal") | 400 | 423 | (23) | 2,749 | 2,785 | (36) | |||||||||||
Variance from Normal | (153) | 1 | (180) | (66) | |||||||||||||
Florida | |||||||||||||||||
Actual HDD | 18 | 17 | 1 | 379 | 507 | (128) | |||||||||||
10-Year Average HDD ("Normal") | 14 | 16 | (2) | 532 | 533 | (1) | |||||||||||
Variance from Normal | 4 | 1 | (153) | (26) | |||||||||||||
Ohio | |||||||||||||||||
Actual HDD | 535 | 662 | (127) | 3,531 | 3,652 | (121) | |||||||||||
10-Year Average HDD ("Normal") | 607 | 614 | (7) | 3,652 | 3,683 | (31) | |||||||||||
Variance from Normal | (72) | 48 | (121) | (31) | |||||||||||||
Florida | |||||||||||||||||
Actual CDD | 1,086 | 952 | 134 | 1,220 | 1,091 | 129 | |||||||||||
10-Year Average CDD ("Normal") | 975 | 969 | 6 | 1,072 | 1,058 | 14 | |||||||||||
Variance from Normal | 111 | (17) | 148 | 33 | |||||||||||||
Natural Gas Distribution Margin Growth
New customer growth in the Company's natural gas distribution operations generated $0.9 million and $2.3 million of additional margin for the three and six months ended June 30, 2019, respectively. The details for the three and six months ended June 30, 2019 are provided in the following table:
Three Months Ended | Six Months Ended | |||||||
(in thousands) | June 30, 2019 | June 30, 2019 | ||||||
Customer Growth: | ||||||||
Residential | $ | 446 | $ | 1,085 | ||||
Commercial and industrial | 421 | 1,168 | ||||||
Total Customer Growth | $ | 867 | $ | 2,253 | ||||
The additional margin from new customers reflects an increase of approximately 3.7 percent and 3.8 percent for the three and six months ended June 30, 2019, respectively, in the average number of residential customers served on the Delmarva Peninsula, and approximately 3.8 percent and 3.5 percent growth in new residential customers served in Florida as well as an increase in the number of commercial and industrial customers served.
Capital Investment Growth and Financing
The Company's capital expenditures were $72.9 million for the six months ended June 30, 2019. The following table shows the 2019 capital expenditure forecast of $177.8 million by segment and by business line:
2019 | |||
(dollars in thousands) | |||
Regulated Energy: | |||
Natural gas distribution | $ | 64,143 | |
Natural gas transmission | 66,787 | ||
Electric distribution | 5,949 | ||
Total Regulated Energy | 136,879 | ||
Unregulated Energy: | |||
Propane distribution | 11,870 | ||
Energy transmission | 8,345 | ||
Other unregulated energy | 11,000 | ||
Total Unregulated Energy | 31,215 | ||
Other: | |||
Corporate and other businesses | 9,705 | ||
Total Other | 9,705 | ||
Total 2019 Forecasted Capital Expenditures | $ | 177,799 | |
The capital expenditure projection is subject to continuous review and modification. Actual capital requirements may vary from the above estimates due to a number of factors, including changing economic conditions, customer growth in existing areas, regulation, new growth or acquisition opportunities and availability of capital. Historically, actual capital expenditures have typically lagged behind the budgeted amounts.
Impact of Hurricane Michael
In October 2018, Hurricane Michael passed through Florida Public Utilities Company's ("FPU") electric distribution service territory in Northwest Florida. The hurricane caused widespread and severe damage to FPU's infrastructure, resulting in 100 percent of its Northwest Florida customers losing electrical service. FPU, after exerting extraordinary hurricane restoration efforts, restored service to those customers who were able to accept it. FPU expended more than $65.0 million to restore service, which has been recorded as new plant and equipment, charged against FPU's accumulated depreciation or charged against FPU's storm reserve. In conjunction with the hurricane-related expenditures, the Company executed two 13-month unsecured term loans as temporary financing, each in the amount of $30.0 million. The interest cost associated with these loans is LIBOR plus 75 basis points. One of the term loans was executed in December 2018; the other was executed in January 2019. While there is a short-term negative impact, the storm is not expected to have a significant impact going forward, assuming recovery is granted through the regulatory process. On August 7, 2019, the Company filed the necessary regulatory filings seeking recovery of the restoration costs incurred, including eligible financing costs. FPU's results for the six months ended June 30, 2019 included interest expense of $0.5 million, or $0.4 million on an after-tax basis, associated with the intermediate term loans discussed above.
The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. The Company's equity to total capitalization ratio, including short term borrowings, was 45 percent as of June 30, 2019. Excluding the funds expended for Hurricane Michael restoration activities, the Company's equity to total capitalization ratio, including short-term borrowings, would have been approximately 48 percent. The Company seeks to align permanent financing with the in-service dates of its capital projects. The Company may utilize more temporary short-term debt, when the financing cost is attractive, as a bridge to the permanent long-term financing.
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating Revenues | |||||||||||||||
Regulated Energy | $ | 73,403 | $ | 70,504 | $ | 177,021 | $ | 179,897 | |||||||
Unregulated Energy and other | 57,500 | 66,160 | 181,498 | 196,123 | |||||||||||
Total Operating Revenues | 130,903 | 136,664 | 358,519 | 376,020 | |||||||||||
Operating Expenses | |||||||||||||||
Regulated Energy cost of sales | 18,317 | 20,010 | 54,833 | 68,241 | |||||||||||
Unregulated Energy and other cost of sales | 42,476 | 49,393 | 132,179 | 149,219 | |||||||||||
Operations | 32,696 | 36,281 | 69,839 | 68,983 | |||||||||||
Maintenance | 3,600 | 3,619 | 7,280 | 7,211 | |||||||||||
Gain from a settlement | (130) | (130) | (130) | (130) | |||||||||||
Depreciation and amortization | 11,609 | 9,839 | 22,684 | 19,543 | |||||||||||
Other taxes | 4,899 | 4,404 | 10,405 | 9,299 | |||||||||||
Total operating expenses | 113,467 | 123,416 | 297,090 | 322,366 | |||||||||||
Operating Income | 17,436 | 13,248 | 61,429 | 53,654 | |||||||||||
Other expense, net | (316) | (262) | (361) | (194) | |||||||||||
Interest charges | 5,655 | 3,881 | 11,365 | 7,545 | |||||||||||
Income Before Income Taxes | 11,465 | 9,105 | 49,703 | 45,915 | |||||||||||
Income taxes | 3,161 | 2,718 | 12,735 | 12,674 | |||||||||||
Net Income | $ | 8,304 | $ | 6,387 | $ | 36,968 | $ | 33,241 | |||||||
Weighted Average Common Shares Outstanding: | |||||||||||||||
Basic | 16,401,028 | 16,369,641 | 16,393,022 | 16,360,540 | |||||||||||
Diluted | 16,445,743 | 16,417,082 | 16,439,333 | 16,410,061 | |||||||||||
Earnings Per Share of Common Stock: | |||||||||||||||
Basic | $ | 0.51 | $ | 0.39 | $ | 2.26 | $ | 2.03 | |||||||
Diluted | $ | 0.50 | $ | 0.39 | $ | 2.25 | $ | 2.03 | |||||||
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)
| ||||||||
Assets | June 30, 2019 | December 31, 2018 | ||||||
(in thousands, except shares and per share data) | ||||||||
Property, Plant and Equipment | ||||||||
Regulated Energy | $ | 1,380,591 | $ | 1,297,416 | ||||
Unregulated Energy | 245,738 | 237,682 | ||||||
Other businesses and eliminations | 30,347 | 34,585 | ||||||
Total property, plant and equipment | 1,656,676 | 1,569,683 | ||||||
Less: Accumulated depreciation and amortization | (321,284) | (294,295) | ||||||
Plus: Construction work in progress | 85,630 | 108,584 | ||||||
Net property, plant and equipment | 1,421,022 | 1,383,972 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 7,254 | 6,089 | ||||||
Trade and other receivables (less allowance for uncollectible accounts of $1,190 and $1,108, respectively) | 48,908 | 85,404 | ||||||
Accrued revenue | 12,724 | 27,499 | ||||||
Propane inventory, at average cost | 5,143 | 9,791 | ||||||
Other inventory, at average cost | 7,778 | 7,127 | ||||||
Regulatory assets | 6,842 | 4,796 | ||||||
Storage gas prepayments | 4,143 | 6,603 | ||||||
Income taxes receivable | 10,984 | 15,300 | ||||||
Prepaid expenses | 5,873 | 10,079 | ||||||
Derivative assets, at fair value | 10,571 | 13,165 | ||||||
Other current assets | 4,022 | 5,684 | ||||||
Total current assets | 124,242 | 191,537 | ||||||
Deferred Charges and Other Assets | ||||||||
Goodwill | 25,785 | 25,837 | ||||||
Other intangible assets, net | 5,611 | 6,207 | ||||||
Investments, at fair value | 8,821 | 6,711 | ||||||
Operating lease right-of-use assets (1) | 12,404 | — | ||||||
Regulatory assets | 76,945 | 72,422 | ||||||
Other assets | 6,212 | 6,985 | ||||||
Total deferred charges and other assets | 135,778 | 118,162 | ||||||
Total Assets | $ | 1,681,042 | $ | 1,693,671 | ||||
(1) During the first quarter of 2019, the Company adopted a new lease accounting standard, resulting in additional assets and liabilities (both current and non-current portions) which total $12.4 million at June 30, 2019. | ||||||||
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
Capitalization and Liabilities | June 30, 2019 | December 31, 2018 | ||||||
(in thousands, except shares and per share data) | ||||||||
Capitalization | ||||||||
Stockholders' equity | ||||||||
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding | $ | — | $ | — | ||||
Common stock, par value $0.4867 per share (authorized 50,000,000 shares) | 7,984 | 7,971 | ||||||
Additional paid-in capital | 256,385 | 255,651 | ||||||
Retained earnings | 285,762 | 261,530 | ||||||
Accumulated other comprehensive loss | (5,747) | (6,713) | ||||||
Deferred compensation obligation | 4,694 | 3,854 | ||||||
Treasury stock | (4,694) | (3,854) | ||||||
Total stockholders' equity | 544,384 | 518,439 | ||||||
Long-term debt, net of current maturities | 275,924 | 316,020 | ||||||
Total capitalization | 820,308 | 834,459 | ||||||
Current Liabilities | ||||||||
Current portion of long-term debt | 75,600 | 11,935 | ||||||
Short-term borrowing | 301,226 | 294,458 | ||||||
Accounts payable | 50,645 | 129,804 | ||||||
Customer deposits and refunds | 29,839 | 34,155 | ||||||
Accrued interest | 2,073 | 2,317 | ||||||
Dividends payable | 6,644 | 6,060 | ||||||
Accrued compensation | 8,699 | 13,923 | ||||||
Regulatory liabilities | 10,168 | 7,883 | ||||||
Derivative liabilities, at fair value | 10,994 | 14,871 | ||||||
Other accrued liabilities (1) | 16,527 | 12,828 | ||||||
Total current liabilities | 512,415 | 528,234 | ||||||
Deferred Credits and Other Liabilities | ||||||||
Deferred income taxes | 164,421 | 156,820 | ||||||
Regulatory liabilities | 133,858 | 135,039 | ||||||
Environmental liabilities | 6,994 | 7,638 | ||||||
Other pension and benefit costs | 29,675 | 28,513 | ||||||
Operating lease - liabilities (1) | 10,710 | — | ||||||
Deferred investment tax credits and other liabilities | 2,661 | 2,968 | ||||||
Total deferred credits and other liabilities | 348,319 | 330,978 | ||||||
Total Capitalization and Liabilities | $ | 1,681,042 | $ | 1,693,671 | ||||
(1) During the first quarter of 2019, the Company adopted a new lease accounting standard, resulting in additional assets and liabilities (both current and non-current portions) which total $12.4 million at June 30, 2019. | ||||||||
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
For the Three Months Ended June 30, 2019 | For the Three Months Ended June 30, 2018 | |||||||||||||||||||||||||||||||
Delmarva NG Distribution | Chesapeake Utilities Florida NG Division | FPU NG Distribution | FPU Electric Distribution | Delmarva NG Distribution | Chesapeake Utilities Florida NG Division | FPU NG Distribution | FPU Electric Distribution | |||||||||||||||||||||||||
Operating Revenues (in thousands) | ||||||||||||||||||||||||||||||||
Residential | $ | 10,444 | $ | 1,511 | $ | 7,457 | $ | 10,801 | $ | 14,007 | $ | 1,459 | $ | 7,713 | $ | 9,814 | ||||||||||||||||
Commercial | 6,353 | 1,587 | 6,633 | 9,807 | 7,752 | 1,524 | 6,809 | 9,709 | ||||||||||||||||||||||||
Industrial | 1,773 | 3,122 | 6,062 | 416 | 1,987 | 2,854 | 5,218 | 371 | ||||||||||||||||||||||||
Other (1) | (3,647) | 795 | (1,489) | (560) | (3,496) | 480 | (1,459) | (1,532) | ||||||||||||||||||||||||
Total Operating Revenues | $ | 14,923 | $ | 7,015 | $ | 18,663 | $ | 20,464 | $ | 20,250 | $ | 6,317 | $ | 18,281 | $ | 18,362 | ||||||||||||||||
Volume (in Dts for natural gas and KWHs for electric) | ||||||||||||||||||||||||||||||||
Residential | 558,159 | 83,315 | 317,025 | 72,358 | 759,202 | 85,526 | 329,284 | 66,682 | ||||||||||||||||||||||||
Commercial | 673,689 | 1,143,877 | 426,555 | 79,540 | 711,690 | 1,134,555 | 432,192 | 73,276 | ||||||||||||||||||||||||
Industrial | 1,216,120 | 7,065,699 | 1,226,774 | 3,173 | 1,308,129 | 7,024,154 | 1,245,950 | 3,540 | ||||||||||||||||||||||||
Other | 60,515 | — | 634,071 | — | 17,759 | — | 463,846 | 1,907 | ||||||||||||||||||||||||
Total | 2,508,483 | 8,292,891 | 2,604,425 | 155,071 | 2,796,780 | 8,244,235 | 2,471,272 | 145,405 | ||||||||||||||||||||||||
Average Customers | ||||||||||||||||||||||||||||||||
Residential | 73,666 | 17,205 | 57,504 | 24,530 | 71,038 | 16,391 | 55,580 | 24,714 | ||||||||||||||||||||||||
Commercial(2) | 7,085 | 1,544 | 3,937 | 7,228 | 6,994 | 1,517 | 3,932 | 7,493 | ||||||||||||||||||||||||
Industrial(2) | 168 | 17 | 2,435 | 2 | 155 | 16 | 2,284 | 2 | ||||||||||||||||||||||||
Other | 16 | — | 12 | — | 4 | — | 11 | — | ||||||||||||||||||||||||
Total | 80,935 | 18,766 | 63,888 | 31,760 | 78,191 | 17,924 | 61,807 | 32,209 | ||||||||||||||||||||||||
For the Six Months Ended June 30, 2019 | For the Six Months Ended June 30, 2018 | |||||||||||||||||||||||||||||||
Delmarva NG Distribution | Chesapeake Utilities Florida NG Division | FPU NG Distribution | FPU Electric Distribution | Delmarva NG Distribution | Chesapeake Utilities Florida NG Division | FPU NG Distribution | FPU Electric Distribution | |||||||||||||||||||||||||
Operating Revenues (in thousands) | ||||||||||||||||||||||||||||||||
Residential | $ | 40,414 | $ | 3,297 | $ | 18,177 | $ | 20,661 | $ | 49,321 | $ | 3,219 | $ | 18,888 | $ | 21,346 | ||||||||||||||||
Commercial | 19,494 | 3,325 | 14,336 | 17,622 | 23,582 | 3,246 | 15,135 | 18,866 | ||||||||||||||||||||||||
Industrial | 4,162 | 6,387 | 12,060 | 1,026 | 4,293 | 4,725 | 11,590 | 771 | ||||||||||||||||||||||||
Other (1) | (4,468) | 1,906 | (2,123) | (4,467) | (5,239) | 990 | (4,119) | (3,880) | ||||||||||||||||||||||||
Total Operating Revenues | $ | 59,602 | $ | 14,915 | $ | 42,450 | $ | 34,842 | $ | 71,957 | $ | 12,180 | $ | 41,494 | $ | 37,103 | ||||||||||||||||
Volume (in Dts for natural gas and KWHs for electric) | ||||||||||||||||||||||||||||||||
Residential | 2,778,534 | 216,187 | 822,351 | 137,869 | 2,999,757 | 226,285 | 852,346 | 145,210 | ||||||||||||||||||||||||
Commercial | 2,327,009 | 2,392,641 | 930,601 | 141,369 | 2,417,116 | 2,374,462 | 967,736 | 141,015 | ||||||||||||||||||||||||
Industrial | 2,727,428 | 14,399,549 | 2,574,011 | 10,923 | 2,817,168 | 10,089,859 | 2,550,480 | 8,060 | ||||||||||||||||||||||||
Other | 78,374 | — | 1,189,462 | — | 30,292 | — | 984,353 | 3,803 | ||||||||||||||||||||||||
Total | 7,911,345 | 17,008,377 | 5,516,425 | 290,161 | 8,264,333 | 12,690,606 | 5,354,915 | 298,088 | ||||||||||||||||||||||||
Average Customers | ||||||||||||||||||||||||||||||||
Residential | 73,821 | 17,097 | 57,166 | 24,455 | 71,136 | 16,307 | 55,430 | 24,679 | ||||||||||||||||||||||||
Commercial(2) | 7,116 | 1,537 | 3,917 | 7,230 | 7,009 | 1,509 | 3,930 | 7,487 | ||||||||||||||||||||||||
Industrial(2) | 168 | 17 | 2,425 | 2 | 154 | 16 | 2,268 | 2 | ||||||||||||||||||||||||
Other | 12 | — | 12 | — | 5 | — | 14 | — | ||||||||||||||||||||||||
Total | 81,117 | 18,651 | 63,520 | 31,687 | 78,304 | 17,832 | 61,642 | 32,168 | ||||||||||||||||||||||||
(1) Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties, and adjustments or changes in taxes, such as the TCJA, which are passed through to customers. This amount also includes the reserve for estimated customer refunds associated with the TCJA. | ||||||||||||||||||||||||||||||||
(2) Certain volumes and customers have been reclassified when compared to the prior year for consistency with current year presentation. | ||||||||||||||||||||||||||||||||
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-reports-second-quarter-2019-results-300898579.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/8/2019Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
DOVER, Del., Aug. 7, 2019 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.405 per share on the Company's common stock. The $0.405 per share dividend will be paid on October 7, 2019 to all shareholders of record at the close of business on September 13, 2019.
Chesapeake has paid dividends to its shareholders without interruption for 58 years. During those 58 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at www.chpk.com or through its Investor Relations (IR) App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-quarterly-dividend-300898335.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/7/20197/12/2019 - Chesapeake Utilities Corporation To Host Conference Call To Review Second Quarter 2019 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review Second Quarter 2019 Financial Results
Source: PR Newswire
DOVER, Del., July 12, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, August 9, 2019, at 10:30 a.m. ET to discuss the Company's financial results for the second quarter ended June 30, 2019. The earnings press release will be issued on Thursday, August 8, 2019, before market hours.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2019 Second Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's Investor Relations App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-second-quarter-2019-financial-results-300884269.html
SOURCE Chesapeake Utilities Corporation
Article Date
7/12/2019Chesapeake Utilities Corporation Board Member Calvert A. Morgan, Jr. to be Inducted into Delaware Business Leaders Hall of Fame
Source: PR Newswire
DOVER, Del., July 1, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that Calvert A. Morgan, Jr., a member of the Company's Board of Directors since 2000, has been named a 2019 Delaware Business Leaders Hall of Fame inductee by the Junior Achievement of Delaware Leadership Council. Mr. Morgan serves as Chairman of the Company's Corporate Governance Committee and as a member of its Compensation Committee and Investment Committee. Mr. Morgan will be formally inducted at a ceremony on October 2 at the Wilmington Country Club.
Established in 1990, the Delaware Business Leaders Hall of Fame honors accomplished individuals of business and industry whose leadership in the areas of strategic management, entrepreneurship, innovation and invention have positively impacted workforce and economic development in the region.
"We congratulate Cal on this extraordinary recognition," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Cal brings a unique set of skills and experience to the Board that have helped us build on our strong foundation for growth and continue to deliver exceptional service to our employees, customers and industry-leading results for our shareholders."
"With essentially 49 years of banking, trust and finance experience and executive leadership expertise, and his broad understanding of the business and economic climate in Delaware, Cal has made invaluable contributions during his service on the Board," said John R. Schimkaitis, Chairman of Chesapeake Utilities Corporation Board of Directors. "On behalf of the entire Board, we congratulate Cal on this wonderful recognition of his hard work and many accomplishments."
As a lifelong Delawarean, Mr. Morgan has continually supported organizations that enhance the state of Delaware. Mr. Morgan is a retired member of the Board and former special advisor to WSFS Financial Corporation, a multi-billion dollar financial services company. Mr. Morgan is the retired Chair of the Board, President and Chief Executive Officer of PNC Bank, Delaware. He is a member of the Delaware Economic and Financial Advisory Council which provides advice to the Governor and Secretary of Finance on financial and economic conditions involving the State. Mr. Morgan previously served as Chair of the Delaware Business Roundtable, and continues to serve as a Trustee of Christiana Care Corporation.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through the Company's Investor Relations App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-board-member-calvert-a-morgan-jr-to-be-inducted-into-delaware-business-leaders-hall-of-fame-300878802.html
SOURCE Chesapeake Utilities Corporation
Article Date
7/1/2019Chesapeake Utilities Corporation Subsidiaries Earn National Safety Awards
Source: PR Newswire
DOVER, Del., June 13, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that two of its subsidiaries, Florida Public Utilities Company (FPU) and Aspire Energy, have earned Safety Achievement Awards from the American Gas Association (AGA). The AGA recognized both Aspire Energy and FPU for excellence in employee safety based on criteria that included professional and personal commitment and dedication to improving the operations and engineering sectors of the natural gas industry through safety, accident prevention and research. Aspire Energy also earned an award for excellence in fleet safety based on its safety record. The awards were presented at the 2019 AGA Operations Conference & Biennial Exhibition held in Nashville.
"Safety and compliance are top priorities at Chesapeake, and I thank our employees for their commitment to providing the highest standards of safety for our Company and our customers," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation.
With a long history of providing safe and reliable services, FPU owns and operates approximately 2,900 miles of natural gas distribution mains across 21 counties in Florida and distributes natural gas to approximately 80,000 customers. Aspire Energy owns and operates natural gas infrastructure including over 2,700 miles of pipeline systems in 40 counties throughout Ohio. The company provides natural gas supplies to several local distribution companies and cooperatives. Aspire Energy primarily sources gas from approximately 300 conventional producers and provides additional services to maintain quality and reliability to wholesale markets.
According to the AGA, there are more than 2.5 million natural gas pipelines that transport natural gas to more than 178 million Americans. Natural gas utilities spend approximately $26 billion annually to help enhance the safety of natural gas distribution and transmission systems.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution and transmission; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through the Company's Investor Relations App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-subsidiaries-earn-national-safety-awards-300867164.html
SOURCE Chesapeake Utilities Corporation
Article Date
6/13/20195/22/2019 - Chesapeake Utilities Corporation and TECO Peoples Gas Partner on Callahan Pipeline in Northeast Florida
Chesapeake Utilities Corporation and TECO Peoples Gas Partner on Callahan Pipeline in Northeast Florida
Source: PR Newswire
DOVER, Del., May 22, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that its Florida subsidiary, Peninsula Pipeline Company, Inc., has entered into an agreement with SeaCoast Gas Transmission, an affiliate of Tampa-based TECO Peoples Gas (PGS) to jointly develop the Callahan Intrastate Pipeline, bringing additional natural gas capacity to Nassau and Duval Counties. The new supply source will enable both Florida Public Utilities Company (FPU), another Chesapeake Utilities subsidiary, and PGS to expand natural gas distribution service in this growing area of Florida. FPU and PGS previously worked together in 2012 to introduce natural gas service to Nassau County.
"We are delighted to work with TECO Peoples Gas to jointly increase the availability of natural gas in Nassau and Duval Counties. Expanding access to safe, reliable and clean natural gas plays an important role in the continuing economic development of the northeast Florida region," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Working together we avoid the cost of duplicative pipeline facilities," he added.
"The Callahan pipeline is an exciting development and continues to demonstrate Peoples Gas' commitment to the Jacksonville region," said T.J. Szelistowski, president of Peoples Gas. "This pipeline will increase the delivery of affordable, reliable, efficient and domestic natural gas to the area. We are proud to be a part of this partnership to deliver the most cost-effective energy solution to Jacksonville-area customers."
The Callahan Intrastate Pipeline facilities include a 26.5-mile-long joint natural gas pipeline that will initiate from a gate station to be constructed on the Southern Natural Gas Cypress Interstate Pipeline near Crawford Road in Callahan, Florida to Radio Avenue and Highway 17 in Yulee, Florida. Peninsula Pipeline will construct, partially own and fully maintain the pipeline.
"The project will increase Chesapeake's footprint in underserved communities in Northeast Florida while providing additional capacity to serve industrial and commercial growth in Nassau County," said Kevin Webber, President of the Company's Florida business unit, which includes FPU. Chesapeake Utilities Corporation has a long-standing history in Florida, beginning with the acquisition of Central Florida Gas Company in 1985, followed by the acquisition of FPU in 2009.
The estimated cost of the pipeline is $65 million, to be split between both companies. Construction is set to begin next month with a target in-service date of September 2020.
FPU and PGS will be seeking the necessary Florida Public Service Commission regulatory approvals associated with access to the additional pipeline capacity and increased distribution capabilities.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through the Company's Investor Relations App.
About Florida Public Utilities Company
Florida Public Utilities Company is a wholly-owned subsidiary of Chesapeake Utilities Corporation. Headquartered in Fernandina Beach, Florida, FPU distributes natural gas and propane and provides electric services to approximately 100,000 customers in markets throughout Florida. For more information, visit www.fpuc.com.
About TECO Peoples Gas
Peoples Gas System, Florida's largest natural gas distribution utility, serves about 390,000 customers across Florida. Peoples Gas is a subsidiary of Emera Inc., a geographically diverse energy and services company headquartered in Halifax, Nova Scotia, Canada. For more information, visit www.peoplesgas.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-and-teco-peoples-gas-partner-on-callahan-pipeline-in-northeast-florida-300855461.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/22/2019Chesapeake Utilities Corporation To Host Live Webcast At 2019 AGA Financial Forum
Source: PR Newswire
DOVER, Del., May 19, 2019 /PRNewswire/ -- The Company announced today that Jeffry M. Householder, President & CEO, Beth W. Cooper, Executive Vice President & CFO, and James F. Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy & Risk Officer of Chesapeake Utilities Corporation (NYSE: CPK) will be hosting a live webcast at 1:00 pm EST (Eastern Standard Time) on Tuesday, May 21st at the 2019 AGA Financial Forum taking place in Fort Lauderdale, Florida. Webcast participants and members of the live audience will learn about the projects the Company currently has underway and other strategic initiatives which position the Company for future growth.
To listen to the live webcast, visit Chesapeake's website at www.chpk.com, click on Investors/Events and Webcasts/Other Events then click on the "2019 AGA Financial Forum Presentation" link or just click the following: Listen to Webcast. You will be prompted to register for the webcast that will start promptly at 1:00 pm EST where the live audio and slides of the presentation being given will be available.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's Investor Relations App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Heidi W. Watkins
Shareholder Services Manager
302.734.6716
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-live-webcast-at-2019-aga-financial-forum-300852838.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/19/2019Chesapeake Utilities Corporation President and CEO Jeff Householder to Ring Opening Bell at the New York Stock Exchange
Source: PR Newswire
DOVER, Del., May 17, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) President and CEO Jeff Householder will ring The Opening Bell on Monday, May 20, 2019 at the New York Stock Exchange. Mr. Householder, who was appointed President and CEO by the Board of Directors on January 1, will be joined by several employees and members of the Company's leadership team who will participate in the ceremonial ringing which signals the opening of the day's trading.
"I am honored to have the opportunity to take part in this historic tradition and stand with a group of our many key employees who have driven our growth over the last ten years, which provides a strong foundation for our future growth," said Mr. Householder. "Chesapeake's combination of strategic focus, financial discipline and engaged employees has led to our Company's long track record of financial and operational success. Last year represented the 25th anniversary of our listing on the NYSE and the bell ringing event represents an excellent time to recognize all of our employees' many efforts in driving our past success and positioning us for the future."
Over the last ten years, Chesapeake Utilities Corporation has invested over $1.38 billion in capital expenditures. These capital expenditures have generated an earnings per share compound annual growth rate of approximately 10 percent, resulting in the Company doubling its size twice over this period – every five years. This has translated into a compound annual growth rate in shareholder value of 17.7 percent over the ten-year period, increasing market capitalization from $215 million at the end of 2008 to approximately $1.5 billion currently. Since listing on the exchange in early 1993, the Company's market capitalization has grown from $45 million to approximately $1.5 billion at recent stock prices.
The bell-ringing is scheduled for 9:30 a.m. Eastern Time on Monday, May 20, 2019. The New York Stock Exchange will stream The Opening Bell ringing on its website: http://livestream.com/NYSE. A video of the bell-ringing will be archived on that same page after the livestream. Photos and video of the NYSE bell ringing ceremony will also be available, courtesy of the NYSE, on Facebook (NYSE) and Twitter (@NYSE).
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through the Company's Investor Relations App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-president-and-ceo-jeff-householder-to-ring-opening-bell-at-the-new-york-stock-exchange-300852429.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/17/20195/16/2019 - Chesapeake Utilities Corporation Appoints Stacie Roberts to Assistant Vice President of Corporate Governance
Chesapeake Utilities Corporation Appoints Stacie Roberts to Assistant Vice President of Corporate Governance
Source: PR Newswire
DOVER, Del., May 16, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today the appointment of Stacie Roberts to Assistant Vice President of Corporate Governance. Ms. Roberts will continue to report to Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer of Chesapeake Utilities Corporation.
"Stacie's uncompromising work ethic, dedication, and commitment to quality is recognized throughout her various contributions across the organization," said Mr. Moriarty. "Our commitment to a culture that promotes integrity and accountability, along with the hard work and dedication of our team, is the foundation for our continued success."
Ms. Roberts will continue to provide guidance to the Company's leadership team, including the Board of Directors and senior management on corporate governance and compliance matters. Under Ms. Roberts' leadership, the Corporate Governance team was awarded Best Corporate Governance Among North American utilities by Ethical Boardroom Magazine in 2018. This prestigious award recognizes outstanding leadership worldwide for companies that have raised the bar to ensure strong corporate governance contributes daily to enhancing long-term value for all stakeholders. The team was also named in 2018 as one of the top four companies for Governance Team of the year (small to mid-cap sized companies) by Corporate Secretary Magazine, an award the Company received in 2017.
Ms. Roberts is active in external organizations including currently serving as a member of the Board and Chair of the Employment Committee of The Arc of Delaware which is dedicated to advocating for and serving Delawareans with intellectual and developmental disabilities. Ms. Roberts also serves as an officer, member of the Advisory Board, and member of working groups for several organizations focused on corporate governance matters.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through the Company's Investor Relations App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-appoints-stacie-roberts-to-assistant-vice-president-of-corporate-governance-300852075.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/16/2019Chesapeake Utilities Corporation Raises Dividend By 9.5 Percent
Source: PR Newswire
DOVER, Del., May 8, 2019 /PRNewswire/ -- At their meeting held today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) voted to increase the quarterly cash dividend on the Company's common stock from $0.37 per share to $0.405 per share. The Board's action raises the 2019 annualized dividend $0.14 per share from $1.48 to $1.62 per share, which represents a 9.5 percent increase. The $0.405 per share dividend will be payable July 5, 2019 to all shareholders of record at the close of business on June 14, 2019.
"We continue to seek opportunities to reinvest our retained earnings while also growing our dividend at a rate that represents top quartile performance. Over the last five years, we have made significant capital investments that have fueled our earnings growth. The Board's decision to increase the annualized dividend by $0.14 per share, or 9.5 percent, aligns our five-year earnings growth rate of 8.8 percent with our five-year dividend growth rate of 8.4 percent including this most recent increase," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. Chesapeake has paid dividends to its shareholders without interruption for 58 years. During those 58 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's Investor Relations App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-raises-dividend-by-9-5-percent-300846673.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/8/2019Chesapeake Utilities Corporation Reports First Quarter 2019 Results
Source: PR Newswire
DOVER, Del., May 8, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced first quarter financial results. The Company's net income for the quarter ended March 31, 2019 was $28.7 million, compared to $26.9 million for the same quarter of 2018. Earnings per share ("EPS") for the quarter ended March 31, 2019 were $1.74, compared to $1.64 per share for the same quarter of 2018.
The higher earnings reflected the positive impact of recently completed and ongoing pipeline expansion projects, accretion from the Marlin Gas Transport, Inc. ("Marlin Gas Transport") and R. F. Ohl Fuel Oil, Inc. ("Ohl") acquisitions, organic growth in the natural gas distribution operations and higher propane retail margins per gallon. Earnings also increased as a result of an order from the Florida Public Service Commission ("PSC") authorizing the Company to retain a portion of the tax savings associated with lower federal tax rates resulting from the United States Tax Cuts and Jobs Act ("TCJA") for certain of the Company's natural gas distribution operations. These increases were partially offset by a $2.5 million margin decrease associated with lower energy consumption due to warmer weather in Florida and the absence of the "Bomb Cyclone" weather impact that sharply increased first quarter 2018 consumption within the Delmarva propane and natural gas distribution operations. A detailed discussion of operating results begins on page 3.
"2019 is off to a great start, as demonstrated by our strong financial results and continued growth across our business segments. In particular, our performance reflects increased contributions from natural gas service expansions, the Marlin Gas Transport and Ohl acquisitions, higher retail propane margins and the favorable outcomes of several regulatory initiatives. Our employees' ingenuity, dedication and commitment to our growth strategy propelled our success during the quarter," stated Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "We are excited about the future growth potential from these recent acquisitions and expansions. We also continue to evaluate additional attractive growth opportunities, with the goal of transforming such opportunities into new investments that generate increased earnings growth and value for our shareholders."
Significant Items Impacting Earnings
Results for the three months ended March 31, 2019 and 2018 were impacted by the following significant items:
For the Three Months Ended March 31, | 2019 | 2018 | |||||||||||||
(in thousands, except per share data) | Net Income | EPS | Net Income | EPS | |||||||||||
Reported (GAAP) Earnings | $ | 28,664 | $ | 1.74 | $ | 26,855 | $ | 1.64 | |||||||
Change in unrealized mark-to-market ("MTM") activity | 80 | — | (4,008) | (0.24) | |||||||||||
2018 portion of the retained tax savings for certain Florida natural gas distribution operations associated with the TCJA income tax rate reduction | (990) | (0.06) | — | — | |||||||||||
Adjusted (Non-GAAP) Earnings** | $ | 27,754 | $ | 1.68 | $ | 22,847 | $ | 1.40 | |||||||
*Unless otherwise noted, earnings per share information is presented on a diluted basis.
**This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin, adjusted earnings 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 "gross margin" by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance. The Company calculates "adjusted earnings" by adjusting reported (GAAP) earnings to exclude the impact of certain significant non-cash items, including the impact of unrealized MTM gains (losses) and one-time charges, such as severance charges, and any prior year tax savings retained by our regulated businesses as a result of current year regulatory authorizations. The Company calculates "adjusted EPS" by dividing adjusted earnings by the weighted average common shares outstanding.
Operating Results for the Quarter Ended March 31, 2019 and 2018
Consolidated Results
Three Months Ended | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | ||||||||||
Gross margin | $ | 101,397 | $ | 91,299 | $ | 10,098 | 11.1 | % | ||||||
Depreciation, amortization and property taxes | 15,504 | 13,697 | 1,807 | 13.2 | % | |||||||||
Other operating expenses | 41,900 | 37,196 | 4,704 | 12.6 | % | |||||||||
Operating income | $ | 43,993 | $ | 40,406 | $ | 3,587 | 8.9 | % | ||||||
Operating income during the first quarter of 2019 increased by $3.6 million, or 8.9 percent, compared to the same period in 2018. The increase in operating income reflects continued strong growth across the Company, with contributions from existing businesses, recent expansion investments, regulatory initiatives, the successful integration and margin generated from Ohl and the particularly strong performance of Marlin Gas Services, LLC ("Marlin"), the Company's newly created subsidiary that acquired certain operating assets of Marlin Gas Transport.
Regulated Energy Segment
Three Months Ended | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | ||||||||||
Gross margin | $ | 67,102 | $ | 61,162 | $ | 5,940 | 9.7 | % | ||||||
Depreciation, amortization and property taxes | 12,531 | 11,156 | 1,375 | 12.3 | % | |||||||||
Other operating expenses | 24,830 | 23,295 | 1,535 | 6.6 | % | |||||||||
Operating income | $ | 29,741 | $ | 26,711 | $ | 3,030 | 11.3 | % | ||||||
Operating income for the Regulated Energy segment increased by $3.0 million, or 11.3 percent, in the first quarter of 2019 compared to the same period in 2018. This increase was driven by a $5.9 million increase in gross margin, offset by $1.4 million in higher depreciation, amortization and property taxes and $1.5 million in higher other operating expenses associated with the margin growth. The increase in operating income reflects continued growth in the natural gas operations and expansion projects completed by Peninsula Pipeline Company, Inc. ("Peninsula Pipeline") and Eastern Shore Natural Gas Company ("Eastern Shore"), the Company's intrastate and interstate transmission subsidiaries, respectively. Further, during the quarter, the Florida PSC issued a final order allowing the Company to retain tax savings associated with lower federal tax rates for certain of the Company's natural gas distribution operations. As a result, $1.3 million in reserves for customer refunds recorded in 2018, were reversed in 2019. Additionally, growth in the business and accrual timing resulted in an increase in incentive compensation expense of $653,000 in the first quarter 2019 compared to the same period in 2018.The key components of the increase in gross margin are shown below:
(in thousands) | Margin Impact | ||
Eastern Shore and Peninsula Pipeline service expansions | $ | 4,266 | |
Natural gas distribution - customer growth (excluding service expansions) | 1,451 | ||
2018 retained tax savings for certain Florida natural gas distribution operations | 1,321 | ||
Impact of weather on customer consumption (primarily in Florida) | (1,093) | ||
Natural gas distribution - change in customer consumption (non-weather) | (485) | ||
Conversion of Sandpiper Energy Inc. ("Sandpiper") customers to natural gas | 382 | ||
Florida Gas Reliability and Infrastructure Program ("GRIP") | 223 | ||
Other immaterial variances | (125) | ||
Quarter-over-quarter increase in gross margin | $ | 5,940 | |
The major components of the increase in other operating expenses are as follows:
(in thousands) | Other Operating | ||
Depreciation, amortization and property taxes primarily associated with recent growth projects | $ | 1,375 | |
Incentive compensation costs (based on timing and period-over-period results) | 653 | ||
Outside services, facilities and maintenance costs | (609) | ||
Payroll expense (increased staffing and annual salary increases) | 608 | ||
Benefits and other employee-related expenses(1) | 551 | ||
Other immaterial variances | 332 | ||
Quarter-over-quarter increase in other operating expenses | $ | 2,910 | |
(1) Since the Company self-insures for healthcare costs, benefits costs fluctuate depending upon filed claims. | |||
Unregulated Energy Segment
Three Months Ended | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | ||||||||||
Gross margin | $ | 34,402 | $ | 30,301 | $ | 4,101 | 13.5 | % | ||||||
Depreciation, amortization and property taxes | 2,939 | 2,505 | 434 | 17.3 | % | |||||||||
Other operating expenses | 16,336 | 14,112 | 2,224 | 15.8 | % | |||||||||
Operating income | $ | 15,127 | $ | 13,684 | $ | 1,443 | 10.5 | % | ||||||
Given the impact of MTM activity on the first quarter 2018 results of Peninsula Energy Services Company, Inc. ("PESCO"), the Company continues to present PESCO's results separate from the rest of the Unregulated Energy segment:
Unregulated Energy Segment, excluding PESCO | ||||||||||||||
Three Months Ended | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | ||||||||||
Gross margin | $ | 32,542 | $ | 29,126 | $ | 3,416 | 11.7 | % | ||||||
Depreciation, amortization and property taxes | 2,792 | 2,357 | 435 | 18.5 | % | |||||||||
Other operating expenses | 14,113 | 12,321 | 1,792 | 14.5 | % | |||||||||
Operating income | $ | 15,637 | $ | 14,448 | $ | 1,189 | 8.2 | % | ||||||
Excluding PESCO, operating income for the Unregulated Energy segment increased by $1.2 million for the three months ended March 31, 2019, compared to the same period in 2018. The increased operating income was driven by a $3.4 million increase in gross margin, partially offset by $1.8 million in higher operating expenses and $435,000 in higher depreciation and taxes.
The major components of the $3.4 million increase in gross margin are shown below:
(in thousands) | Margin Impact | |||
Marlin (acquired assets of Marlin Gas Transport in December 2018) | $ | 2,329 | ||
Propane Operations | ||||
Decrease in weather-related customer consumption due to the absence of the 2018 Bomb Cyclone | (1,307) | |||
Increased retail margins per gallon | 1,259 | |||
Customer growth, increased sales volumes (non-weather-related) and other factors | 482 | |||
Ohl acquisition (assets acquired in December 2018) | 476 | |||
Lower wholesale propane margins and sales | (453) | |||
Aspire Energy of Ohio, LLC ("Aspire Energy") | ||||
Rate increases | 779 | |||
Increased customer consumption | 397 | |||
Other immaterial variances | (546) | |||
Quarter-over-quarter increase in gross margin | $ | 3,416 | ||
The major components of the increase in other operating expenses are as follows:
(in thousands) | Other Operating | ||
Operating expenses associated with operating Marlin and Ohl (Asset acquisitions in December 2018 | $ | 1,157 | |
Incentive compensation costs (based on timing and period-over-period results) | 466 | ||
Outside services and facilities maintenance costs | 286 | ||
Depreciation, asset removal and property tax costs due to new capital investments | 187 | ||
Benefits and other employee-related expenses(1) | 133 | ||
Other immaterial variances | (2) | ||
Quarter-over-quarter increase in other operating expenses | $ | 2,227 | |
(1) Since the Company self-insures for healthcare costs, benefits costs fluctuate depending upon filed claims. | |||
PESCO | ||||||||||||||
Three Months Ended | ||||||||||||||
(in thousands) | 2019 | 2018 | Change | Percent | ||||||||||
Gross margin | $ | 1,860 | $ | 1,175 | $ | 685 | 58.3 | % | ||||||
Depreciation, amortization and property taxes | 147 | 148 | (1) | (0.7) | % | |||||||||
Other operating expenses | 2,223 | 1,791 | 432 | 24.1 | % | |||||||||
Operating loss | $ | (510) | $ | (764) | $ | 254 | 33.2 | % | ||||||
For the three months ended March 31, 2019, PESCO's gross margin was higher by $685,000 compared to the same period in 2018. Operating expenses increased by $432,000, reflecting increased staffing, infrastructure and risk management systems necessary to support growth. Overall, PESCO's quarter-over-quarter performance improved by $254,000.
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 2018 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
Conference Call
Chesapeake Utilities will host a conference call on Friday, May 10, 2019 at 10:30 a.m. Eastern Time to discuss the Company's financial results for the three months ended March 31, 2019. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2019 First Quarter Results Conference Call. To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, use the link CPK - Conference Call Audio Replay, or visit the Investors/Events and Presentations section of Company's website at www.chpk.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its Investor Relations (IR) App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799
Financial Summary | |||||||
(in thousands, except per share data) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Gross Margin | |||||||
Regulated Energy segment | $ | 67,102 | $ | 61,162 | |||
Unregulated Energy segment | 34,402 | 30,301 | |||||
Other businesses and eliminations | (107) | (164) | |||||
Total Gross Margin | $ | 101,397 | $ | 91,299 | |||
Operating Income | |||||||
Regulated Energy segment | $ | 29,741 | $ | 26,711 | |||
Unregulated Energy segment | 15,127 | 13,684 | |||||
Other businesses and eliminations | (875) | 11 | |||||
Total Operating Income | 43,993 | 40,406 | |||||
Other income (expense), net | (45) | 68 | |||||
Interest Charges | 5,710 | 3,664 | |||||
Pre-tax Income | 38,238 | 36,810 | |||||
Income Taxes | 9,574 | 9,955 | |||||
Net Income | $ | 28,664 | $ | 26,855 | |||
Earnings Per Share of Common Stock | |||||||
Basic | $ | 1.75 | $ | 1.64 | |||
Diluted | $ | 1.74 | $ | 1.64 | |||
Financial Summary Highlights | ||||||||||||
Key variances, between the three months ended March 31, 2018 and 2019, included: | ||||||||||||
(in thousands, except per share data) | Pre-tax | Net | Earnings | |||||||||
First Quarter of 2018 Reported Results | $ | 36,810 | $ | 26,855 | $ | 1.64 | ||||||
Adjusting for Unusual Items: | ||||||||||||
Net impact of PESCO's MTM activity | (5,591) | (4,088) | (0.24) | |||||||||
Impact of weather on customer consumption | (2,523) | (1,891) | (0.12) | |||||||||
2018 retained tax savings for certain Florida natural gas operations | 1,321 | 990 | 0.06 | |||||||||
(6,793) | (4,989) | (0.30) | ||||||||||
Increased (Decreased) Gross Margins: | ||||||||||||
Absence of the 2018 Bomb Cyclone and capacity constraints cost for PESCO | 5,545 | 4,157 | 0.25 | |||||||||
Eastern Shore and Peninsula Pipeline service expansions* | 4,266 | 3,198 | 0.19 | |||||||||
Margin contribution from Marlin and Ohl (assets acquired in December 2018)* | 2,805 | 2,103 | 0.13 | |||||||||
Natural gas distribution - customer growth (excluding service expansions) | 1,451 | 1,088 | 0.06 | |||||||||
Higher propane retail margins per gallon | 1,259 | 944 | 0.06 | |||||||||
Unregulated Energy customers' consumption growth | 879 | 659 | 0.04 | |||||||||
Aspire Energy rate increases | 779 | 584 | 0.04 | |||||||||
Other margin for PESCO operations | 731 | 548 | 0.03 | |||||||||
Natural gas distribution - change in customer consumption (non-weather) | (485) | (364) | (0.02) | |||||||||
Lower wholesale propane margins and sales | (453) | (340) | (0.02) | |||||||||
Conversion of Sandpiper customers to natural gas | 382 | 287 | 0.02 | |||||||||
Florida GRIP* | 223 | 167 | 0.01 | |||||||||
17,382 | 13,031 | 0.79 | ||||||||||
Decreased (Increased) Other Operating Expenses: | ||||||||||||
Depreciation, asset removal and property tax costs due to growth investments | (1,560) | (1,169) | (0.07) | |||||||||
Incentive compensation costs (based on timing and period-over-period results) | (1,931) | (1,448) | (0.09) | |||||||||
Operating expenses for Marlin and Ohl (assets acquired in December 2018) | (1,157) | (867) | (0.05) | |||||||||
Benefits and other employee-related expenses | (732) | (549) | (0.03) | |||||||||
Payroll expense (increased staffing and annual salary increases) | (673) | (504) | (0.03) | |||||||||
Operating expenses to support growth for PESCO | (431) | (323) | (0.02) | |||||||||
(6,484) | (4,860) | (0.29) | ||||||||||
Interest charges | (2,046) | (1,534) | (0.09) | |||||||||
Change in effective tax rate | — | 768 | 0.05 | |||||||||
Net other changes | (631) | (607) | (0.06) | |||||||||
(2,677) | (1,373) | (0.10) | ||||||||||
First Quarter of 2019 Reported Results | $ | 38,238 | $ | 28,664 | $ | 1.74 | ||||||
*See the Major Projects and Initiatives table later in this press release. | ||||||||||||
Recently Completed and Ongoing Major Projects and Initiatives
The Company constantly pursues and develops additional projects and initiatives in order to further increase shareholder value and serve existing and new customers. The following represent the major projects/initiatives recently completed and currently underway. In the future, the Company will add new projects and initiatives to this table once they are substantially final.
Gross Margin for the Period | ||||||||||||||||||||
Three Months Ended | Year Ended | Estimate for | ||||||||||||||||||
Project/Initiative | March 31, | December 31, | Fiscal | |||||||||||||||||
in thousands | 2019 | 2018 | 2018 | 2019 | 2020 | |||||||||||||||
Florida GRIP (1) | $ | 3,565 | $ | 3,342 | $ | 13,323 | $ | 14,204 | $ | 15,565 | ||||||||||
2017 Eastern Shore System Expansion Project - including interim services | 4,800 | 2,263 | 9,238 | 16,183 | 15,799 | |||||||||||||||
Tax benefit retained by certain Florida entities(2) | 2,115 | — | — | 3,199 | 1,879 | |||||||||||||||
Northwest Florida Expansion | 1,307 | — | 3,485 | 6,500 | 6,500 | |||||||||||||||
Western Palm Beach County, Florida Expansion | 161 | — | 54 | 605 | 4,711 | |||||||||||||||
Marlin | 2,329 | — | 110 | 5,100 | 6,000 | |||||||||||||||
Ohl propane acquisition (rolled into Sharp) | 476 | — | — | 1,200 | 1,236 | |||||||||||||||
Del-Mar Energy Pathway Project - including interim services | 165 | — | — | 725 | 3,039 | |||||||||||||||
Total | $ | 14,918 | $ | 5,605 | $ | 26,210 | $ | 47,716 | $ | 54,729 | ||||||||||
(1) All periods shown have been adjusted to reflect the lower customer rates as a result of the TCJA. Lower customer rates are offset by the corresponding decrease in federal income tax expense and have no negative impact on net income. | ||||||||||||||||||||
(2) The amount disclosed for the first quarter of 2019 includes tax savings of $1.3 million for the year ended December 31, 2018, due to an order by the Florida PSC allowing reversal of a TCJA refund reserve, recorded in 2018, which increased gross margin for the quarter by that amount. | ||||||||||||||||||||
GRIP
Florida GRIP is a natural gas pipe replacement program approved by the Florida PSC that allows automatic recovery, through rates, of costs associated with the replacement of mains and services. Since the program's inception in August 2012, the Company has invested $131.4 million of capital expenditures to replace 268 miles of qualifying distribution mains, including $4.1 million during the first three months of 2019. GRIP generated additional gross margin of $223,000 for the three months ended March 31, 2019 compared to the same period in 2018.
Major Projects and Initiatives Currently Underway
2017 Eastern Shore System Expansion Project
Eastern Shore has substantially completed the construction of a system expansion project which increased its capacity by 26 percent. The few remaining segments are expected to be placed into service in various phases during the second quarter of 2019. The project generated $2.5 million in incremental gross margin during the three months ended March 31, 2019 compared to the same period in 2018. The project is expected to produce gross margin of approximately $16.2 million this year, $15.8 million annually from 2020 through 2022, and $13.2 million annually thereafter.
Northwest Florida Expansion Project
In May 2018, Peninsula Pipeline completed construction of transmission lines, and the Company's Florida natural gas division completed construction of lateral distribution lines, to serve customers in Northwest Florida. The project generated incremental gross margin of $1.3 million for the three months ended March 31, 2019. The estimated annual gross margin from this project for 2019 and future years is $6.5 million, with the opportunity for additional margin as the remaining capacity is sold.
Western Palm Beach County Belvedere, Florida Project
Peninsula Pipeline is constructing four transmission lines to bring natural gas to the Company's distribution system in West Palm Beach, Florida. The first phase of this project was placed into service in December 2018 and generated $161,000 in additional gross margin for the three months ended March 31, 2019. The Company expects to complete the remainder of the project in phases through early 2020 and estimates that it will generate gross margin of $605,000 in 2019 and approximately $4.7 million in future years once fully in service.
Marlin
In December 2018, the Company acquired certain operating assets of Marlin Gas Transport, a supplier of mobile compressed natural gas utility and pipeline solutions, and created Marlin, a new subsidiary which offers compressed natural gas solutions to supply interruption scenarios and provides other unique applications where pipeline supplies are unavailable or inadequate to meet customer requirements. Marlin generated $2.3 million of gross margin for the three months ended March 31, 2019. Based on Marlin's strong first quarter results, we have increased our 2019 full year margin estimate for this business from $4.5 million to $5.1 million and established our preliminary 2020 estimate for gross margin of $6.0 million.
Ohl Propane Acquisition
In December 2018, Sharp acquired certain propane customers and operating assets of Ohl. Located between two of Sharp's existing districts, Ohl provided propane distribution service to approximately 2,500 residential and commercial customers in Pennsylvania. The customers and assets acquired from Ohl have been assimilated into Sharp. The operations acquired from Ohl generated $476,000 of incremental gross margin for the three months ended March 31, 2019. The Company estimates that this acquisition will generate additional gross margin of approximately $1.2 million for Sharp in 2019, with the potential for additional growth in future years.
Del-Mar Energy Pathway Project
In September 2018, Eastern Shore filed for FERC authorization to construct the Del-Mar Energy Pathway project to provide an additional 14,300 dekatherms per day of capacity to four customers. The benefits of this project include additional natural gas transmission pipeline infrastructure in eastern Sussex County, Delaware, and the initial extension of Eastern Shore's pipeline system into Somerset County, Maryland. Interim services in advance of this project generated $165,000 for the three months ended March 31, 2019. The estimated annual gross margin from this project is approximately $725,000 in 2019, $3.0 million in 2020, $4.6 million in 2021 and $5.1 million annually thereafter. Eastern Shore anticipates that this project will be fully in-service by mid-2021, contingent upon FERC granting its authorization for the project by August 2019.
Regulatory Initiatives
Florida Tax Savings Related to TCJA
In the first quarter of 2019, the Florida PSC issued orders authorizing certain of the Company's natural gas distribution operations to retain a portion of the tax savings associated with the lower federal tax rates resulting from the TCJA. The Company expects these savings to continue in future years.
Other major factors influencing gross margin
Weather and Consumption
Weather conditions accounted for a $2.5 million decrease in gross margin during the first quarter of 2019, compared to the same period in 2018. While period-over-period heating degree-days ("HDD") were essentially flat on the Delmarva Peninsula, extreme conditions during the 2018 "Bomb Cyclone" drove weather-related consumption in the first quarter of 2018 compared to the same period in 2019. This decrease in consumption accounted for $1.1 million in lower first quarter 2019 gross margin for the propane operations and $310,000 for the natural gas distribution operations. Weather in Florida was approximately 26 percent warmer in the first quarter of 2019, compared to the same period in 2018, and reduced consumption by propane, electric and natural gas distribution customers which resulted in decreased margin of approximately $951,000. The following table summarizes HDD and cooling degree day ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three months ended March 31, 2019 and 2018.
Three Months Ended | ||||||||
March 31, | ||||||||
2019 | 2018 | Variance | ||||||
Delmarva | ||||||||
Actual HDD | 2,322 | 2,295 | 27 | |||||
10-Year Average HDD ("Normal") | 2,362 | 2,354 | 8 | |||||
Variance from Normal | (40) | (59) | ||||||
Florida | ||||||||
Actual HDD | 361 | 490 | (129) | |||||
10-Year Average HDD ("Normal") | 518 | 517 | 1 | |||||
Variance from Normal | (157) | (27) | ||||||
Ohio | ||||||||
Actual HDD | 2,996 | 2,991 | 5 | |||||
10-Year Average HDD ("Normal") | 3,045 | 3,069 | (24) | |||||
Variance from Normal | (49) | (78) | ||||||
Florida | ||||||||
Actual CDD | 134 | 139 | (5) | |||||
10-Year Average CDD ("Normal") | 97 | 89 | 8 | |||||
Variance from Normal | 37 | 50 | ||||||
Natural Gas Distribution Margin Growth
New customer growth in the Company's natural gas distribution operations generated $1.5 million of additional margin, which was partially offset by $485,000 in lower margin due to fewer volumes sold to commercial and industrial customers in Florida and at Sandpiper. The details for the three months ended March 31, 2019, are provided in the following table:
Three Months Ended | ||||
(in thousands) | March 31, 2019 | |||
Customer Growth: | ||||
Residential | $ | 637 | ||
Commercial and industrial, excluding new service in Northwest Florida | 529 | |||
New service in Northwest Florida | 285 | |||
Total Customer Growth | 1,451 | |||
Non-Weather Change in Customer Consumption: | ||||
Residential | (89) | |||
Commercial and industrial | (396) | |||
Total Decline in Customer Consumption | (485) | |||
Total (or net) Increase in Natural Gas Distribution Margin | $ | 966 | ||
The additional margin from new customers reflects an increase of approximately 3.9 percent in the average number of residential customers served on the Delmarva Peninsula, approximately 3.2 percent growth in residential customers served in Florida, new service to customers in Northwest Florida, as well as an increase in the number of commercial and industrial customers served.
Propane Operations
Gross margin generated by our propane operations increased by $305,000 during the three months ended March 31, 2019, compared to the same period in 2018. The following table summarizes the year-over year changes in gross margin for the propane business for the quarter ended March 31, 2019:
Three Months Ended | ||||
March 31, 2019 | ||||
(in thousands) | ||||
Decrease in customer consumption due to warmer weather | $ | (1,307) | ||
Increased retail margins per gallon | 1,259 | |||
Customer growth, increased sales volumes (non-weather-related) and other factors | 482 | |||
Ohl acquisition (assets acquired in December 2018) | 476 | |||
Lower wholesale propane margins and sales | (453) | |||
Other | (152) | |||
2019 Change in gross margin by our propane operations | $ | 305 | ||
Aspire Energy
Gross margin generated by Aspire Energy increased by $796,000 during the three months ended March 31, 2019, compared to the same period in 2018. The increase reflects $779,000 of rate increases and $397,000 of consumption growth, which was offset by a $380,000 decrease in gross margin due to various factors.
PESCO
PESCO's gross margin for the three months ended March 31, 2019 was higher by $685,000, compared to the same period in 2018. The following table summarizes the changes in PESCO'S year-over-year margin for the three months ended March 31, 2019:
Three Months Ended | |||
March 31, 2019 | |||
(in thousands) | |||
Net impact of PESCO's MTM activity | $ | (5,591) | |
Net impact of extraordinary costs associated with the 2018 Bomb Cyclone for the Mid-Atlantic wholesale portfolio (1) | 3,284 | ||
Mid-Atlantic retail portfolio loss due to pipeline capacity constraints in the first quarter of 2018 (1) | 2,261 | ||
Other margin for PESCO operations (net) | 731 | ||
2019 Change in PESCO gross margin | $ | 685 | |
(1) The 2018 Bomb Cyclone refers to the high-intensity winter storms in early January 2018 that impacted the Mid-Atlantic region and had a residual impact on our businesses through the month of February. The exceedingly high demand and associated impacts on pipeline capacity and gas supply in the Mid-Atlantic region created significant, unusual costs for PESCO. While such concerted impacts are not expected to occur frequently, our management revisited and refined its risk management strategies and implemented additional controls. | |||
Capital Investment Growth and Financing
Capital expenditures totaled $33.8 million for the three months ended March 31, 2019. The following table shows the 2019 capital expenditure budget of $168.2 million by segment and by business line:
2019 | |||
(dollars in thousands) | |||
Regulated Energy: | |||
Natural gas distribution | $ | 64,143 | |
Natural gas transmission | 66,787 | ||
Electric distribution | 5,949 | ||
Total Regulated Energy | 136,879 | ||
Unregulated Energy: | |||
Propane distribution | 11,870 | ||
Energy transmission | 8,345 | ||
Other unregulated energy | 1,416 | ||
Total Unregulated Energy | 21,631 | ||
Other: | |||
Corporate and other businesses | 9,705 | ||
Total Other | 9,705 | ||
Total 2019 Forecasted Capital Expenditures | $ | 168,215 | |
The capital expenditure projection is subject to continuous review and modification. Actual capital requirements may vary from the above estimates due to a number of factors, including changing economic conditions, customer growth in existing areas, regulation, new growth or acquisition opportunities and availability of capital. Historically, actual capital expenditures have typically lagged behind the budgeted amounts.
Impact of Hurricane Michael
In October 2018, Hurricane Michael passed through Florida Public Utilities Company's ("FPU") electric distribution operation's service territory in Northwest Florida. The hurricane caused widespread and severe damage to FPU's infrastructure, resulting in 100 percent of its Northwest Florida customers losing electrical service. FPU exerted extraordinary hurricane restoration efforts and restored service to those customers who were able to accept it. Through March 31, 2019, FPU has spent approximately $65.0 million to restore service, which was recorded as new plant and equipment or charged against FPU's accumulated depreciation and storm reserve. The Company is in the process of preparing the necessary regulatory filings to seek recovery of the costs incurred. In conjunction with the hurricane-related expenditures, the Company executed two 13-month unsecured term loans as temporary financing, each in the amount of $30.0 million. The interest cost associated with these loans is LIBOR plus 75 basis points. One of the term loans was executed in December 2018, and the other was executed in January 2019. The storm did not have a material impact on the margin from these operations, as services were restored to a majority of the Company's customers. Pending the outcome of the regulatory filings associated with the storm, the Company's results for the first quarter included higher interest expense of $435,000, or $326,000 on an after-tax basis ($0.02 per share) associated with the intermediate term loans discussed above.
The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. The Company's equity to total capitalization ratio, including short term borrowings, was 46 percent as of March 31, 2019. Excluding the funds expended for Hurricane Michael restoration activities, the Company's equity to total capitalization ratio, including short-term borrowings, would have been approximately 49 percent. The Company seeks to align permanent financing with the in-service dates of its capital projects. The Company may utilize more temporary short-term debt, when the financing cost is attractive, as a bridge to the permanent long-term financing.
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Operating Revenues | |||||||
Regulated Energy | $ | 103,618 | $ | 109,393 | |||
Unregulated Energy and other | 123,998 | 129,963 | |||||
Total Operating Revenues | 227,616 | 239,356 | |||||
Operating Expenses | |||||||
Regulated Energy cost of sales | 36,516 | 48,231 | |||||
Unregulated Energy and other cost of sales | 89,703 | 99,826 | |||||
Operations | 37,144 | 32,702 | |||||
Maintenance | 3,681 | 3,593 | |||||
Depreciation and amortization | 11,074 | 9,704 | |||||
Other taxes | 5,505 | 4,894 | |||||
Total operating expenses | 183,623 | 198,950 | |||||
Operating Income | 43,993 | 40,406 | |||||
Other income (expense), net | (45) | 68 | |||||
Interest charges | 5,710 | 3,664 | |||||
Income Before Income Taxes | 38,238 | 36,810 | |||||
Income taxes | 9,574 | 9,955 | |||||
Net Income | $ | 28,664 | $ | 26,855 | |||
Weighted Average Common Shares Outstanding: | |||||||
Basic | 16,384,927 | 16,351,338 | |||||
Diluted | 16,432,852 | 16,402,985 | |||||
Earnings Per Share of Common Stock: | |||||||
Basic | $ | 1.75 | $ | 1.64 | |||
Diluted | $ | 1.74 | $ | 1.64 | |||
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
Assets | March 31, 2019 | December 31, 2018 | ||||||
(in thousands, except shares and per share data) | ||||||||
Property, Plant and Equipment | ||||||||
Regulated Energy | $ | 1,346,221 | $ | 1,297,416 | ||||
Unregulated Energy | 241,126 | 237,682 | ||||||
Other businesses and eliminations | 30,282 | 34,585 | ||||||
Total property, plant and equipment | 1,617,629 | 1,569,683 | ||||||
Less: Accumulated depreciation and amortization | (312,949) | (294,295) | ||||||
Plus: Construction work in progress | 90,453 | 108,584 | ||||||
Net property, plant and equipment | 1,395,133 | 1,383,972 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 7,975 | 6,089 | ||||||
Trade and other receivables (less allowance for uncollectible accounts of $1,054 and $1,108, respectively) | 74,098 | 85,404 | ||||||
Accrued revenue | 20,747 | 27,499 | ||||||
Propane inventory, at average cost | 6,865 | 9,791 | ||||||
Other inventory, at average cost | 8,122 | 7,127 | ||||||
Regulatory assets | 7,913 | 4,796 | ||||||
Storage gas prepayments | 1,327 | 6,603 | ||||||
Income taxes receivable | 9,059 | 15,300 | ||||||
Prepaid expenses | 7,192 | 10,079 | ||||||
Derivative assets, at fair value | 9,221 | 13,165 | ||||||
Other current assets | 1,121 | 5,684 | ||||||
Total current assets | 153,640 | 191,537 | ||||||
Deferred Charges and Other Assets | ||||||||
Goodwill | 25,785 | 25,837 | ||||||
Other intangible assets, net | 5,909 | 6,207 | ||||||
Investments, at fair value | 7,509 | 6,711 | ||||||
Operating lease right-of-use assets (1) | 12,523 | — | ||||||
Regulatory assets | 77,101 | 72,422 | ||||||
Other assets | 5,197 | 6,985 | ||||||
Total deferred charges and other assets | 134,024 | 118,162 | ||||||
Total Assets | $ | 1,682,797 | $ | 1,693,671 | ||||
(1) During the first quarter of 2019, the Company adopted a new lease accounting standard, resulting in additional assets and liabilities (both current and non-current portions) totaling $12.5 million shown on the balance sheet at March 31, 2019. | ||||||||
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
Capitalization and Liabilities | March 31, 2019 | December 31, 2018 | ||||||
(in thousands, except shares and per share data) | ||||||||
Capitalization | ||||||||
Stockholders' equity | ||||||||
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding | $ | — | $ | — | ||||
Common stock, par value $0.4867 per share (authorized 50,000,000 shares) | 7,980 | 7,971 | ||||||
Additional paid-in capital | 255,307 | 255,651 | ||||||
Retained earnings | 284,111 | 261,530 | ||||||
Accumulated other comprehensive loss | (3,739) | (6,713) | ||||||
Deferred compensation obligation | 4,376 | 3,854 | ||||||
Treasury stock | (4,376) | (3,854) | ||||||
Total stockholders' equity | 543,659 | 518,439 | ||||||
Long-term debt, net of current maturities | 285,998 | 316,020 | ||||||
Total capitalization | 829,657 | 834,459 | ||||||
Current Liabilities | ||||||||
Current portion of long-term debt | 71,509 | 11,935 | ||||||
Short-term borrowing | 276,393 | 294,458 | ||||||
Accounts payable | 75,277 | 129,804 | ||||||
Customer deposits and refunds | 29,710 | 34,155 | ||||||
Accrued interest | 4,505 | 2,317 | ||||||
Dividends payable | 6,067 | 6,060 | ||||||
Accrued compensation | 8,506 | 13,923 | ||||||
Regulatory liabilities | 15,085 | 7,883 | ||||||
Derivative liabilities, at fair value | 6,798 | 14,871 | ||||||
Other accrued liabilities (1) | 14,719 | 12,828 | ||||||
Total current liabilities | 508,569 | 528,234 | ||||||
Deferred Credits and Other Liabilities | ||||||||
Deferred income taxes | 160,912 | 156,820 | ||||||
Regulatory liabilities | 132,686 | 135,039 | ||||||
Environmental liabilities | 7,370 | 7,638 | ||||||
Other pension and benefit costs | 29,822 | 28,513 | ||||||
Operating lease - liabilities (1) | 10,873 | — | ||||||
Deferred investment tax credits and other liabilities | 2,908 | 2,968 | ||||||
Total deferred credits and other liabilities | 344,571 | 330,978 | ||||||
Total Capitalization and Liabilities | $ | 1,682,797 | $ | 1,693,671 | ||||
(1) During the first quarter of 2019, the Company adopted a new lease accounting standard, resulting in additional assets and liabilities (both current and non-current portions) totaling $12.5 million shown on the balance sheet at March 31, 2019. | ||||||||
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2019 | For the Three Months Ended March 31, 2018 | |||||||||||||||||||||||||||||||
Delmarva NG Distribution | Chesapeake Utilities Florida NG Division | FPU NG Distribution | FPU Electric Distribution | Delmarva NG Distribution | Chesapeake Utilities Florida NG Division | FPU NG Distribution | FPU Electric Distribution | |||||||||||||||||||||||||
Operating Revenues (in thousands) | ||||||||||||||||||||||||||||||||
Residential | $ | 29,971 | $ | 1,785 | $ | 10,720 | $ | 9,859 | $ | 35,314 | $ | 1,761 | $ | 11,182 | $ | 11,533 | ||||||||||||||||
Commercial | 13,141 | 1,738 | 7,707 | 7,816 | 15,830 | 1,722 | 8,331 | 9,157 | ||||||||||||||||||||||||
Industrial | 2,388 | 3,266 | 5,994 | 610 | 2,306 | 1,871 | 6,536 | 400 | ||||||||||||||||||||||||
Other (1) | (822) | 1,111 | (635) | (3,907) | (1,743) | 510 | (2,836) | (2,349) | ||||||||||||||||||||||||
Total Operating Revenues | $ | 44,678 | $ | 7,900 | $ | 23,786 | $ | 14,378 | $ | 51,707 | $ | 5,864 | $ | 23,213 | $ | 18,741 | ||||||||||||||||
Volume (in Dts for natural gas and MWHs for electric) | ||||||||||||||||||||||||||||||||
Residential | 2,220,375 | 132,872 | 505,326 | 65,511 | 2,240,555 | 140,759 | 523,062 | 78,528 | ||||||||||||||||||||||||
Commercial | 1,653,320 | 1,248,764 | 504,046 | 61,829 | 1,705,426 | 1,239,936 | 535,544 | 67,740 | ||||||||||||||||||||||||
Industrial | 1,511,308 | 7,333,850 | 1,347,237 | 7,750 | 1,509,039 | 2,334,243 | 1,304,530 | 4,520 | ||||||||||||||||||||||||
Other | 17,859 | — | 555,391 | — | 12,533 | — | 468,556 | 1,896 | ||||||||||||||||||||||||
Total | 5,402,862 | 8,715,486 | 2,912,000 | 135,090 | 5,467,553 | 3,714,938 | 2,831,692 | 152,684 | ||||||||||||||||||||||||
Average Customers | ||||||||||||||||||||||||||||||||
Residential | 73,976 | 16,988 | 56,829 | 24,379 | 71,233 | 16,223 | 55,280 | 24,644 | ||||||||||||||||||||||||
Commercial(2) | 7,148 | 1,529 | 3,897 | 7,232 | 7,024 | 1,460 | 3,927 | 7,481 | ||||||||||||||||||||||||
Industrial(2) | 168 | 17 | 2,415 | 2 | 153 | 73 | 2,251 | 2 | ||||||||||||||||||||||||
Other | 9 | — | 12 | — | 6 | — | 17 | — | ||||||||||||||||||||||||
Total | 81,301 | 18,534 | 63,153 | 31,613 | 78,416 | 17,756 | 61,475 | 32,127 | ||||||||||||||||||||||||
(1) | Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties, and adjustments or changes in taxes, such as the TCJA, which are passed through to customers. This amount also includes the reserve for estimated customer refunds associated with the TCJA. |
(2) | Certain volumes and customers have been reclassified when compared to the prior year for consistency with current year presentation. |
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-reports-first-quarter-2019-results-300845886.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/8/2019Eastern Shore Natural Gas Company Receives Positive Environmental Assessment from FERC for Del-Mar Energy Pathway Project
Source: PR Newswire
DOVER, Del., May 6, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that the Federal Energy Regulatory Commission (FERC) has issued a positive environmental assessment of the Company's Del-Mar Energy Pathway Project (Project) (Docket No. CP18-548-000). The Project, which was applied for in September of 2018 by Eastern Shore Natural Gas Company (ESNG), Chesapeake Utilities' interstate natural gas transmission subsidiary, proposes the construction and operation of new natural gas pipeline and meter and delivery (M&R) stations in Kent and Sussex counties in Delaware, and Wicomico and Somerset counties in Maryland.
"We have continued to meet the growing market demand for natural gas in the region by expanding our transmission pipeline capacity in recent years," said Jeff Tietbohl, Vice President of Eastern Shore Natural Gas Company. "This project will play a significant role in providing clean, reliable and cost-effective natural gas to underserved areas on the Delmarva Peninsula."
The FERC staff concluded that the proposed Project, with appropriate mitigating measures, would not significantly impact the environment. The Project proposes to add approximately 12 miles of natural gas pipeline in Kent and Sussex counties and nearly seven miles of pipeline in Wicomico and Somerset counties. FERC certificate authorization is anticipated by the end of the second or third quarter of 2019 and construction of the Del-Mar Energy Pathway Project is expected to commence later this year.
The construction and operation of the new natural gas pipeline and related facilities will provide approximately 11.8 million cubic feet per day of additional natural gas firm transportation service and 2.5 million cubic feet of off-peak transportation service to Chesapeake Utilities' natural gas distribution subsidiaries on the Delmarva Peninsula and one industrial customer.
The projected cost of the project is approximately $37 million. The anticipated annual gross margin for the Del-Mar Energy Pathway Project is $5.1 million. For more information on the project, visit https://bit.ly/2GNiBef.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through the Company's Investor Relations App.
About Eastern Shore Natural Gas Company
Eastern Shore Natural Gas Company, a subsidiary of Chesapeake Utilities Corporation, owns and operates a 486-mile interstate pipeline that transports natural gas from various points in Pennsylvania to customers in Delaware, Maryland and Pennsylvania. For more information, visit www.esng.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7050
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/eastern-shore-natural-gas-company-receives-positive-environmental-assessment-from-ferc-for-del-mar-energy-pathway-project-300844449.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/6/20194/17/2019 - Chesapeake Utilities Corporation To Host Conference Call To Review First Quarter 2019 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review First Quarter 2019 Financial Results
Source: PR Newswire
DOVER, Del., April 17, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, May 10, 2019, at 10:30 a.m. ET to discuss the Company's financial results for the first quarter ended March 31, 2019. The earnings press release will be issued on Wednesday, May 8, 2019, before market hours.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2019 First Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's Investor Relations App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-first-quarter-2019-financial-results-300834158.html
SOURCE Chesapeake Utilities Corporation
Article Date
4/17/2019Chesapeake Utilities Corporation Announces Executive Appointments
Source: PR Newswire
DOVER, Del., March 5, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK), announced today several recent promotions and new officer appointments.
"Our Company's strong foundation for growth is directly attributable to the hard work and dedication of our employees," said Jeff Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. "These promotions better position the Company for future growth and these leaders have demonstrated a constant commitment to serve our employees, customers, communities and other external stakeholders."
Beth W. Cooper has been promoted to Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary of Chesapeake Utilities Corporation. Ms. Cooper provides financial oversight over the entire organization and works directly with the Board of Directors including the Audit Committee, senior management, the Company's business units and key external constituents. Over the last ten years, she has led the Finance organization through the greatest period of growth in the Company's history. Ms. Cooper joined Chesapeake in 1990.
Ms. Cooper is also active in external organizations and currently serves on the Salisbury University Perdue School Executive Advisory Council, the American Gas Association (AGA) Finance Committee, and the Wyoming Church Finance Committee.
James F. Moriarty has been promoted to Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer of Chesapeake Utilities Corporation. In addition to Mr. Moriarty's current responsibilities, he will lead the integration and provide oversight of the Regulatory and Governmental Affairs function across the Company. He currently provides legal counsel to the entire Chesapeake team, including the Board of Directors, senior leaders and business unit leaders, as well as on corporate governance matters.
Mr. Moriarty is active in charitable endeavors including currently serving as Vice Chair of the Dorchester County YMCA (now named the Pauline F. & David Robbins Family YMCA) and in the legal community, including as a member of the Legal Committee of the American Gas Association. He joined Chesapeake in 2015.
Kevin J. Webber has been promoted to President of Florida Public Utilities Company and Senior Vice President of Chesapeake Utilities Corporation. Mr. Webber joined FPU in 2010 as Vice President of Gas Operations and Business Development. In 2011, he also assumed responsibility for electric operations. Since the merger with Chesapeake Utilities Corporation in 2009, Mr. Webber has been instrumental in integrating FPU into the Chesapeake Utilities' family of companies and driving the Company's significant growth in Florida. Most recently, he led the effort to acquire the assets of Marlin Gas Transport, Inc., a premier North American supplier of mobile compressed natural gas (CNG) utility and pipeline solutions.
Cheryl M. Martin has been promoted to Vice President of Regulatory Affairs for Chesapeake Utilities Corporation. Cheryl is currently Assistant Vice President of Regulatory Affairs and Business Analysis for FPU. In Ms. Martin's new role, she will lead an integrated Regulatory and Governmental Affairs function for the Company. In 2011, she became the Director of Florida Regulatory Affairs and Business Analysis. Ms. Martin was promoted in 2015 to her current role and assumed additional responsibilities for energy logistics, business processes, and electric business development analysis. She joined FPU in March 1985.
Michael D. Cassel has been promoted to Assistant Vice President of FPU. Mr. Cassel is currently Director of Florida Regulatory and Governmental Affairs. In his new role, he will lead the Regulatory and Governmental Affairs groups for FPU. He joined Chesapeake Utilities Corporation in March 2008 as a Regulatory Analyst for the Company's Delaware and Maryland Natural Gas Divisions. Mr. Cassel has worked tirelessly to build upon key regulatory relationships in Florida and has been the face of the Company on key regulatory filings including those related to the tax reform impacts, the electric modernization program, and many others.
Buddy Shelley has been promoted to Assistant Vice President of Electric Operations for FPU. Mr. Shelley currently serves as the Director of Electric Operations. Mr. Shelley joined FPU in December 2006 and has over 40 years of experience in electric distribution and transmission operations. Mr. Shelley has been instrumental in integrating FPU's northwest and northeast Florida electric operational units. He is responsible for operations and engineering for all electric entities as well as the innovative Eight Flags Energy CHP plant. Most recently, he played a key role in FPU's accelerated restoration efforts associated with Hurricane Michael.
Barry D. Kennedy has been promoted to Assistant Vice President of Natural Gas Operations for FPU. Mr. Kennedy currently serves as Director of Natural Gas Operations. He joined FPU in December 2004 and has over 40 years of experience in natural gas and propane operations. Mr. Kennedy has been instrumental in driving growth in our natural gas operations in Florida and is responsible for operations and engineering for all natural gas distribution entities as well as Peninsula Pipeline's intrastate assets. Under his leadership, Mr. Kennedy's team has led FPU's extensive gas reliability and infrastructure program ("GRIP").
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
About Florida Public Utilities
Florida Public Utilities Company is a wholly owned subsidiary of Chesapeake Utilities Corporation. Headquartered in Fernandina Beach, Florida, FPU distributes natural gas and propane and provides electric services to approximately 100,000 customers in markets throughout Florida. For more information, visit www.fpuc.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Justin Mulcahy
Public Relations Manager
302.217.7011
jmulcahy@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-executive-appointments-300807075.html
SOURCE Chesapeake Utilities Corporation
Article Date
3/5/2019Chesapeake Utilities Corporation Reports Fourth Quarter And Fiscal Year 2018 Results
Source: PR Newswire
DOVER, Del., Feb. 26, 2019 /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, 2018.
Reported net income for 2018 was $56.6 million, or $3.45 per share compared to $58.1 million, or $3.55 per share for 2017. Adjusted 2018 net income increased to $54.3 million, or $3.31 per share, from $47.3 million, or $2.89 per share in 2017. Continued growth across the Company's businesses, key regulatory initiatives and colder weather were the most significant contributors to higher earnings in 2018.
Fourth quarter 2018 GAAP net income was $17.8 million, or $1.08 per share compared to $26.1 million, or $1.59 per share in 2017. Adjusted fourth quarter 2018 net income increased to $18.2 million, or $1.10 per share, from $15.3 million, or $0.93 per share in 2017. Higher 2018 fourth quarter adjusted earnings reflect continued growth across the Company's businesses. A detailed discussion of operating results begins on page 3.
"Just two short months ago, I was appointed President and CEO of this very special company. I continue to be energized by everything I see, including the results discussed herein, our employees which drive our success, our commitment to providing safe, clean, reliable energy services to existing and new communities, and other potential growth opportunities," stated Jeffry M. Householder, President and Chief Executive Officer. "2018 was another remarkable year by any measure. 2018 EPS exceeded our guidance of 17 percent growth over 2017 adjusted earnings. Earnings were driven by our highest ever increase in gross margin, which reflected strong growth across our regulated and unregulated energy businesses. Given the opportunities in our existing businesses and ongoing projects and initiatives, we are well positioned for future growth. It is an exciting time to lead this Company forward," Mr. Householder added.
Significant Items Impacting Earnings
Results for the year and fourth quarter of 2018 and 2017 were impacted by the following significant items:
For the year ended December 31, | 2018 | 2017 | |||||||||||||
(in thousands, except per share data) | Net Income | EPS | Net Income | EPS | |||||||||||
Reported (GAAP) Earnings | $ | 56,580 | $ | 3.45 | $ | 58,124 | $ | 3.55 | |||||||
Unrealized mark-to-market ("MTM") activity | (3,706) | (0.23) | 3,499 | 0.21 | |||||||||||
One-time impact from TCJA associated with deferred tax liability revaluation | — | — | (14,299) | (0.87) | |||||||||||
Non-recurring separation expenses associated with a former executive | 1,421 | 0.09 | — | — | |||||||||||
Adjusted (Non-GAAP) Earnings*
| $ | 54,295 | $ | 3.31 | $ | 47,324 | $ | 2.89 | |||||||
For the period ended December 31, | Fourth Quarter 2018 | Fourth Quarter 2017 | |||||||||||||
(in thousands, except per share data) | Net Income | EPS | Net Income | EPS | |||||||||||
Reported (GAAP) Earnings | $ | 17,801 | $ | 1.08 | $ | 26,101 | $ | 1.59 | |||||||
Unrealized MTM activity | 401 | 0.02 | 3,467 | 0.21 | |||||||||||
One-time impact from TCJA associated with deferred tax liability revaluation | — | — | (14,299) | (0.87) | |||||||||||
Adjusted (Non-GAAP) Earnings
| $ | 18,202 | $ | 1.10 | $ | 15,269 | $ | 0.93 | |||||||
The Company's reported EPS was $3.45 for 2018 compared to $3.55 in 2017. 2018 adjusted (non-GAAP) EPS totaled $3.31, representing 14.5 percent growth over 2017 adjusted (non-GAAP) EPS of $2.89. Fourth quarter 2018 adjusted (non-GAAP) EPS of $1.10 reflects growth of 18.3 percent over fourth quarter adjusted (non-GAAP) EPS of $0.93 in 2017.
Hurricane Michael Update
In October 2018, Hurricane Michael passed through Florida Public Utilities Company's ("FPU") electric distribution operation's service territory in Northwest Florida. The hurricane caused widespread and severe damage to FPU's infrastructure resulting in 100 percent of its customers losing electrical service. FPU has restored service to those customers who were able to accept power following Hurricane Michael after a significant hurricane restoration effort. In conjunction with restoring these services, FPU expended over $60 million to restore service, which has been recorded as new plant and equipment or charged against FPU's accumulated depreciation and storm reserve. The Company has begun preparing the necessary regulatory filings to seek recovery for the costs incurred, including replenishment of the Company's storm reserve. In conjunction with the hurricane-related expenditures, the Company executed two 13-month unsecured term loans as temporary financing, each in the amount of $30 million. The interest cost associated with these loans is LIBOR plus 75 basis points. One of the term loans was executed in December of 2018 and the other was executed on January 31, 2019. The storm did not have a material impact on the Company's financial results in 2018 as services were restored to a majority of its customers, and is not expected to have a significant impact going forward as the Company will be seeking recovery of the storm costs through rates.
*This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin, adjusted earnings 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 "gross margin" by deducting the cost of sales from operating revenues. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance. This press release also includes gross margin that excludes the impact of unusual items, such as the pass-through to customers of lower federal income taxes resulting from TCJA. The Company calculates "adjusted earnings" by adjusting reported (GAAP) earnings to exclude the impact of certain significant non-cash items, including the impact of realized MTM gains (losses), and one-time charges, such as severance charges. "Adjusted EPS" is calculated by dividing adjusted earnings by the weighted average common shares outstanding.
**Unless otherwise noted, earnings per share information is presented on a diluted basis.
Operating Results for the Years Ended December 31, 2018 and 2017
Consolidated Results
Year Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | Change | Percent Change | ||||||||||
Gross margin before the TCJA impact | $ | 316,310 | $ | 279,669 | $ | 36,641 | 13.1 | % | ||||||
Pass-through of lower taxes to regulated energy customers | (9,562) | — | (9,562) | N/A | ||||||||||
Gross margin | 306,748 | 279,669 | 27,079 | 9.7 | % | |||||||||
Depreciation, amortization and property taxes | 56,948 | 51,782 | 5,166 | 10.0 | % | |||||||||
Non-recurring executive separation expenses | 1,548 | — | 1,548 | N/A | ||||||||||
Other operating expenses | 153,632 | 140,467 | 13,165 | 9.4 | % | |||||||||
Operating income | $ | 94,620 | $ | 87,420 | $ | 7,200 | 8.2 | % | ||||||
Operating income, for the year ended December 31, 2018, increased by $7.2 million, or 8.2 percent, compared to the same period in 2017. This increase was driven by a $27.1 million, or 9.7 percent, increase in gross margin, which is net of $9.6 million of estimated customer refunds for lower taxes associated with the TCJA. The increased margin was partially offset by a $5.2 million increase in depreciation, amortization and property taxes and a $13.2 million increase in other operating expenses. The pass-through of lower taxes to customers is completely offset by an equivalent reduction in income tax expenses for the Regulated Energy segment. Excluding the estimated pass-through of lower taxes to customers, gross margin and operating income increased by $36.6 million (13.1 percent) and $16.8 million (19.2 percent), respectively.
Regulated Energy Segment
Year Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | Change | Percent Change | ||||||||||
Gross margin before the TCJA impact | $ | 233,015 | $ | 207,541 | $ | 25,474 | 12.3 | % | ||||||
Pass-through of lower taxes to regulated energy customers | (9,562) | — | (9,562) | N/A | ||||||||||
Gross margin | 223,453 | 207,541 | 15,912 | 7.7 | % | |||||||||
Depreciation, amortization and property taxes | 46,523 | 42,337 | 4,186 | 9.9 | % | |||||||||
Other operating expenses | 97,715 | 90,620 | 7,095 | 7.8 | % | |||||||||
Operating income | $ | 79,215 | $ | 74,584 | $ | 4,631 | 6.2 | % | ||||||
Operating income for the Regulated Energy segment increased by $4.6 million, or 6.2 percent, for the year ended December 31, 2018 compared to the same period in 2017. This increase was driven by a $25.5 million increase in gross margin before the impact of the TCJA, which was partially offset by $4.2 million in higher depreciation and $7.1 million in other operating expenses associated with gross margin growth. Excluding the estimated pass-through of lower taxes to customers, operating income increased by $14.2 million, or 19.0 percent.
The key components of the increase in gross margin are shown below:
(in thousands) | Margin Impact | ||
Eastern Shore*and Peninsula Pipeline** service expansions | $ | 9,709 | |
Natural gas growth (excluding service expansions) | 5,911 | ||
Implementation of Eastern Shore settled rates | 5,803 | ||
Colder weather | 1,788 | ||
Florida electric reliability/modernization program | 1,516 | ||
Florida Gas Reliability and Infrastructure Program ("GRIP") | 1,277 | ||
Other | (530) | ||
Total | 25,474 | ||
Less: Pass-through of lower taxes to regulated energy customers*** | (9,562) | ||
Year-over-year increase in gross margin | $ | 15,912 | |
*Eastern Shore Natural Gas Company, the Company's interstate natural gas transmission subsidiary |
**Peninsula Pipeline Company, Inc., the Company's Florida intrastate pipeline subsidiary |
***As a result of the TCJA and in compliance with directives by federal and state regulatory commissions, the Company reserved or refunded an estimated $9.6 million during 2018. In some jurisdictions, refunds have been made to customers, while in other jurisdictions, the Company has established reserves until agreements are approved and permanent changes are made to customer rates. The reserves and lower customer rates are equal to the estimated reduction in federal income taxes due to the TCJA and have no material impact on after-tax earnings from the Regulated Energy segment. |
The major components of the increase in other operating expenses are as follows:
(in thousands) | Other Operating Expenses | ||
Depreciation, amortization and property taxes associated with recent capital investments | $ | 4,186 | |
Payroll expense (increased staffing and annual salary increases) | 2,426 | ||
Outside services to support growth | 2,182 | ||
Facilities costs to support growth and maintenance costs to maintain system integrity | 1,661 | ||
Other operating expenses, including vehicle, other taxes and credit collections due to growth and timing of collections | 869 | ||
Incentive compensation costs (based on actual results compared to targets and timing of accruals) | (737) | ||
Regulatory expenses due to fewer proceedings in 2018 | (661) | ||
Other employee-related expenses | 514 | ||
Early termination of facility lease due to consolidation of operations facilities | 323 | ||
Cumulative change in other expenses | 518 | ||
Year-over-year increase in other operating expenses | $ | 11,281 | |
Unregulated Energy Segment
Year Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | Change | Percent Change | ||||||||||
Gross margin | $ | 83,798 | $ | 72,572 | $ | 11,226 | 15.5 | % | ||||||
Depreciation, amortization and property taxes | 10,282 | 9,287 | 995 | 10.7 | % | |||||||||
Other operating expenses | 56,615 | 50,654 | 5,961 | 11.8 | % | |||||||||
Operating income | $ | 16,901 | $ | 12,631 | $ | 4,270 | 33.8 | % | ||||||
Given the impact of MTM activity and increased infrastructure and risk management system costs, Peninsula Energy Services Company, Inc. ("PESCO")'s results continue to be reported separate from the rest of the Unregulated Energy segment:
Unregulated Energy Segment, excluding PESCO | ||||||||||||||
Year Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | Change | Percent Change | ||||||||||
Gross margin | $ | 77,197 | $ | 70,360 | $ | 6,837 | 9.7 | % | ||||||
Depreciation, amortization and property taxes | 9,678 | 9,081 | 597 | 6.6 | % | |||||||||
Other operating expenses | 49,197 | 45,504 | 3,693 | 8.1 | % | |||||||||
Operating income | $ | 18,322 | $ | 15,775 | $ | 2,547 | 16.1 | % | ||||||
Operating income for the Unregulated Energy segment, excluding PESCO, increased by $2.5 million in 2018 compared to 2017. Gross margin increased by $6.8 million, or 9.7 percent, due primarily to higher performance from the propane operations and at Aspire Energy, as well as more normal weather. Other operating expenses increased by $3.7 million, and depreciation, amortization and property taxes increased by $597,000 as a result of the margin growth.
The major components of the increase in gross margin (excluding PESCO results) are shown below:
(in thousands) | Margin Impact | ||
Propane Operations | |||
Customer growth, increased sales volumes (non-weather related) and other factors | $ | 2,947 | |
Additional customer consumption from colder weather | 2,241 | ||
Decreased margins per gallon in certain customer classes | (977) | ||
Service, appliances and other fees | 404 | ||
Higher wholesale propane margins and sales | 287 | ||
Aspire Energy | |||
Higher customer consumption from colder weather | 1,017 | ||
Increase in rates effective on various dates in 2018 | 602 | ||
Other | 316 | ||
Year-over-year increase in gross margin | $ | 6,837 | |
The key components of the increase in other operating expenses (excluding PESCO expenses) are as follows:
(in thousands) | Other Operating Expenses | ||
Payroll expense (increased staffing and annual salary increases) | $ | 1,923 | |
Facilities and maintenance costs to support growth and on-going compliance activities | 953 | ||
Depreciation, amortization and property taxes associated with recent capital investments | 597 | ||
Other employee-related costs | 586 | ||
Cumulative change in other expenses | 231 | ||
Year-over-year increase in other operating expenses | $ | 4,290 | |
PESCO | |||||||||||
Year Ended | |||||||||||
(in thousands) | 2018 | 2017 | Change | ||||||||
Gross margin | $ | 6,601 | $ | 2,212 | $ | 4,389 | |||||
Depreciation, amortization and property taxes | 604 | 206 | 398 | ||||||||
Other operating expenses | 7,418 | 5,150 | 2,268 | ||||||||
Operating loss | $ | (1,421) | $ | (3,144) | $ | 1,723 | |||||
PESCO's operating results in 2018 improved by $1.7 million compared to 2017 due primarily to MTM gains recorded in 2018 compared to MTM losses recorded in 2017, partially offset by the extraordinary costs of meeting demand requirements in the Mid-Atlantic region during the first quarter associated with the 2018 Bomb Cyclone, capacity constraints and other market conditions. PESCO's other operating expenses increased by $2.3 million compared to the same period in 2017, reflecting increased staffing, infrastructure and risk management systems to support PESCO's growth. See a more detailed discussion later in the press release (page 19) and in the Company's 2018 Annual Report on Form 10-K.
Operating Results for the Quarters Ended December 31, 2018 and 2017
Consolidated Results
Three Months Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | Change | Percent Change | ||||||||||
Gross margin before the TCJA impact | $ | 87,051 | $ | 75,020 | $ | 12,031 | 16.0 | % | ||||||
Pass-through of lower taxes to regulated energy customers | (1,981) | — | (1,981) | N/A | ||||||||||
Gross margin | 85,070 | 75,020 | 10,050 | 13.4 | % | |||||||||
Depreciation, amortization and property taxes | 14,799 | 13,367 | 1,432 | 10.7 | % | |||||||||
Other operating expenses | 41,341 | 38,025 | 3,316 | 8.7 | % | |||||||||
Operating income | $ | 28,930 | $ | 23,628 | $ | 5,302 | 22.4 | % | ||||||
Operating income during the fourth quarter of 2018 increased by $5.3 million, or 22.4 percent, compared to the same period in 2017. Pass-through of lower taxes to regulated energy customers, as a result of the TCJA, reduced margin and operating income by approximately $2.0 million, and were offset by an equal reduction in income taxes. Gross margin before the effect of the TCJA increased by $12.0 million, or 16.0 percent, and operating income increased by $7.3 million, or 30.8 percent. Depreciation expense increased by $1.4 million, and other operating expenses increased by $3.3 million, reflecting increased investment and costs to support growth.
Regulated Energy Segment
Three Months Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | Change | Percent Change | ||||||||||
Gross margin before the TCJA impact | $ | 62,509 | $ | 56,394 | $ | 6,115 | 10.8 | % | ||||||
Pass-through of lower taxes to regulated energy customers | (1,981) | — | (1,981) | N/A | ||||||||||
Gross margin | 60,528 | 56,394 | 4,134 | 7.3 | % | |||||||||
Depreciation, amortization and property taxes | 12,121 | 10,926 | 1,195 | 10.9 | % | |||||||||
Other operating expenses | 26,122 | 23,888 | 2,234 | 9.4 | % | |||||||||
Operating income | $ | 22,285 | $ | 21,580 | $ | 705 | 3.3 | % | ||||||
Operating income for the Regulated Energy segment increased by $705,000, or 3.3 percent, in the fourth quarter of 2018 compared to the same period in 2017. This increase was driven by a $4.1 million increase in gross margin, offset by $3.4 million in higher depreciation and other operating expenses associated with the margin growth. Fourth quarter gross margin and operating income were also impacted by customer refunds of $2.0 million, due to the pass-through of lower taxes to regulated energy customers as a result of the TCJA. The decrease in gross margin and operating income from the customer refunds was completely offset by an equal reduction in income tax expense. Excluding the estimated pass-through to customers of lower taxes, operating income increased by $2.7 million, or 12.4 percent. This increase in operating income reflects continued growth in the natural gas distribution operations and expansions at Peninsula Pipeline and Eastern Shore, as shown in the table that follows.
The key components of the increase in gross margin are shown below:
(in thousands) | Margin Impact | ||
Eastern Shore and Peninsula Pipeline service expansions | $ | 3,743 | |
Natural gas growth (excluding service expansions) | 1,566 | ||
Florida GRIP | 346 | ||
Florida electric reliability/modernization program | 285 | ||
Other | 175 | ||
Total | 6,115 | ||
Less: Pass-through to regulated energy customers of lower taxes resulting from TCJA* | (1,981) | ||
Quarter-over-quarter increase in gross margin | $ | 4,134 | |
*As a result of the TCJA and in compliance with directives by federal and state regulatory commissions, the Company reserved or refunded an estimated $2.0 million during the fourth quarter of 2018. In some jurisdictions, refunds have been made to customers, while in other jurisdictions, the Company has established reserves until final agreements are approved and permanent changes are made to customer rates. The reserves and lower customer rates are equal to the estimated reduction in federal income taxes due to the TCJA and have no material impact on after-tax earnings from the Regulated Energy segment. |
The major components of the increase in other operating expenses are as follows:
(in thousands) | Other Operating Expenses | ||
Outside services to support growth | $ | 2,150 | |
Depreciation, amortization and property taxes associated with recent capital projects | 1,195 | ||
Incentive compensation costs (based on actual results compared to targets and timing of accruals) | (1,140) | ||
Payroll expense (increased staffing and annual salary increases) | 571 | ||
Other employee-related expenses | 207 | ||
Cumulative change in other expenses | 446 | ||
Quarter-over-quarter increase in other operating expenses | $ | 3,429 | |
Unregulated Energy Segment
Three Months Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | Change | Percent Change | ||||||||||
Gross margin | $ | 24,649 | $ | 18,745 | $ | 5,904 | 31.5 | % | ||||||
Depreciation, amortization and property taxes | 2,645 | 2,403 | 242 | 10.1 | % | |||||||||
Other operating expenses | 15,344 | 14,337 | 1,007 | 7.0 | % | |||||||||
Operating income | $ | 6,660 | $ | 2,005 | $ | 4,655 | 232.2 | % | ||||||
As with full year results, PESCO's quarterly results are shown separate from the rest of the Unregulated Energy Segment.
Unregulated Energy Segment, excluding PESCO | ||||||||||||||
Three Months Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | Change | Percent Change | ||||||||||
Gross margin | $ | 22,560 | $ | 22,282 | $ | 278 | 1.2 | % | ||||||
Depreciation, amortization and property taxes | 2,497 | 2,308 | 189 | 8.2 | % | |||||||||
Other operating expenses | 13,203 | 12,641 | 562 | 4.4 | % | |||||||||
Operating income | $ | 6,860 | $ | 7,333 | $ | (473) | (6.5) | % | ||||||
Operating income for the Unregulated Energy segment, excluding PESCO, decreased by $473,000 for the three months ended December 31, 2018, compared to the same period in 2017. The decrease in operating income reflects a $278,000 increase in gross margin, offset by $562,000 in higher other operating expenses.
The major components of the increase in gross margin, excluding PESCO results, are shown below:
(in thousands) | Margin Impact | ||
Unregulated Energy customer growth | $ | 1,348 | |
Propane operations - decreased retail margins per gallon for certain customer classes | (500) | ||
Warmer weather in the Mid-Atlantic | (475) | ||
Other | (95) | ||
Quarter-over-quarter increase in gross margin | $ | 278 | |
Other operating expenses were higher as a result of additional personnel, and outside services to support growth in these businesses, offset by lower incentive compensation costs as a result of actual results relative to pre-established targets and the timing of associated accruals.
The major components of the increase in other operating expenses are as follows:
(in thousands) | Other Operating Expenses | ||
Outside services and facilities maintenance costs | $ | 674 | |
Incentive compensation costs (based on period-over-period results compared to targets and the timing of accruals) | (643) | ||
Payroll expense (increased staffing and annual salary increases) | 495 | ||
Cumulative change in other expenses | 36 | ||
Quarter-over-quarter increase in other operating expenses | $ | 562 | |
PESCO | |||||||||||
Three Months Ended | |||||||||||
(in thousands) | 2018 | 2017 | Change | ||||||||
Gross margin | $ | 2,089 | $ | (3,537) | $ | 5,626 | |||||
Depreciation, amortization and property taxes | 148 | 95 | 53 | ||||||||
Other operating expenses | 2,141 | 1,696 | 445 | ||||||||
Operating loss | $ | (200) | $ | (5,328) | $ | 5,128 | |||||
For the three months ended December 31, 2018, PESCO's gross margin improved by $5.6 million, compared to the same period in 2017, due primarily to the absence of the unrealized MTM loss recorded in the fourth quarter of 2017. PESCO's operating expenses increased by $498,000, compared to the same period in 2017, reflecting increased planned expenses for staff, infrastructure and risk management systems to keep pace with growth. A more detailed discussion of PESCO's results for the fourth quarters of 2018 and 2017 is provided later in this release (page 19) and in the Company's 2018 Annual Report on Form 10-K.
Safe Harbor for Forward-Looking Statements
The Company makes statements in this Press Release that does not directly or exclusively relate to historical facts. Such statements are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. One can typically identify forward-looking statements by the use of forward-looking words, such as "project," "believe," "expect," "anticipate," "intend," "plan," "estimate," "continue," "potential," "forecast" or other similar words, or future or conditional verbs such as "may," "will," "should," "would" or "could." These statements represent the Company's intentions, plans, expectations, assumptions and beliefs about future financial performance, business strategy, projected plans and objectives of the Company. Forward-looking statements speak only as of the date they are made or as of the date indicated and we do not undertake any obligation to update forward-looking statements as a result of new information, future events or otherwise. These statements are subject to many risks and uncertainties. In addition to the risk factors described under Item 1A, Risk Factors, in the Company's 2018 Annual Report on Form 10-K, the following important factors, among others, could cause actual future results to differ materially from those expressed in the forward-looking statements:
Conference Call
Chesapeake Utilities Corporation will host a conference call on March 1, 2019 at 10:30 a.m. Eastern Time to discuss the Company's financial results for the year and quarter ended December 31, 2018. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2018 Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at CPK Earnings Results or download the replay on your mobile device by accessing the Audiocast section of the Company's Investor Relations App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas operations; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its Investor Relations App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Executive Vice President & Chief Financial Officer
302.734.6799
Financial Summary | ||||||||||||||||
(in thousands, except per-share data) | ||||||||||||||||
Year Ended | Fourth Quarter | |||||||||||||||
For the Periods Ended December 31, | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Gross Margin | ||||||||||||||||
Regulated Energy | $ | 223,453 | $ | 207,541 | $ | 60,528 | $ | 56,394 | ||||||||
Unregulated Energy | 83,798 | 72,572 | 24,649 | 18,745 | ||||||||||||
Other businesses and eliminations | (503) | (444) | (107) | (119) | ||||||||||||
Total Gross Margin | $ | 306,748 | $ | 279,669 | $ | 85,070 | $ | 75,020 | ||||||||
Operating Income | ||||||||||||||||
Regulated Energy | $ | 79,215 | $ | 74,584 | $ | 22,285 | $ | 21,580 | ||||||||
Unregulated Energy | 16,901 | 12,631 | 6,660 | 2,005 | ||||||||||||
Other businesses and eliminations | (1,496) | 205 | (15) | 43 | ||||||||||||
Total Operating Income | $ | 94,620 | $ | 87,420 | $ | 28,930 | $ | 23,628 | ||||||||
Other expense, net | (615) | (2,342) | (410) | (486) | ||||||||||||
Interest charges | 16,431 | 12,645 | 4,456 | 3,513 | ||||||||||||
Income taxes | 20,994 | 14,309 | 6,263 | (6,472) | ||||||||||||
Net Income | $ | 56,580 | $ | 58,124 | $ | 17,801 | $ | 26,101 | ||||||||
Earnings Per Share of Common Stock | ||||||||||||||||
Basic | $ | 3.46 | $ | 3.56 | $ | 1.09 | $ | 1.60 | ||||||||
Diluted | $ | 3.45 | $ | 3.55 | $ | 1.08 | $ | 1.59 | ||||||||
Financial Summary Highlights | ||||||||||||
Key variances for the year ended December 31, 2018 included: | ||||||||||||
(in thousands, except per share data) | Pre-tax | Net | Earnings | |||||||||
Year ended December 31, 2017 Reported Results | $ | 72,433 | $ | 58,124 | $ | 3.55 | ||||||
Adjusting for unusual items: | ||||||||||||
Absence of the 2017 deferred tax revaluation benefit associated with the TCJA | — | (14,299) | (0.87) | |||||||||
Net impact of PESCO's MTM activity | 10,423 | 7,602 | 0.46 | |||||||||
One-time separation expenses associated with a former executive | (1,548) | (1,421) | (0.09) | |||||||||
Absence of Xeron expenses, including 2017 wind-down expenses | 829 | 605 | 0.04 | |||||||||
9,704 | (7,513) | (0.46) | ||||||||||
Increased (Decreased) Gross Margins: | ||||||||||||
Eastern Shore and Peninsula Pipeline service expansions* | 9,709 | 7,082 | 0.43 | |||||||||
Pass-through of lower taxes to regulated energy customers(1) | (9,562) | (6,975) | (0.42) | |||||||||
Natural gas growth (excluding service expansions) | 5,911 | 4,311 | 0.26 | |||||||||
Implementation of Eastern Shore settled rates*(2) | 5,803 | 4,233 | 0.26 | |||||||||
Impact on PESCO from Bomb Cyclone and pipeline capacity constraints | (5,545) | (4,044) | (0.25) | |||||||||
Colder weather | 5,046 | 3,680 | 0.22 | |||||||||
Unregulated Energy growth, excluding PESCO | 3,140 | 2,290 | 0.14 | |||||||||
Florida electric reliability/modernization program* | 1,516 | 1,106 | 0.07 | |||||||||
Florida GRIP* | 1,277 | 932 | 0.06 | |||||||||
Other margin for PESCO operations (net) | (489) | (357) | (0.02) | |||||||||
16,806 | 12,258 | 0.75 | ||||||||||
Decreased (Increased) Other Operating Expenses(3): | ||||||||||||
Depreciation, asset removal and property taxes | (4,779) | (3,486) | (0.21) | |||||||||
Payroll expense (increased staffing and annual salary increases) | (4,349) | (3,172) | (0.19) | |||||||||
Facilities maintenance costs | (2,687) | (1,960) | (0.12) | |||||||||
Operating expenses to increase staffing, infrastructure and risk management systems necessary to support growth for PESCO(3) | (2,665) | (1,944) | (0.12) | |||||||||
Outside services | (2,182) | (1,592) | (0.10) | |||||||||
Vehicle, other taxes and credit collections | (1,551) | (1,131) | (0.07) | |||||||||
Other employee-related expenses | (1,100) | (802) | (0.05) | |||||||||
Incentive compensation costs | 734 | 535 | 0.03 | |||||||||
Outside regulatory costs and early termination of facility lease due to consolidation of operations facilities | 238 | 173 | 0.01 | |||||||||
(18,341) | (13,379) | (0.82) | ||||||||||
Interest charges | (3,786) | (2,762) | (0.17) | |||||||||
Income taxes - Regulated Energy (1) | — | 6,975 | 0.42 | |||||||||
Other income tax effects - primarily the impact of income rate tax changes on Unregulated businesses | — | 2,323 | 0.14 | |||||||||
Net Other changes | 758 | 554 | 0.04 | |||||||||
Year ended December 31, 2018 Reported Results | $ | 77,574 | $ | 56,580 | $ | 3.45 | ||||||
(1) | "Pass-through of lower taxes to regulated customers" represents the amounts that have already been refunded to customers or reserves established for future refunds and/or reduced rates to customers in 2018 as a result of lower taxes due to the TCJA. Refunds made to customers are offset by the corresponding decrease in federal income tax expense and are expected to have no negative impact on net income. |
(2) | Excluding amounts refunded to customers associated with the TCJA, which are broken out separately and discussed in footnote 1. |
(3) | As a result of increased staffing, infrastructure and risk management systems to support growth for PESCO, operating expenses for PESCO are presented separately. |
* See the Major Projects and Initiatives table later in this press release.
Key variances for the quarter ended December 31, 2018 included:
(in thousands, except per share) | Pre-tax | Net | Earnings | |||||||||
Fourth Quarter 2017 Reported Results | $ | 19,629 | $ | 26,101 | $ | 1.59 | ||||||
Adjusting for unusual items: | ||||||||||||
Absence of the Q4 2017 Unregulated Energy tax benefit associated with TCJA | — | (14,299) | (0.87) | |||||||||
Net impact of PESCO's MTM activity | 5,216 | 3,859 | 0.23 | |||||||||
5,216 | (10,440) | (0.64) | ||||||||||
Increased (Decreased) Gross Margins: | ||||||||||||
Eastern Shore and Peninsula Pipeline service expansions* | 3,743 | 2,769 | 0.17 | |||||||||
Pass-through of lower taxes to regulated energy customers(1) | (1,981) | (1,465) | (0.09) | |||||||||
Natural gas growth (excluding service expansions) | 1,566 | 1,158 | 0.07 | |||||||||
Unregulated energy growth, excluding PESCO | 1,329 | 983 | 0.06 | |||||||||
Implementation of Eastern Shore settled rates*(2) | (641) | (474) | (0.03) | |||||||||
Lower retail propane margins per gallon in certain customer classes | (500) | (370) | (0.02) | |||||||||
Warmer weather | (351) | (260) | (0.02) | |||||||||
Other margin for PESCO operations (net) | 409 | 303 | 0.02 | |||||||||
Florida GRIP* | 346 | 256 | 0.02 | |||||||||
Florida electric reliability/modernization program* | 285 | 211 | 0.01 | |||||||||
4,205 | 3,111 | 0.19 | ||||||||||
(Increased) Decreased Other Operating Expenses(3): | ||||||||||||
Outside services and facilities maintenance costs | (2,898) | (2,143) | (0.13) | |||||||||
Incentive compensation costs (based on period-over-period results) | 1,783 | 1,319 | 0.08 | |||||||||
Depreciation, asset removal and property taxes | (1,379) | (1,020) | (0.06) | |||||||||
Payroll expense (increased staffing and annual salary increases) | (1,065) | (788) | (0.05) | |||||||||
Operating expenses to increase staffing, infrastructure and risk management systems necessary to support growth for PESCO(3) | (498) | (368) | (0.02) | |||||||||
Other employee-related expenses | (351) | (259) | (0.02) | |||||||||
(4,408) | (3,259) | (0.20) | ||||||||||
Interest Charges | (943) | (698) | (0.04) | |||||||||
Income taxes - Regulated Energy (1) | — | 1,465 | 0.09 | |||||||||
Other income tax effects | — | 1,253 | 0.08 | |||||||||
Net Other Changes | 365 | 268 | 0.01 | |||||||||
Fourth Quarter 2018 Reported Results | $ | 24,064 | $ | 17,801 | $ | 1.08 | ||||||
(1) | "Pass-through of lower taxes to regulated customers" represents the amounts that have already been refunded to customers or reserves established for future refunds and/or reduced rates to customers in the fourth quarter of 2018 as a result of lower taxes due to the TCJA. Refunds made to customers are offset by the corresponding decrease in federal income taxes and are expected to have no net impact on net income. |
(2) | Excluding amounts refunded to customers associated with the TCJA, which are broken out separately and discussed in footnote 1. |
(3) | As a result of increased staffing, infrastructure and risk management systems to support growth for PESCO, operating expenses for PESCO are presented separately. |
* See the Major Projects and Initiatives table later in this press release.
The following information highlights certain key factors contributing to the Company's results for the year and quarter ended December 31, 2018:
Recently Completed and Ongoing Major Projects and Initiatives
The Company constantly seeks and develops additional projects and initiatives to provide solutions for our customers and further increase shareholder value. The following represent the major projects and initiatives recently completed and currently underway. In the future, the Company will add new projects to this table when such projects are initiated.
Gross Margin for the Period | ||||||||||||||||||||
Year Ended | Three Months Ended | Estimate | ||||||||||||||||||
Project / Initiative | 2018 | 2017 | 2018 | 2017 | 2019 | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Florida GRIP | $ | 14,731 | $ | 13,454 | $ | 3,798 | $ | 3,452 | $ | 16,276 | ||||||||||
Eastern Shore Rate Case (1) | 9,496 | 3,693 | 2,687 | 2,673 | 9,800 | |||||||||||||||
Florida Electric Reliability/Modernization Pilot Program (1) | 1,610 | 94 | 379 | 94 | 1,558 | |||||||||||||||
New Smyrna Beach, Florida(1) | 1,409 | 235 | 352 | 235 | 1,409 | |||||||||||||||
2017 Eastern Shore System Expansion - including interim services (1) | 8,015 | 483 | 3,577 | 483 | 15,709 | |||||||||||||||
Northwest Florida Expansion(1) | 3,485 | — | 1,307 | — | 6,500 | |||||||||||||||
Western Palm Beach County, Florida Expansion(1) | 54 | — | 54 | — | 1,250 | |||||||||||||||
Marlin Gas Services | 110 | — | 110 | — | 4,475 | |||||||||||||||
Ohl propane acquisition (rolled into Sharp) | — | — | — | — | 1,200 | |||||||||||||||
Total | $ | 38,910 | $ | 17,959 | $ | 12,264 | $ | 6,937 | $ | 58,177 | ||||||||||
(1) | Gross margin amounts included in this table have not been adjusted to reflect the impact of the TCJA. Any TCJA-related refunds and/or rate reductions implemented in the Company's regulated businesses were, or will be, offset by lower federal income taxes due to the TCJA. |
Ongoing Growth Initiatives
Florida GRIP
GRIP is a natural gas pipe replacement program approved by the Florida Public Service Commission ("PSC"). Since the program's inception in August 2012, we have invested $127.0 million to replace 268 miles of qualifying distribution mains, including $13.3 million and $10.8 million during 2018 and 2017, respectively. GRIP generated additional gross margin of $1.3 million and $346,000 for the year and quarter ended December 31, 2018, respectively, compared to the same periods in 2017. There are approximately 79 remaining miles of main that will be replaced under this program, at an estimated cost of $35.0 million.
Regulatory Proceedings
Eastern Shore Rate Case
Eastern Shore's rate case settlement agreement became final on April 1, 2018, with settlement rates effective January 1, 2018. The final agreement increases Eastern Shore's annual operating income by $6.6 million, representing an estimated $9.8 million in additional margin from base rates, offset by the pass-through of an estimated $3.2 million in lower federal income tax expense for Eastern Shore resulting from the TCJA. For the year ended December 31, 2018, Eastern Shore recognized incremental gross margin of approximately $5.8 million. As of December 31, 2018, Eastern Shore has provided rate reductions to its customers totaling approximately $3.3 million as a result of the new rates. Annual margin from the new rates in future years is estimated to be $9.8 million.
Florida Electric Reliability/Modernization Pilot Program
In December 2017, the Florida PSC approved a $1.6 million annualized rate increase effective January 2018, for the recovery of a limited number of investments and costs related to reliability, safety and modernization for our Florida electric distribution system. This increase will continue through at least the last billing cycle of December 2019. For the year and quarter ended December 31, 2018, additional margin of $1.5 million and $285,000, respectively, was generated by this program.
Major Projects and Initiatives Currently Underway
New Smyrna Beach, Florida Project
In the fourth quarter of 2017, we commenced construction of a 14-mile natural gas transmission pipeline to serve current and planned customer growth in the New Smyrna Beach service area. The project was partially placed into service at the end of 2017 and was fully placed into service during the fourth quarter of 2018. For the year and quarter ended December 31, 2018, the project generated incremental gross margin of approximately $1.2 million and $117,000 compared to the same periods in 2017. The project is expected to generate $1.4 million in annual gross margin going forward.
2017 Eastern Shore System Expansion Project
From November 2017 to December 2018, Eastern Shore substantially completed the construction of a system expansion that increased its capacity by 26 percent. The first phase of the project was placed into service in December 2017. For the quarter and year ended December 31, 2018, the project generated $3.1 million and $7.5 million, respectively, of incremental gross margin, including margin from interim services, compared to 2017. The project is expected to produce total annual margin of approximately $15.7 million in 2019, $15.8 million from 2020 through 2022, and $13.2 million thereafter.
Northwest Florida Expansion Project
Peninsula Pipeline completed construction of transmission lines, and the Company's Florida natural gas division completed construction of lateral distribution lines, to serve customers in Northwest Florida. The project was placed into service in May 2018, generating gross margin of $1.3 million and $3.5 million for the quarter and year ended December 31, 2018, respectively, and is expected to generate estimated annual gross margin of $6.5 million thereafter.
Western Palm Beach County, Florida Project
Peninsula Pipeline is constructing transmission lines to bring natural gas to our natural gas distribution system in West Palm Beach, Florida. The first phase of this project was placed into service in December 2018 and generated gross margin of $54,000 for the year and quarter ended December 31, 2018. The Company expects to complete this project in phases through early 2020 and estimates gross margin of $1.3 million for 2019 and annual gross margin of approximately $5.4 million, once the project is fully in service.
Marlin Gas Services
In December 2018, the Company acquired certain operating assets of Marlin Gas Transport, Inc., a supplier of mobile compressed natural gas utility and pipeline solutions, and a new subsidiary was created named Marlin Gas Services. The acquisition will enable us to offer solutions to address customer supply interruption scenarios and tailor other alternatives where pipeline supplies are not available. Results generated in 2018 were immaterial given the date of acquisition. The Company estimates that this acquisition will generate gross margin of approximately $4.5 million in 2019, with potential for additional growth in future years.
Ohl Propane Acquisition
In December 2018, Sharp acquired certain propane customers and operating assets of R. F. Ohl Fuel Oil, Inc. ("Ohl"). Ohl provided propane delivery service to approximately 2,500 residential and commercial customers in Pennsylvania, between two of Sharp's existing districts. The acquired customers and assets have been assimilated into Sharp. Results generated in 2018 were immaterial, given the date of acquisition. The Company estimates that this acquisition will generate gross margin of approximately $1.2 million in 2019, with potential for additional growth in future years.
Future Projects not included in the Table above
Del-Mar Energy Pathway Project
In September 2018, Eastern Shore filed for FERC authorization to construct the Del-Mar Energy Pathway project to provide an additional 14,300 Dts/d of capacity to four customers. The benefits of this project include additional natural gas transmission pipeline infrastructure in eastern Sussex County, Delaware, and the initial extension of Eastern Shore's pipeline system into Somerset County, Maryland. The estimated annual gross margin from this project is $5.1 million. Eastern Shore anticipates that this project would be fully in-service by the third quarter of 2020 contingent upon FERC issuing authorization for the project by August 2019.
Weather and Consumption
The impact of colder temperatures on customer consumption during 2018 contributed $5.0 million in incremental gross margin compared to 2017. While 2018 was colder than 2017, it was still 1.1 percent warmer than normal (average across our service territories). Normal weather during 2018 would have generated $4.0 million in additional gross margin.
For the quarter ended December 31, 2018, warmer weather on the Delmarva Peninsula lowered gross margin by $351,000 compared to the same period in 2017. Normal weather during the fourth quarter would have generated $1.5 million in additional gross margin. The following table summarizes the heating degree-days ('HDD") and cooling degree-days ("CDD") information for the years and quarters ended December 31, 2018 and 2017 and shows variances between actual and "Normal" (10-year average) HDD and CDD for those periods.
HDD and CDD Information
For the Periods Ended December 31, | 2018 | 2017 | Variance | Q4 2018 | Q4 2017 | Variance | |||||||||||
Delmarva | |||||||||||||||||
Actual HDD | 4,251 | 3,800 | 451 | 1,522 | 1,538 | (16) | |||||||||||
10-Year Average HDD ("Normal") | 4,379 | 4,374 | 5 | 1,533 | 1,529 | 4 | |||||||||||
Variance from Normal | (128) | (574) | (11) | 9 | |||||||||||||
Florida | |||||||||||||||||
Actual HDD | 780 | 533 | 247 | 273 | 235 | 38 | |||||||||||
10-Year Average HDD ("Normal") | 800 | 818 | (18) | 267 | 263 | 4 | |||||||||||
Variance from Normal | (20) | (285) | 6 | (28) | |||||||||||||
Ohio | |||||||||||||||||
Actual HDD | 5,845 | 5,126 | 719 | 2,138 | 2,057 | 81 | |||||||||||
10-Year Average HDD ("Normal") | 5,823 | 5,914 | (91) | 2,048 | 2,048 | — | |||||||||||
Variance from Normal | 22 | (788) | 90 | 9 | |||||||||||||
Florida | |||||||||||||||||
Actual CDD | 3,105 | 3,013 | 92 | 401 | 407 | (6) | |||||||||||
10-Year Average CDD ("Normal") | 2,889 | 2,865 | 24 | 296 | 286 | 10 | |||||||||||
Variance from Normal | 216 | 148 | 105 | 121 | |||||||||||||
Note: The Company continually refines and updates its weather calculations. These refinements may result in the annual impact varying from the aggregate of the quarterly variances previously disclosed.
Natural Gas Distribution Customer and Consumption Growth
Customer growth for the Company's natural gas distribution operations generated $3.9 million and $1.1 million in additional gross margin for the year and quarter ended December 31, 2018, respectively, compared to the same periods in 2017. The additional margin was generated from an increase of approximately 3.3 percent in the average number of residential customers served, growth in volumes delivered to commercial and industrial customers on the Delmarva Peninsula and in Florida, and new service initiated to customers in Northwest Florida.
Higher residential and commercial customer consumption increased gross margin by $2.0 million and $501,000 for the year and quarter ended December 31, 2018, respectively, compared to the same periods in 2017.
(in thousands) | Margin Increase | |||||||
For the Periods Ended December 31, | 2018 | Q4 2018 | ||||||
Customer growth: | ||||||||
Residential | $ | 1,604 | $ | 433 | ||||
Commercial and industrial, excluding new service in Northwest Florida | 1,322 | 296 | ||||||
New service in Northwest Florida | 987 | 336 | ||||||
Total customer growth | 3,913 | 1,065 | ||||||
Volume growth: | ||||||||
Residential | 655 | 207 | ||||||
Commercial and industrial | 1,522 | 279 | ||||||
Other - including unbilled revenue | (179) | 15 | ||||||
Total volume growth | 1,998 | 501 | ||||||
Total natural gas distribution growth | $ | 5,911 | $ | 1,566 | ||||
Propane Operations
The Company's Florida and Mid-Atlantic propane distribution operations continue to pursue a multi-pronged growth plan, which includes: targeting retail and wholesale customer growth in existing markets, both organically as well as through acquisitions; incremental growth from recent and planned start-ups in new markets; targeting new community gas systems in high growth areas; further build-out of the Company's propane vehicular platform through AutoGas fueling stations; and optimization of its supply portfolio to generate incremental margin opportunities. Our propane operations and AutoGas segment install and support propane vehicle conversion systems for vehicle fleets, including converting fleets to bi-fuel propane-powered engines and providing on-site fueling infrastructure.
These operations generated $4.9 million and $68,000 in incremental margin for the year and quarter ended December 31, 2018, respectively, compared to the same periods in 2017. For the year ended December 31, 2018, $2.2 million of the margin increase reflected the impact of colder temperatures. The balance of the gross margin increase for the year reflected the impact of the growth strategies discussed above, including generating approximately a four percent increase in customers. Supply management initiatives have also increased retail propane margins from many customer classes and margin from wholesale propane sales.
PESCO
PESCO's gross margin for the year and quarter ended December 31, 2018 increased by $4.4 million and $5.6 million, respectively, compared to the same periods in 2017. The following table summarizes the changes in PESCO'S year-over-year margin for the year and quarter ended December 31, 2018:
For the periods ended December 31, | 2018 | Q4 2018 | ||||||
(in thousands) | ||||||||
Net impact of PESCO's MTM activity | $ | 10,423 | $ | 5,216 | ||||
Net impact of extraordinary costs associated with the 2018 Bomb Cyclone for the Mid-Atlantic wholesale portfolio (1) | (3,284) | — | ||||||
Loss for the Mid-Atlantic retail portfolio caused by pipeline capacity constraints in January and warm weather in February 2018 (1) | (2,261) | — | ||||||
Other margin for PESCO operations (net) | (489) | 409 | ||||||
Total Change in Gross Margin for PESCO in 2018 | $ | 4,389 | 5,625 | |||||
(1) | The 2018 Bomb Cyclone refers to the high-intensity winter storms in early January 2018 that impacted the Mid-Atlantic region and which had a residual impact on the Company's businesses through the month of February. The exceedingly high demand and associated impacts on pipeline capacity and gas supply in the Mid-Atlantic region created significant, unusual costs for PESCO. While such concerted impacts will recur infrequently, the Company's management revisited and refined its risk management strategies and implemented additional controls. |
For the year ended December 31, 2018, PESCO reported an operating loss of $1.4 million, compared to an operating loss of $3.1 million during the prior year period. The year-over-year improvement in operating loss reflects primarily increased gross margin of $4.4 million, for the reasons discussed in the table above, which was offset by an increase of $2.7 million in other operating expenses as a result of increased staffing, infrastructure and risk management system costs to ensure the appropriate infrastructure is in place as PESCO executes its growth strategy.
PESCO generated an operating loss of $200,000 for the quarter ended December 31, 2018, compared to a loss of $5.3 million during the prior year period. The improvement in quarter-over-quarter results reflects the absence of the MTM loss recorded in the fourth quarter of 2017.
Xeron
Xeron's operations were wound down during the second quarter of 2017. 2018 operating income improved by $718,000 over 2017, due to the absence of an operating loss and wind-down expenses incurred in 2017.
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) For the Periods Ended December 31, 2018 and 2017 (in thousands, except shares and per share data) | |||||||||||||||
Year Ended | Fourth Quarter | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating Revenues | |||||||||||||||
Regulated Energy | $ | 345,281 | $ | 326,310 | $ | 92,614 | $ | 87,957 | |||||||
Unregulated Energy | 420,617 | 324,595 | 122,862 | 104,133 | |||||||||||
Other businesses and eliminations | (48,409) | (33,322) | (14,286) | (11,687) | |||||||||||
Total Operating Revenues | 717,489 | 617,583 | 201,190 | 180,403 | |||||||||||
Operating Expenses | |||||||||||||||
Regulated energy cost of sales | 121,828 | 118,769 | 32,085 | 31,563 | |||||||||||
Unregulated energy and other cost of sales | 288,913 | 219,145 | 84,034 | 73,819 | |||||||||||
Operations | 138,441 | 125,994 | 36,637 | 34,218 | |||||||||||
Maintenance | 14,387 | 12,701 | 3,968 | 3,331 | |||||||||||
Gain from a settlement | (130) | (130) | — | — | |||||||||||
Depreciation and amortization | 40,802 | 36,599 | 10,627 | 9,331 | |||||||||||
Other taxes | 18,628 | 17,085 | 4,909 | 4,513 | |||||||||||
Total operating expenses | 622,869 | 530,163 | 172,260 | 156,775 | |||||||||||
Operating Income | 94,620 | 87,420 | 28,930 | 23,628 | |||||||||||
Other expense, net | (615) | (2,342) | (410) | (486) | |||||||||||
Interest charges | 16,431 | 12,645 | 4,456 | 3,513 | |||||||||||
Income Before Income Taxes | 77,574 | 72,433 | 24,064 | 19,629 | |||||||||||
Income taxes | 20,994 | 14,309 | 6,263 | (6,472) | |||||||||||
Net Income | $ | 56,580 | $ | 58,124 | $ | 17,801 | $ | 26,101 | |||||||
Weighted Average Common Shares Outstanding: | |||||||||||||||
Basic | 16,369,616 | 16,336,789 | 16,378,545 | 16,344,442 | |||||||||||
Diluted | 16,419,870 | 16,383,352 | 16,430,594 | 16,397,332 | |||||||||||
Earnings Per Share of Common Stock: | |||||||||||||||
Basic | $ | 3.46 | $ | 3.56 | $ | 1.09 | $ | 1.60 | |||||||
Diluted | $ | 3.45 | $ | 3.55 | $ | 1.08 | $ | 1.59 | |||||||
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited) | ||||||||
As of December 31, | ||||||||
Assets | 2018 | 2017 | ||||||
(in thousands, except shares and per share data) | ||||||||
Property, Plant and Equipment | ||||||||
Regulated energy | $ | 1,297,416 | $ | 1,073,736 | ||||
Unregulated energy | 237,682 | 210,682 | ||||||
Other | 34,585 | 27,699 | ||||||
Total property, plant and equipment | 1,569,683 | 1,312,117 | ||||||
Less: Accumulated depreciation and amortization | (294,295) | (270,599) | ||||||
Plus: Construction work in progress | 108,584 | 84,509 | ||||||
Net property, plant and equipment | 1,383,972 | 1,126,027 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 6,089 | 5,614 | ||||||
Accounts receivable (less allowance for uncollectible accounts of $1,108 and $936, respectively) | 85,404 | 77,223 | ||||||
Accrued revenue | 27,499 | 22,279 | ||||||
Propane inventory, at average cost | 9,791 | 8,324 | ||||||
Other inventory, at average cost | 7,127 | 12,022 | ||||||
Regulatory assets | 4,796 | 10,930 | ||||||
Storage gas prepayments | 6,603 | 5,250 | ||||||
Income taxes receivable | 15,300 | 14,778 | ||||||
Prepaid expenses | 10,079 | 13,621 | ||||||
Derivative assets, at fair value | 13,165 | 1,286 | ||||||
Other current assets | 5,684 | 7,260 | ||||||
Total current assets | 191,537 | 178,587 | ||||||
Deferred Charges and Other Assets | ||||||||
Goodwill | 25,837 | 19,604 | ||||||
Other intangible assets, net | 6,207 | 4,686 | ||||||
Investments, at fair value | 6,711 | 6,756 | ||||||
Regulatory assets | 72,422 | 75,575 | ||||||
Receivables and other deferred charges | 6,985 | 3,699 | ||||||
Total deferred charges and other assets | 118,162 | 110,320 | ||||||
Total Assets | $ | 1,693,671 | $ | 1,414,934 | ||||
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited) | |||||||||
As of December 31, | |||||||||
Capitalization and Liabilities | 2018 | 2017 | |||||||
(in thousands, except shares and per share data) | |||||||||
Capitalization | |||||||||
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding | $ | — | $ | — | |||||
Common stock, par value $0.4867 per share (authorized 50,000,000 shares) | 7,971 | 7,955 | |||||||
Additional paid-in capital | 255,651 | 253,470 | |||||||
Retained earnings | 261,530 | 229,141 | |||||||
Accumulated other comprehensive loss | (6,713) | (4,272) | |||||||
Deferred compensation obligation | 3,854 | 3,395 | |||||||
Treasury stock | (3,854) | (3,395) | |||||||
Total stockholders' equity | 518,439 | 486,294 | |||||||
Long-term debt, net of current maturities | 316,020 | 197,395 | |||||||
Total capitalization | 834,459 | 683,689 | |||||||
Current Liabilities | |||||||||
Current portion of long-term debt | 11,935 | 9,421 | |||||||
Short-term borrowing | 294,458 | 250,969 | |||||||
Accounts payable | 129,804 | 74,688 | |||||||
Customer deposits and refunds | 34,155 | 34,751 | |||||||
Accrued interest | 2,317 | 1,742 | |||||||
Dividends payable | 6,060 | 5,312 | |||||||
Accrued compensation | 13,923 | 13,112 | |||||||
Regulatory liabilities | 7,883 | 6,485 | |||||||
Derivative liabilities, at fair value | 14,871 | 6,247 | |||||||
Other accrued liabilities | 12,828 | 10,273 | |||||||
Total current liabilities | 528,234 | 413,000 | |||||||
Deferred Credits and Other Liabilities | |||||||||
Deferred income taxes | 156,820 | 135,850 | |||||||
Regulatory liabilities | 135,039 | 140,978 | |||||||
Environmental liabilities | 7,638 | 8,263 | |||||||
Other pension and benefit costs | 28,513 | 29,699 | |||||||
Deferred investment tax credits and Other liabilities | 2,968 | 3,455 | |||||||
Total deferred credits and other liabilities | 330,978 | 318,245 | |||||||
Total Capitalization and Liabilities | $ | 1,693,671 | $ | 1,414,934 | |||||
Chesapeake Utilities Corporation and Subsidiaries
Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
For the Three Months Ended December 31, 2018 | For the Three Months Ended December 31, 2017 | |||||||||||||||||||||||||||||||
Delmarva NG Distribution | Chesapeake Utilities' Florida NG Division | FPU NG Distribution | FPU Electric Distribution | Delmarva NG Distribution | Chesapeake Utilities' Florida NG Division | FPU NG Distribution | FPU Electric Distribution | |||||||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||||||||||||||
Residential | $ | 15,647 | $ | 1,313 | $ | 5,846 | $ | 9,450 | $ | 14,854 | $ | 1,435 | $ | 8,157 | $ | 10,166 | ||||||||||||||||
Commercial | 8,260 | 1,566 | 6,491 | 8,711 | 7,860 | 1,493 | 7,170 | 9,951 | ||||||||||||||||||||||||
Industrial | 2,274 | 3,117 | 5,995 | 411 | 2,236 | 1,676 | 5,921 | 1,609 | ||||||||||||||||||||||||
Other (1) | 5,426 | 883 | 3,901 | 298 | 5,090 | 1,039 | (444) | (1,640) | ||||||||||||||||||||||||
Total Operating Revenues | $ | 31,607 | $ | 6,879 | $ | 22,233 | $ | 18,870 | $ | 30,040 | $ | 5,643 | $ | 20,804 | $ | 20,086 | ||||||||||||||||
Volumes (in Dts for natural gas and KWHs for electric) | ||||||||||||||||||||||||||||||||
Residential | 962,407 | 90,091 | 327,226 | 65,844 | 792,602 | 86,682 | 327,815 | 66,998 | ||||||||||||||||||||||||
Commercial | 947,924 | 1,192,733 | 417,254 | 69,464 | 829,713 | 1,165,579 | 436,272 | 74,689 | ||||||||||||||||||||||||
Industrial | 1,518,671 | 6,577,922 | 1,220,219 | 3,350 | 1,375,672 | 3,042,088 | 1,171,381 | 15,130 | ||||||||||||||||||||||||
Other | 23,313 | — | 919,192 | 1,686 | 29,142 | — | 593,768 | 1,885 | ||||||||||||||||||||||||
Total | 3,452,315 | 7,860,746 | 2,883,891 | 140,344 | 3,027,129 | 4,294,349 | 2,529,236 | 158,702 | ||||||||||||||||||||||||
Average Customers | ||||||||||||||||||||||||||||||||
Residential | 72,219 | 16,703 | 56,181 | 24,573 | 69,532 | 15,967 | 54,704 | 24,648 | ||||||||||||||||||||||||
Commercial | 6,992 | 1,550 | 3,893 | 7,508 | 6,848 | 1,435 | 3,962 | 7,468 | ||||||||||||||||||||||||
Industrial | 162 | 17 | 2,380 | 2 | 155 | 80 | 2,186 | 2 | ||||||||||||||||||||||||
Other | 4 | — | 12 | 3 | — | 10 | ||||||||||||||||||||||||||
Total | 79,377 | 18,270 | 62,466 | 32,083 | 76,538 | 17,482 | 60,862 | 32,118 | ||||||||||||||||||||||||
For the Year Ended December 31, 2018 | For the Year Ended December 31, 2017 | |||||||||||||||||||||||||||||||
Delmarva NG Distribution | Chesapeake Utilities' Florida NG Division | FPU NG Distribution | FPU Electric Distribution | Delmarva NG Distribution | Chesapeake Utilities' Florida NG Division | FPU NG Distribution | FPU Electric Distribution | |||||||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||||||||||||||
Residential | $ | 70,466 | $ | 5,086 | $ | 30,334 | $ | 44,788 | $ | 57,365 | $ | 5,600 | $ | 33,103 | $ | 44,082 | ||||||||||||||||
Commercial | 36,916 | 6,236 | 26,993 | 39,442 | 31,585 | 5,756 | 30,283 | 41,141 | ||||||||||||||||||||||||
Industrial | 8,289 | 10,911 | 22,296 | 1,543 | 7,619 | 6,535 | 21,647 | 3,561 | ||||||||||||||||||||||||
Other (1) | 928 | 3,108 | 1,494 | (5,970) | 3,504 | 3,858 | (5,353) | (5,918) | ||||||||||||||||||||||||
Total Operating Revenues | $ | 116,599 | $ | 25,341 | $ | 81,117 | $ | 79,803 | $ | 100,073 | $ | 21,749 | $ | 79,680 | $ | 82,866 | ||||||||||||||||
Volumes (in Dts for natural gas and KWHs for electric) | ||||||||||||||||||||||||||||||||
Residential | 4,142,567 | 369,067 | 1,393,785 | 307,269 | 3,368,603 | 340,570 | 1,350,413 | 291,510 | ||||||||||||||||||||||||
Commercial | 3,792,220 | 4,719,725 | 1,722,081 | 302,687 | 3,274,975 | 5,156,823 | 1,863,147 | 304,235 | ||||||||||||||||||||||||
Industrial | 5,549,387 | 19,858,336 | 4,900,998 | 15,160 | 5,125,633 | 11,561,309 | 4,543,775 | 27,380 | ||||||||||||||||||||||||
Other | 80,254 | — | 2,338,815 | 7,402 | 95,415 | — | 1,875,761 | 7,511 | ||||||||||||||||||||||||
Total | 13,564,428 | 24,947,128 | 10,355,679 | 632,518 | 11,864,626 | 17,058,702 | 9,633,096 | 630,636 | ||||||||||||||||||||||||
Average Customers | ||||||||||||||||||||||||||||||||
Residential | 71,322 | 16,450 | 55,701 | 24,686 | 68,699 | 15,796 | 54,410 | 24,574 | ||||||||||||||||||||||||
Commercial | 6,979 | 1,519 | 3,915 | 7,497 | 6,845 | 1,421 | 4,054 | 7,450 | ||||||||||||||||||||||||
Industrial | 157 | 16 | 2,312 | 2 | 147 | 79 | 2,078 | 2 | ||||||||||||||||||||||||
Other | 5 | — | 11 | — | 5 | — | 10 | |||||||||||||||||||||||||
Total | 78,463 | 17,985 | 61,939 | 32,185 | 75,696 | 17,296 | 60,552 | 32,026 | ||||||||||||||||||||||||
(1) | Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties and adjustments for pass-through taxes. |
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SOURCE Chesapeake Utilities Corporation
Article Date
2/26/2019Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
DOVER, Del., Feb. 26, 2019 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.37 per share on the Company's common stock. The $0.37 per share dividend will be paid on April 5, 2019 to all shareholders of record at the close of business on March 15, 2019.
Chesapeake has paid dividends to its shareholders without interruption for 58 years. During those 58 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's Investor Relations (IR) App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-quarterly-dividend-300802424.html
SOURCE Chesapeake Utilities Corporation
Article Date
2/26/2019Chesapeake Utilities Corporation To Host Conference Call To Review Fourth Quarter And Annual 2018 Financial Results
Source: PR Newswire
DOVER, Del., Feb. 1, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, March 1, 2019, at 10:30 a.m. ET to discuss the Company's financial results for the fourth quarter and year ended December 31, 2018. The earnings press release will be issued on Tuesday, February 26, 2019, after the market closes.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2018 Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-fourth-quarter-and-annual-2018-financial-results-300788418.html
SOURCE Chesapeake Utilities Corporation
Article Date
2/1/2019Chesapeake Utilities Corporation Announces the Appointment of Jeffry M. Householder as President, Chief Executive Officer and Director
Source: PR Newswire
DOVER, Del., Dec. 20, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today announced that its Board of Directors has appointed Jeffry M. Householder, currently President of the Company's Florida business unit, President and Chief Executive Officer ("CEO"), effective January 1, 2019. Concurrent with this promotion, the Company announced Mr. Householder's appointment to the Board of Directors, also effective January 1, 2019. Mr. Householder succeeds Chesapeake's current President and CEO, Michael P. McMasters, who will continue as a member of the Board of Directors. Mr. McMasters announced his retirement in September.
"Jeff's leadership, innovation and strategic thinking have been critical drivers of the dramatic growth we have cultivated in our Florida operations, and I am confident that under his leadership Chesapeake's culture will flourish and continue to produce superior service to our customers and value for our shareholders," stated Mike McMasters. "I congratulate Jeff and look forward to supporting him and Chesapeake's very capable senior management team to ensure a smooth transition and the Company's future success."
"Jeff has the experience, leadership skills and vision that are essential for the continued success of our businesses, and he understands the culture and values that have driven Chesapeake's track record of success," stated John R. Schimkaitis, Chairman of the Board of Directors. "We are committed to leadership development and planned transitions in our management team, and Jeff's accomplishments as the leader of our Florida business unit underlie our confidence in his ability to build on Chesapeake's strong foundation and lead the management team, as we continue our culture of entrepreneurial, disciplined capital investment."
Mr. Householder has more than 30 years of energy industry experience and joined Chesapeake Utilities in 2010 as President of the Company's Florida business unit after serving in leadership positions with TECO Energy Peoples Gas, West Florida Gas Company, Florida City Gas and Tallahassee Utilities. Under Jeff's leadership, the Florida operations have generated significant growth in earnings while providing safe, clean, reliable and affordable energy and solutions that promote economic development and preserve environmental integrity. In addition, he led the growth and expansion of Peninsula Pipeline (the Company's Florida intrastate pipeline) and the construction and operation of the Eight Flags Combined Heat and Power facility, the first plant of this type for the Company. Jeff's guidance and oversight of our accelerated Hurricane Michael restoration efforts and our acquisition of the Marlin assets in Florida, which we announced yesterday, also exemplify his executive leadership capabilities. He has worked closely with the Company's Board of Directors and senior executives on strategic initiatives and corporate projects and has served as a member of the Company's Growth Council, which is responsible for making recommendations to the Board regarding all significant capital investments considered by the Company. He has also been a member of various executive committees within the Company, including Employee Benefits, Security and Procurement, and serves on the boards of the Edison Electric Institute, Southern Gas Association and Florida Natural Gas Association.
"This is a very exciting time at Chesapeake, and I am honored to have the opportunity to build on the success the Company and its employees produced under Mike's leadership. We will continue to grow our existing businesses and seek new growth opportunities, while maintaining our traditional financial discipline," stated Mr. Householder. "Chesapeake's consistent generation of superior earnings growth and total return to shareholders is a testimony to the culture we have nurtured and to the talent and commitment of our management team and employees. I look forward to leading our team while serving and growing our businesses profitably for the benefit of customers and shareholders."
Mr. McMasters served as President and CEO from 2011 to 2018. Under his leadership, Chesapeake produced compound annual earnings growth of 8.2 percent, which yielded an annualized total return of 18.8 percent and growth in market capitalization from $395 million to $1.4 billion.
The Company's Chairman, John Schimkaitis stated, "The Board and I are deeply grateful to Mike for his many years of inspiring and productive leadership. Mike has transformed our Company in every way, and his legacy of contributions will continue to benefit our customers, communities, employees and shareholders for years to come."
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President and Chief Financial Officer
302.734.6022
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-the-appointment-of-jeffry-m-householder-as-president-chief-executive-officer-and-director-300769562.html
SOURCE Chesapeake Utilities Corporation
Article Date
12/20/2018Chesapeake Utilities Corporation Acquires Marlin CNG Services
Source: PR Newswire
DOVER, Del., Dec. 19, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK), announced today its acquisition of Marlin CNG Services (Marlin), a premier North American supplier of mobile compressed natural gas (CNG) utility and pipeline solutions.
"With increased opportunities for mobile fuel and virtual pipeline solutions on the horizon, this acquisition aligns with our strategic plan as we expand the scope of our services throughout our service territories and beyond. Acquiring Marlin CNG Services allows us to extend our services and utilize customized equipment to meet the needs of natural gas suppliers and customers," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation.
Since 1996, Marlin has been providing virtual pipeline applications to local gas distribution utilities, municipal gas companies, intrastate and interstate pipeline companies, natural gas producers, manufacturers and large industrial customers throughout North America. Using its experienced and fully certified staff in combination with its fleet of CNG tankers, mobile compressors and its patented offload regulators, Marlin provides gas supply support during planned interruptions of service and responds rapidly to unexpected interruptions.
"This acquisition extends Chesapeake's service offerings to a variety of new customers, allows for flexibility in meeting the needs of local distribution and transmission companies, and supports the expansion of our business," said Jeffry M. Householder, President of Chesapeake Utilities Corporation's Florida Business Unit.
Marlin provides an array of gas supply solutions to address most supply interruption scenarios and offers other unique applications where pipeline supplies are not available or cannot meet customer requirements. These applications include solutions for winter peaking supplies, pipeline integrity testing, equipment testing, pipeline reconstruction, fuel supply switching and bridging supply requirements in advance of pipeline connections.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-acquires-marlin-cng-services-300768948.html
SOURCE Chesapeake Utilities Corporation
Article Date
12/19/201812/18/2018 - Chesapeake Utilities Corporation Subsidiary Acquires Propane Operating Assets in Pennsylvania
Chesapeake Utilities Corporation Subsidiary Acquires Propane Operating Assets in Pennsylvania
Source: PR Newswire
DOVER, Del., Dec. 18, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that its propane subsidiary, Sharp Energy, Inc., has purchased the propane operating assets of R.F. Ohl Fuel Oil Inc. based in Lehighton, Pennsylvania.
R.F. Ohl, a family-owned and operated company founded in 1984, has been providing propane service to more than 2,500 residential and commercial customers in Carbon, Monroe, Northampton, Lehigh, and Schuylkill counties in Pennsylvania since 2003. Sharp Energy started providing propane service to the Pennsylvania community that same year and now serves more than 6,000 customers throughout the state.
"We are excited to further expand our propane footprint throughout the Pennsylvania region and to continue our long-standing track record in meeting the energy needs of our customers," said Bob Zola, President of Sharp Energy, Inc.
"This acquisition is a strategic fit for our family of businesses and will extend Sharp Energy's reach to new customers, communities and businesses in Pennsylvania," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "We look forward to expanding our service in this community and continuing to deliver safe, reliable and affordable propane service throughout the region."
R.F. Ohl will retain ownership of its fuel products and HVAC services businesses. "We are excited to focus on the fuel products and HVAC services businesses and I am confident that Sharp Energy will continue to provide our propane customers with the same exceptional service that they have been accustomed to receiving," said Steve Ohl, President, R.F. Ohl.
About Sharp Energy
Sharp Energy, headquartered in Georgetown, Delaware, distributes propane to approximately 39,000 residential, commercial and industrial customers in Maryland, Delaware, Virginia and Pennsylvania. With four rail facilities and over three million gallons of propane storage, Sharp Energy has established a solid supply portfolio. Sharp Energy is a proud partner of Alliance AutoGas, a national network of companies that have joined together to deliver a comprehensive alternative fueling solution including EPA-certified propane AutoGas vehicle conversions, on-site fueling infrastructure, fuel supply, safety and operational training, and ongoing technical support. To learn more about Sharp Energy, visit www.sharpenergy.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Beth W. Cooper
Senior Vice President and Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-subsidiary-acquires-propane-operating-assets-in-pennsylvania-300767744.html
SOURCE Chesapeake Utilities Corporation
Article Date
12/18/201811/8/2018 - Florida Public Utilities Company Restores Power to Customers Impacted by Hurricane Michael
Florida Public Utilities Company Restores Power to Customers Impacted by Hurricane Michael
Source: PR Newswire
DOVER, Del., Nov. 7, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today announced that its Florida Public Utilities Company (FPU) subsidiary has restored electric service to all customers who are able to accept power following Hurricane Michael. The powerful storm was the first Category 4 hurricane on record to make landfall in the Florida Panhandle, bringing 155 mile-per-hour winds and inflicting heavy damage throughout northwest Florida. Hurricane Michael adversely impacted FPU's entire electric system in northwest Florida and knocked out power to approximately 13,000 customers.
Immediately following the hurricane, FPU crews assessed the damage from the storm and mobilized its electric workforce, other employees from throughout the FPU organization, and numerous third-party mutual assistance crews to begin the restoration efforts. Teams worked around-the-clock shifts to restore service to customers as safely and quickly as possible. Service was first restored to key infrastructure facilities including local hospitals, medical facilities and schools as well as the main water treatment and waste management plants. As part of the restoration effort, FPU – with the help of mutual assistance crews – rebuilt several miles of power lines, replaced over 2,000 electric poles and hundreds of transformers with more resilient, storm-hardened equipment capable of withstanding extreme weather. FPU estimates that once completed, over $50 million will have been expended toward these vital restoration and reliability efforts. Consistent with past practices, at the appropriate time, FPU will seek a recovery of the associated storm related costs.
"I extend my sincere thanks and appreciation to our employees and volunteers for their dedication to our customers and colleagues during the most expansive restoration effort in our history," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Our team's commitment to the safety and well-being of our customers, colleagues and communities has been at the forefront of each and every action taken to restore service and to accelerate recovery from this storm."
"More than 1,200 employees, contractors and volunteers have been engaged in this restoration effort, and just as we provide mutual assistance to companies in times of need, we are grateful for the mutual assistance we received during this restoration effort," said Jeffry M. Householder, President, Florida Public Utilities Company. "Throughout this restoration, FPU worked closely with federal, state and local emergency management officials as these communications are essential in a restoration of this magnitude to ensure that all communities impacted receive the necessary resources.
"Being without power for any period of time is challenging. We thank our customers for their continued patience and support while our crews work to safely repair our system as a result of this unprecedented storm," Mr. Householder added.
To assist impacted customers, FPU requested and the Florida Public Service Commission recently approved two proposals by FPU. One is to temporarily suspend the remittance of electric bills to customers who were impacted by the hurricane and a second is to provide limited financial assistance getting customer-owned electric equipment repaired or replaced to customers who cannot receive power from FPU as a result of damage sustained by Hurricane Michael. In addition, FPU has suspended the assessment of late fees for customers in the impacted area.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our Investor Relations (IR) App.
About Florida Public Utilities Company
Florida Public Utilities Company is a wholly owned subsidiary of Chesapeake Utilities Corporation. Headquartered in Fernandina Beach, Florida, FPU distributes natural gas and propane and provides electric services to approximately 100,000 customers in markets throughout Florida. For more information, visit www.fpuc.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/florida-public-utilities-company-restores-power-to-customers-impacted-by-hurricane-michael-300746214.html
SOURCE Chesapeake Utilities Corporation
Article Date
11/8/201810/22/2018 - Chesapeake Utilities Corporation To Host Conference Call To Review Third Quarter 2018 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review Third Quarter 2018 Financial Results
Source: PR Newswire
DOVER, Del., Oct. 22, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Monday, November 12, 2018, at 10:30 a.m. ET to discuss the Company's financial results for the third quarter ended September 30, 2018. The earnings press release will be issued on Thursday, November 8, 2018, after the market closes.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's Third Quarter conference call.
To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, use the link CPK - Conference Call Audio Replay, or visit the Investors/Events and Presentations section of Company's website at www.chpk.com.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-third-quarter-2018-financial-results-300735560.html
SOURCE Chesapeake Utilities Corporation
Article Date
10/22/2018Chesapeake Utilities Corporation Subsidiaries Earn Three 2017 National Safety Awards
Source: PR Newswire
DOVER, Del., Sept. 13, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that two of its subsidiaries, Eastern Shore Natural Gas Company (ESNG) and Aspire Energy, have earned Safety Achievement Awards from the American Gas Association (AGA). ESNG and Aspire Energy were both recognized for Employee Safety based on criteria that included professional and personal commitment and dedication to improving the operations and engineering sectors of the natural gas industry through safety, accident prevention and research. Aspire Energy was also recognized for excellence in fleet safety based on its safety record. The awards for 2017 were presented at the AGA's Operations Conference in Washington, D.C. this summer.
"The safety of our customers, communities and employees is our top priority at Chesapeake," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "We are committed to promoting a positive safety culture throughout our Company and I'm extremely proud that two of our business units were recognized for maintaining the very highest standards of safety."
With a long history of providing safe and reliable services, ESNG owns and operates a 457-mile interstate pipeline that transports natural gas from four pipeline interconnection points in Pennsylvania to customers in Delaware, Maryland and Pennsylvania. ESNG transports over 50 billion cubic feet of natural gas annually to local distribution companies, electric power generators and industrial customers throughout the region. Aspire Energy operates a natural gas infrastructure with over 2,600 miles of pipeline in 40 counties throughout Ohio. The company provides natural gas supplies to several local distribution companies and cooperatives. Aspire Energy primarily sources gas from approximately 300 conventional producers and provides gathering and processing services as necessary to maintain quality and reliability to wholesale markets.
"We are honored to be recognized with these national awards for the high safety standards that have been put in place and are maintained by our team each and every day," said Steve Thompson, Senior Vice President of Chesapeake Utilities Corporation.
According to the American Gas Association, the nation's natural gas pipelines reach more than 177 million Americans and natural gas utilities spend $24 billion annually to help enhance the safety of natural gas distribution and transmission systems.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Mike Stock
Sr. Director, Corporate Communications
Chesapeake Utilities Corporation
mstock@chpk.com
302-736-7808
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-subsidiaries-earn-three-2017-national-safety-awards-300712547.html
SOURCE Chesapeake Utilities Corporation
Article Date
9/13/2018Chesapeake Utilities Corporation to Host Investor Days On Delmarva
Source: PR Newswire
DOVER, Del., Sept. 11, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that it will host Investor Days on Delmarva from September 18 – 20, 2018. Attendees will tour local facilities of Chesapeake Utilities and Sharp Energy in southern Delaware and Maryland, including a visit to the Company's new Energy Lane Campus in Dover, Delaware.
The by-invitation event will be led by Michael P. McMasters, Chesapeake Utilities Corporation's President and Chief Executive Officer, and Beth W. Cooper, Senior Vice President and CFO, and will feature presentations by Chesapeake Utilities' senior management and business unit leaders.
Presentations will highlight the Company's regulated and unregulated energy businesses, current growth initiatives and an update from the Corporate teams.
The slide presentations will be posted in the Investors section of the Chesapeake Utilities Corporation website and on the IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President and Chief Financial Officer
Chesapeake Utilities Corporation
302.734.6022
bcooper@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-investor-days-on-delmarva-300710596.html
SOURCE Chesapeake Utilities Corporation
Article Date
9/11/20189/10/2018 - Michael P. McMasters to Retire as President and Chief Executive Officer of Chesapeake Utilities Corporation
Michael P. McMasters to Retire as President and Chief Executive Officer of Chesapeake Utilities Corporation
Source: PR Newswire
DOVER, Del., Sept. 10, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that President and Chief Executive Officer, Michael P. McMasters, has advised the Board of Directors of his intention to retire in early 2019. Mr. McMasters will remain fully engaged in leading the organization as CEO until his retirement. He will continue as a member of the Board of Directors and will serve in an advisory capacity to ensure a smooth transition.
"It has been an honor to lead Chesapeake Utilities for the past eight years and a privilege to work with so many dedicated and hard-working colleagues during my thirty-six years with the Company," said Mr. McMasters. "Chesapeake's consistent generation of superior earnings growth and total return to shareholders is a testimony to the culture we have nurtured and to the talent and commitment of our management team and employees."
As part of the Board's on-going succession planning, a committee of independent Board members is evaluating internal and external candidates to succeed Mr. McMasters. The Board will choose a successor who will build on Chesapeake's strong foundation and management team and continue our culture of entrepreneurial, disciplined capital investment.
The Company's Chairman, John R. Schimkaitis stated, "The Board and I are deeply grateful to Mike for his many years of inspiring and productive leadership. He led the team to significantly grow our company from $395 million to $1.4 billion in market capitalization, with compound annual earnings growth of eight percent over the last eight years, yielding an annualized return to shareholders of 17.4 percent. Mike's legacy of contributions will continue to benefit our customers, communities, employees and shareholders for years to come. We wish Mike all the best in his well-deserved retirement."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President and Chief Financial Officer
302.734.6022
or
James F. Moriarty
Senior Vice President, General Counsel and Corporate Secretary
302.736.7871
View original content:http://www.prnewswire.com/news-releases/michael-p-mcmasters-to-retire-as-president-and-chief-executive-officer-of-chesapeake-utilities-corporation-300709428.html
SOURCE Chesapeake Utilities Corporation
Article Date
9/10/2018Chesapeake Utilities Corporation Reports Second Quarter 2018 Results
Source: PR Newswire
DOVER, Del., Aug. 9, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced second quarter financial results. The Company's net income for the quarter ended June 30, 2018 was $6.4 million, compared to $6.0 million for the same quarter of 2017. Earnings per share ("EPS") for the quarter ended June 30, 2018 were $0.39, compared to $0.37 per share for the same quarter of 2017. For the six months ended June 30, 2018, the Company reported net income of $33.2 million, or $2.03 per share. This represents an increase of $8.1 million or $0.49 per share compared to the same period in 2017. The second quarter of 2018 and year-to-date EPS reflect the impact of a $0.09 charge for nonrecurring separation expenses associated with a former executive. Absent that charge, earnings for the quarter and six months ended June 30, 2018 would have been $0.48 and $2.12, respectively.
Higher quarterly and year-to-date earnings reflect the benefits of investments in system expansions and reliability and continued growth in regulated natural gas and electric operations, as well as enhanced profitability and growth from the Company's propane operations and the benefit of the lower effective tax rate from the Tax Cuts and Jobs Act ("TCJA") on Unregulated Energy earnings. The results also reflect more normal weather during the quarter and six months ended June 30, 2018. Weather during the first half of 2018 was 1.8 percent warmer than normal compared to 22.2 percent warmer than normal during the first six months of 2017. A detailed discussion of operating results begins on page 3.
"Results for the second quarter and year-to-date highlight the strong leadership team we have built at Chesapeake Utilities and the dedication of our employees to achieving our earnings, capital investment and return targets," stated Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Our business units continue to execute on our growth and expansion initiatives including the completion of the Northwest Florida Pipeline expansion project, significant progress on the construction of Eastern Shore's largest ever expansion project, as well as several other projects that support attainment of our strategic growth targets in future years," Mr. McMasters added. "I am very excited about the potential growth opportunities we have in front of us, the leadership we have in place to accomplish our strategic plan and our energized employees' ability to turn these opportunities into executable projects that will continue to drive our future earnings growth and further increase shareholder value," he concluded.
Significant Items Impacting Earnings
Results for the three and six months ended June 30, 2018 were impacted by the following significant items:
|
For the period ended June 30, |
Second quarter |
Year-to-date | |||||||||||||
|
Net Income |
EPS |
Net Income |
EPS | ||||||||||||
|
(in thousands, except per share data) |
|||||||||||||||
|
Reported (GAAP) Earnings |
$ |
6,387 |
$ |
0.39 |
$ |
33,241 |
$ |
2.03 |
|||||||
|
Less: Realized Mark-to-Market ("MTM") gain |
— |
— |
(4,008) |
(0.24) |
|||||||||||
|
Add: Nonrecurring separation expenses associated with |
1,421 |
0.09 |
1,421 |
0.09 |
|||||||||||
|
Adjusted (Non-GAAP) Earnings* |
$ |
7,808 |
$ |
0.48 |
$ |
30,654 |
$ |
1.88 |
|||||||
Excluding the one-time separation expenses for a former executive, earnings for the second quarter of 2018 would have been $0.48 per share, an increase of 29.7 percent over EPS for the same quarter in 2017. Excluding both the one-time separation expenses and the realized MTM gain recorded by Peninsula Energy Services Company, Inc. ("PESCO") during the first quarter, EPS for the six months ended June 30, 2018 would have been $1.88, an increase of 22.1 percent over EPS of $1.54 for the six months ended June 30, 2017.
*This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin, adjusted earnings 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 "gross margin" by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance. This press release also includes gross margin that excludes the impact of unusual items, such as one-time impact from the enactment of the TCJA. The Company calculates "adjusted earnings" by adjusting reported (GAAP) earnings to exclude the impact of certain significant non-cash items, including the impact of realized MTM gains (losses) and one-time charges, such as severance charges, and calculates "adjusted EPS" by dividing adjusted earnings by the weighted average common shares outstanding.
Operating Results for the Quarters Ended June 30, 2018 and 2017
Consolidated Results
|
Three Months Ended |
||||||||||||||
|
(in thousands) |
June 30, |
June 30, |
Change |
Percent | ||||||||||
|
Gross margin before the TCJA impact |
$ |
69,545 |
$ |
60,411 |
$ |
9,134 |
15.1 |
% | ||||||
|
Impact of the TCJA reserves for customer refunds |
(2,284) |
— |
(2,284) |
N/A |
||||||||||
|
Gross margin |
67,261 |
60,411 |
6,850 |
11.3 |
% | |||||||||
|
Depreciation, amortization and property taxes |
13,749 |
12,752 |
997 |
7.8 |
% | |||||||||
|
Nonrecurring separation expenses |
1,548 |
— |
1,548 |
N/A |
||||||||||
|
Other operating expenses |
38,716 |
33,598 |
5,118 |
15.2 |
% | |||||||||
|
Operating income |
$ |
13,248 |
$ |
14,061 |
$ |
(813) |
(5.8) |
% | ||||||
Operating income during the second quarter of 2018 decreased by $813,000, or 5.8 percent, compared to the same period in 2017. The most significant driver of the decrease was the pass-through of lower tax rates to regulated energy customers as a result of the TCJA. While the pass-through reduced margin and operating income by approximately $2.3 million, it was offset by an equal reduction in income taxes. Excluding the impact of the pass-through of refunds, operating income increased by $1.5 million, or 10.5 percent, driven by higher gross margin of $9.1 million, or 15.1 percent.
Regulated Energy Segment
|
Three Months Ended |
||||||||||||||
|
(in thousands) |
June 30, |
June 30, |
Change |
Percent | ||||||||||
|
Gross margin before the TCJA impact |
$ |
52,778 |
$ |
46,829 |
$ |
5,949 |
12.7 |
% | ||||||
|
Impact of the TCJA reserves for customer refunds |
(2,284) |
— |
(2,284) |
N/A |
||||||||||
|
Gross margin |
50,494 |
46,829 |
3,665 |
7.8 |
% | |||||||||
|
Depreciation, amortization and property taxes |
11,161 |
10,438 |
723 |
6.9 |
% | |||||||||
|
Other operating expenses |
25,029 |
22,305 |
2,724 |
12.2 |
% | |||||||||
|
Operating income |
$ |
14,304 |
$ |
14,086 |
$ |
218 |
1.5 |
% | ||||||
As a result of the implementation of settled rates for Eastern Shore, continued system expansions, customer growth across the Company's regulated operations and more normal weather conditions, operating income for the Regulated Energy segment increased by $218,000, or 1.5 percent, in the second quarter of 2018 compared to the same period in 2017. This increase was driven by a $5.9 million increase in gross margin, before the impact of the TCJA reserve discussed above, offset by $3.4 million in higher depreciation and other operating expenses associated with the margin growth. As discussed above, second quarter gross margin and operating income were also impacted by customer refunds of $2.3 million, associated with the TCJA, which were offset by an equal reduction in income tax expenses. Excluding the estimated customer refunds associated with the TCJA, operating income increased by $2.5 million, or 17.8 percent.
The significant components of the increase in gross margin are shown below:
|
(in thousands) |
Margin Impact | ||
|
Implementation of Eastern Shore settled rates |
$ |
2,365 |
|
|
Service expansions |
1,652 |
||
|
Natural gas growth (including customer and consumption growth but excluding service expansions) |
1,575 |
||
|
Return to more normal weather |
359 |
||
|
Florida electric reliability/modernization program |
352 |
||
|
Gas Reliability and Infrastructure Program ("GRIP") in Florida |
306 |
||
|
Other |
(660) |
||
|
Total |
5,949 |
||
|
Less: TCJA reserve impact for regulated entities* |
(2,284) |
||
|
Quarter over quarter increase in gross margin |
$ |
3,665 |
|
|
*As a result of the TCJA, an estimated amount of $2.3 million was reserved or refunded to customers during the second quarter of 2018 to reflect the impact of lower tax rates on the Company's regulated businesses. In some jurisdictions, refunds have been made to customers, while in other jurisdictions, the Company has established reserves until final agreements are approved and permanent changes are made to customer rates. The reserves and lower customer rates are equal to the estimated reduction in Federal income taxes due to the TCJA and have no material impact on after-tax earnings from the Regulated Energy segment. | |||
The significant components of the increase in other operating expenses are as follows:
|
(in thousands) |
Other | ||
|
Higher outside services, facilities and maintenance costs due to growth |
$ |
1,166 |
|
|
Higher payroll expense (increased staffing and annual salary increases) |
1,019 |
||
|
Higher depreciation, amortization and property taxes associated with recent capital projects |
722 |
||
|
Higher incentive compensation costs (based on period-over-period results) |
384 |
||
|
Other |
156 |
||
|
Quarter over quarter increase in other operating expenses |
$ |
3,447 |
|
At the present time, we expect the current expense run rate to continue for the remainder of the year.
Unregulated Energy Segment
|
Three Months Ended |
||||||||||||||
|
(in thousands) |
June 30, |
June 30, |
Change |
Percent | ||||||||||
|
Gross margin |
$ |
16,915 |
$ |
13,736 |
$ |
3,179 |
23.1 |
% | ||||||
|
Depreciation, amortization and property taxes |
2,553 |
2,272 |
281 |
12.4 |
% | |||||||||
|
Other operating expenses |
13,872 |
11,462 |
2,410 |
21.0 |
% | |||||||||
|
Operating income |
$ |
490 |
$ |
2 |
$ |
488 |
N.M. |
|||||||
Operating income for the Unregulated Energy segment increased by $488,000 for the three months ended June 30, 2018, compared to the same period in 2017. The increase was driven by a $3.2 million, or 23.1 percent, increase in gross margin, which was partially offset by $2.7 million in higher operating expenses associated with growth. The improvement in operating income is largely a result of continued growth and colder weather at the propane operations and higher margins at PESCO.
The significant components of the increase in gross margin are shown below:
|
(in thousands) |
Margin Impact | ||
|
Nonrecurring margin increase for PESCO (see the discussion included later for the margin |
$ |
1,092 |
|
|
Propane delivery operations - additional customer consumption related to weather |
806 |
||
|
Incremental margin from PESCO operations (see the discussion included later for the |
592 |
||
|
Propane delivery operations - increased margin driven by growth and other factors |
536 |
||
|
Aspire Energy of Ohio LLC ("Aspire Energy") - increased margins largely due to higher |
207 |
||
|
Other |
(54) |
||
|
Quarter over quarter increase in gross margin |
$ |
3,179 |
|
The significant components of the increase in other operating expenses are as follows:
|
(in thousands) |
Other | ||
|
Incremental operating expenses for PESCO |
$ |
764 |
|
|
Higher payroll expense (increased staffing and annual salary increases)(1) |
515 |
||
|
Higher outside services, facilities and maintenance costs due to growth(1) |
475 |
||
|
Higher incentive compensation costs (based on period-over-period results)(1) |
427 |
||
|
Higher benefit and other employee-related expenses(1) |
173 |
||
|
Higher depreciation, asset removal and property tax costs due to new capital investments(1) |
131 |
||
|
Other(1) |
206 |
||
|
Quarter over quarter increase in other operating expenses |
$ |
2,691 |
|
|
(1) Excluding incremental operating expenses at PESCO. | |||
At the present time, we expect the current expense run rate to continue for the remainder of the year.
Operating Results for the Six Months Ended June 30, 2018 and 2017
Consolidated Results
|
Six Months Ended |
||||||||||||||
|
(in thousands) |
June 30, |
June 30, |
Change |
Percent | ||||||||||
|
Gross margin before the TCJA impact |
$ |
163,981 |
$ |
144,573 |
$ |
19,408 |
13.4 |
% | ||||||
|
Impact of the TCJA reserves for customer refunds |
(5,421) |
— |
(5,421) |
N/A |
||||||||||
|
Gross margin |
158,560 |
144,573 |
13,987 |
9.7 |
% | |||||||||
|
Depreciation, amortization and property taxes |
27,447 |
25,235 |
2,212 |
8.8 |
% | |||||||||
|
Nonrecurring separation expenses |
1,548 |
— |
1,548 |
N/A |
||||||||||
|
Other operating expenses |
75,911 |
70,178 |
5,733 |
8.2 |
% | |||||||||
|
Operating income |
$ |
53,654 |
$ |
49,160 |
$ |
4,494 |
9.1 |
% | ||||||
Operating income, during the six months ended June 30, 2018, increased by $4.5 million, or 9.1 percent, compared to the same period in 2017. This increase was driven by a $19.4 million, or 13.4 percent, increase in gross margin before the TCJA impact, which was partially offset by a $2.2 million increase in depreciation, amortization and property taxes and a $5.7 million increase in other operating expenses. Gross margin and operating income for the six months ended June 30, 2018, were also impacted by customer refunds of $5.4 million, associated with the TCJA, which were offset by an equivalent reduction in income tax expenses for the Regulated Energy segment. Excluding the estimated customer refunds associated with the TCJA, operating income increased by $9.9 million, or 20.2 percent.
Regulated Energy Segment
|
Six Months Ended |
||||||||||||||
|
(in thousands) |
June 30, |
June 30, |
Change |
Percent | ||||||||||
|
Gross margin before the TCJA impact |
$ |
117,077 |
$ |
104,239 |
$ |
12,838 |
12.3 |
% | ||||||
|
Impact of the TCJA reserves for customer refunds |
(5,421) |
— |
(5,421) |
N/A |
||||||||||
|
Gross margin |
111,656 |
104,239 |
7,417 |
7.1 |
% | |||||||||
|
Depreciation, amortization and property taxes |
22,317 |
20,629 |
1,688 |
8.2 |
% | |||||||||
|
Other operating expenses |
48,324 |
46,129 |
2,195 |
4.8 |
% | |||||||||
|
Operating income |
$ |
41,015 |
$ |
37,481 |
$ |
3,534 |
9.4 |
% | ||||||
As a result of the implementation of settled rates for Eastern Shore, continued system expansions, customer growth across the Company's regulated operations and more normal weather conditions, operating income for the Regulated Energy segment increased by $3.5 million, or 9.4 percent, in the six months ended June 30, 2018 compared to the same period in 2017. This increase was driven by a $12.8 million increase in gross margin before the impact of the TCJA reserve discussed above, which was partially offset by $3.9 million in higher depreciation and other operating expenses associated with the margin growth. Excluding the estimated customer refunds associated with the TCJA, operating income increased by $9.0 million, or 23.9 percent.
The significant components of the increase in gross margin are shown below:
|
(in thousands) |
Margin Impact | ||
|
Implementation of Eastern Shore settled rates |
$ |
5,095 |
|
|
Natural gas growth (including customer and consumption growth but excluding service expansions) |
3,342 |
||
|
Service expansions |
2,316 |
||
|
Return to more normal weather |
1,314 |
||
|
Florida electric reliability/modernization program |
767 |
||
|
Florida GRIP |
602 |
||
|
Other |
(598) |
||
|
Total |
12,838 |
||
|
Less: TCJA reserve impact for regulated entities* |
(5,421) |
||
|
Period over period increase in gross margin |
$ |
7,417 |
|
|
*As a result of the TCJA, an estimated amount of $5.4 million was reserved or refunded to customers during the first six months of 2018 to reflect the impact of lower tax rates on the Company's regulated businesses. In some jurisdictions, refunds have been made to customers, while in other jurisdictions, the Company has established reserves until final agreements are approved and permanent changes are made to customer rates. The reserves and lower customer rates are equal to the estimated reduction in Federal income taxes due to the TCJA and have no material impact on after-tax earnings from the Regulated Energy segment. | |||
The significant components of the increase in other operating expenses are as follows:
|
(in thousands) |
Other Operating | ||
|
Higher depreciation, amortization and property taxes associated with recent capital projects |
$ |
1,688 |
|
|
Higher payroll expense (increased staffing and annual salary increases) |
1,399 |
||
|
Higher facilities and maintenance costs largely as a result of growth |
1,149 |
||
|
Lower regulatory and outside services expenses as there were various regulatory |
(1,056) |
||
|
Higher incentive compensation costs (based on period-over-period results) |
592 |
||
|
Other |
111 |
||
|
Period over period increase in other operating expenses |
$ |
3,883 |
|
Unregulated Energy Segment
|
Six Months Ended |
||||||||||||||
|
(in thousands) |
June 30, |
June 30, |
Change |
Percent | ||||||||||
|
Gross margin |
$ |
47,216 |
$ |
40,555 |
$ |
6,661 |
16.4 |
% | ||||||
|
Depreciation, amortization and property taxes |
5,059 |
4,524 |
535 |
11.8 |
% | |||||||||
|
Other operating expenses |
27,983 |
24,454 |
3,529 |
14.4 |
% | |||||||||
|
Operating income |
$ |
14,174 |
$ |
11,577 |
$ |
2,597 |
22.4 |
% | ||||||
Operating income for the Unregulated Energy segment increased by $2.6 million for the six months ended June 30, 2018, compared to the same period in 2017. The increase was driven by a $6.7 million, or 16.4 percent, increase in gross margin, which was partially offset by $4.1 million in higher operating expenses associated with growth. The improvements in gross margin and operating income were driven primarily by more normal weather and continued growth within the Company's propane operations and at Aspire Energy.
The significant components of the increase in gross margin are shown below:
|
(in thousands) |
Margin Impact | ||
|
Propane delivery operations - additional customer consumption - weather |
$ |
2,923 |
|
|
Propane delivery operations - increased margin driven by growth and other factors |
1,789 |
||
|
Nonrecurring margin decrease at PESCO |
(863) |
||
|
Aspire Energy - customer consumption - weather |
921 |
||
|
Aspire Energy - increased margin driven by growth and other factors |
585 |
||
|
Growth in wholesale propane margins and sales |
333 |
||
|
Incremental margin from PESCO operations |
255 |
||
|
Other |
718 |
||
|
Period over period increase in gross margin |
$ |
6,661 |
|
The significant components of the increase in other operating expenses are as follows:
|
(in thousands) |
Other | ||
|
Incremental operating expenses for PESCO |
$ |
1,715 |
|
|
Higher payroll expense (increased staffing and annual salary increases)(1) |
996 |
||
|
Absence of Xeron Inc. ("Xeron") 2017 wind-down costs(1) |
(870) |
||
|
Higher vehicle, sales and advertising, other taxes and credit collections costs, largely driven by |
646 |
||
|
Higher incentive compensation costs (based on period-over-period results)(1) |
594 |
||
|
Higher facilities and maintenance costs due to growth(1) |
443 |
||
|
Higher depreciation, amortization and property taxes associated with recent capital investments(1) |
266 |
||
|
Higher benefits and employee-related costs(1) |
214 |
||
|
Other(1) |
60 |
||
|
Period over period increase in other operating expenses |
$ |
4,064 |
|
|
(1) Excluding incremental operating expenses at PESCO. | |||
Matters discussed 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 2017 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
Unless otherwise noted, earnings per share are presented on a diluted basis.
Conference Call
Chesapeake Utilities will host a conference call on Friday, August 10, 2018 at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter ended June 30, 2018. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2018 Second Quarter Results Conference Call. To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, use the link CPK - Conference Call Audio Replay, or visit the Investors/Events and Presentations section of Company's website at www.chpk.com.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary | |||||||||||||||
|
(in thousands, except per share data) | |||||||||||||||
|
Three Months Ended |
Six Months Ended | ||||||||||||||
|
June 30, |
June 30, | ||||||||||||||
|
2018 |
2017 |
2018 |
2017 | ||||||||||||
|
Gross Margin |
|||||||||||||||
|
Regulated Energy segment |
$ |
50,494 |
$ |
46,829 |
$ |
111,656 |
$ |
104,239 |
|||||||
|
Unregulated Energy segment |
16,915 |
13,736 |
47,216 |
40,555 |
|||||||||||
|
Other businesses and eliminations |
(148) |
(154) |
(312) |
(221) |
|||||||||||
|
Total Gross Margin |
$ |
67,261 |
$ |
60,411 |
$ |
158,560 |
$ |
144,573 |
|||||||
|
Operating Income |
|||||||||||||||
|
Regulated Energy segment |
$ |
14,304 |
$ |
14,086 |
$ |
41,015 |
$ |
37,481 |
|||||||
|
Unregulated Energy segment |
490 |
2 |
14,174 |
11,577 |
|||||||||||
|
Other businesses and eliminations |
(1,546) |
(27) |
(1,535) |
102 |
|||||||||||
|
Total Operating Income |
13,248 |
14,061 |
53,654 |
49,160 |
|||||||||||
|
Other Expense, net |
(262) |
(1,002) |
(194) |
(1,703) |
|||||||||||
|
Interest Charges |
3,881 |
3,073 |
7,545 |
5,811 |
|||||||||||
|
Pre-tax Income |
9,105 |
9,986 |
45,915 |
41,646 |
|||||||||||
|
Income Taxes |
2,718 |
3,940 |
12,674 |
16,456 |
|||||||||||
|
Net Income |
$ |
6,387 |
$ |
6,046 |
$ |
33,241 |
$ |
25,190 |
|||||||
|
Earnings Per Share of Common Stock |
|||||||||||||||
|
Basic |
$ |
0.39 |
$ |
0.37 |
$ |
2.03 |
$ |
1.54 |
|||||||
|
Diluted |
$ |
0.39 |
$ |
0.37 |
$ |
2.03 |
$ |
1.54 |
|||||||
Financial Summary Highlights
Key variances, between the three months ended June 30, 2017 and 2018, included:
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Second Quarter of 2017 Reported Results |
$ |
9,986 |
$ |
6,046 |
$ |
0.37 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
One-time separation expenses associated with a former executive |
(1,548) |
(1,421) |
(0.09) |
|||||||||
|
Absence of Xeron expenses, including 2017 wind-down expenses |
173 |
122 |
0.01 |
|||||||||
|
(1,375) |
(1,299) |
(0.08) |
||||||||||
|
Increased Gross Margins: |
||||||||||||
|
Implementation of Eastern Shore settled rates* (1) |
2,365 |
1,659 |
0.10 |
|||||||||
|
TCJA impact - refunds and reserves for future refunds to ratepayers(2) |
(2,284) |
(1,602) |
(0.10) |
|||||||||
|
Service expansions* |
1,652 |
1,158 |
0.07 |
|||||||||
|
Natural gas growth (including customer and consumption growth but excluding service expansions) |
1,575 |
1,105 |
0.07 |
|||||||||
|
Return to normal weather |
1,108 |
778 |
0.05 |
|||||||||
|
Nonrecurring margin increase at PESCO |
1,092 |
766 |
0.05 |
|||||||||
|
Incremental margin from PESCO operations |
592 |
415 |
0.03 |
|||||||||
|
Unregulated Energy growth excluding PESCO |
503 |
353 |
0.02 |
|||||||||
|
Florida electric reliability/modernization program* |
352 |
247 |
0.02 |
|||||||||
|
GRIP* |
306 |
215 |
0.01 |
|||||||||
|
7,261 |
5,094 |
0.32 |
||||||||||
|
Decreased (Increased) Other Operating Expenses: |
||||||||||||
|
Higher outside services and facilities maintenance costs (3) |
(1,602) |
(1,124) |
(0.07) |
|||||||||
|
Higher payroll expense (increased staffing and annual salary increases) (3) |
(1,534) |
(1,076) |
(0.07) |
|||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital |
(848) |
(595) |
(0.04) |
|||||||||
|
Higher incentive compensation costs (based on period-over-period results) (3) |
(811) |
(569) |
(0.03) |
|||||||||
|
Incremental operating expenses for PESCO |
(764) |
(536) |
(0.03) |
|||||||||
|
Higher benefit and other employee-related expenses (3) |
(365) |
(256) |
(0.02) |
|||||||||
|
(5,924) |
(4,156) |
(0.26) |
||||||||||
|
Interest charges |
(808) |
(567) |
(0.03) |
|||||||||
|
Income taxes - including TCJA impact - decreased effective tax rate |
— |
1,295 |
0.08 |
|||||||||
|
Net other changes |
(35) |
(26) |
(0.01) |
|||||||||
|
(843) |
702 |
0.04 |
||||||||||
|
Second Quarter of 2018 Reported Results |
$ |
9,105 |
$ |
6,387 |
$ |
0.39 |
||||||
|
(1) Excluding amounts refunded to customers associated with the TCJA, which are broken out separately and discussed in footnote 2. | ||||||||||||
|
(2) "TCJA impact - refunds and reserves for future refunds to ratepayers" represents the amounts that have already been refunded to customers or reserves established for future refunds to customers in the second quarter of 2018 as a result of lower taxes due to the TCJA. Refunds made to customers are offset by the corresponding decrease in federal income taxes and are expected to have no net impact on net income. | ||||||||||||
|
(3) Excluding incremental operating expenses at PESCO. | ||||||||||||
*See the Major Projects and Initiatives table later in this press release.
Key variances, between the six months ended June 30, 2017 and 2018, included:
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Six Months Ended June 30, 2017 Reported Results |
$ |
41,646 |
$ |
25,190 |
$ |
1.54 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
One-time separation expenses associated with a former executive |
(1,548) |
(1,421) |
(0.09) |
|||||||||
|
Absence of Xeron expenses, including 2017 wind-down expenses |
870 |
630 |
0.04 |
|||||||||
|
(678) |
(791) |
(0.05) |
||||||||||
|
Increased Gross Margins: |
||||||||||||
|
TCJA impact - refunds and reserves for future refunds to ratepayers(2) |
(5,421) |
(3,925) |
(0.24) |
|||||||||
|
Return to normal weather |
5,159 |
3,735 |
0.23 |
|||||||||
|
Implementation of Eastern Shore settled rates* (1) |
5,095 |
3,689 |
0.22 |
|||||||||
|
Natural gas growth (including customer and consumption growth but excluding service expansions) |
3,342 |
2,420 |
0.15 |
|||||||||
|
Service expansions* |
2,316 |
1,677 |
0.10 |
|||||||||
|
Unregulated Energy growth excluding PESCO |
2,044 |
1,480 |
0.09 |
|||||||||
|
Nonrecurring margin decrease at PESCO |
(863) |
(625) |
(0.04) |
|||||||||
|
Florida electric reliability/modernization program* |
767 |
555 |
0.03 |
|||||||||
|
GRIP* |
602 |
436 |
0.03 |
|||||||||
|
Incremental margin from PESCO operations |
255 |
185 |
0.01 |
|||||||||
|
13,296 |
9,627 |
0.58 |
||||||||||
|
Decreased (Increased) Other Operating Expenses: |
||||||||||||
|
Higher payroll expense (increased staffing and annual salary increases) (3) |
(2,395) |
(1,734) |
(0.11) |
|||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital |
(1,949) |
(1,411) |
(0.09) |
|||||||||
|
Incremental operating expenses for PESCO |
(1,715) |
(1,242) |
(0.08) |
|||||||||
|
Higher facilities maintenance costs (3) |
(1,554) |
(1,125) |
(0.07) |
|||||||||
|
Lower regulatory and outside services costs (3) |
1,298 |
940 |
0.06 |
|||||||||
|
Higher incentive compensation costs (based on period-over-period results) (3) |
(1,187) |
(859) |
(0.05) |
|||||||||
|
(7,502) |
(5,431) |
(0.34) |
||||||||||
|
Interest charges |
(1,734) |
(1,255) |
(0.08) |
|||||||||
|
Income taxes - including TCJA impact - decreased effective tax rate |
— |
5,262 |
0.32 |
|||||||||
|
Net other changes |
887 |
639 |
0.06 |
|||||||||
|
(847) |
4,646 |
0.30 |
||||||||||
|
Six Months Ended June 30, 2018 Reported Results |
$ |
45,915 |
$ |
33,241 |
$ |
2.03 |
||||||
|
(1) Excluding amounts refunded to customers associated with the TCJA, which are broken out separately and discussed in footnote 2. | ||||||||||||
|
(2) "TCJA impact - refunds and reserves for future refunds to ratepayers" represents amounts that have already been refunded to customers or reserves established for future refunds to customers in the first six months of 2018 as a result of lower taxes due to the TCJA. Refunds made to customers are offset by the corresponding decrease in federal income taxes and are expected to have no net impact on net income. | ||||||||||||
|
(3) Excluding incremental operating expenses at PESCO. | ||||||||||||
*See the Major Projects and Initiatives table later in this press release.
Recently Completed and Ongoing Major Projects and Initiatives
The Company constantly seeks and develops additional projects and initiatives in order to further increase shareholder value and serve its customers. The following represent the major projects recently completed and currently underway. In the future, the Company will add new projects to this table as projects are initiated.
|
Gross Margin for the Period | |||||||||||||||||||||||||||
|
Three Months Ended |
Six Months Ended |
Year Ended |
Estimate for | ||||||||||||||||||||||||
|
June 30, |
June 30, |
December 31, |
Fiscal | ||||||||||||||||||||||||
|
in thousands |
2018 |
2017 |
2018 |
2017 |
2017 |
2018 |
2019 | ||||||||||||||||||||
|
Florida GRIP |
$ |
3,647 |
$ |
3,341 |
$ |
7,211 |
$ |
6,609 |
$ |
13,454 |
$ |
14,287 |
$ |
14,370 |
|||||||||||||
|
Eastern Shore Rate Case (1) |
2,365 |
— |
5,095 |
— |
3,693 |
9,800 |
9,800 |
||||||||||||||||||||
|
Florida Electric Reliability/Modernization Pilot |
352 |
— |
767 |
— |
94 |
1,558 |
1,558 |
||||||||||||||||||||
|
New Smyrna Beach, Florida Project (1) |
352 |
— |
704 |
— |
235 |
1,409 |
1,409 |
||||||||||||||||||||
|
2017 Eastern Shore System Expansion Project - |
859 |
— |
1,995 |
— |
433 |
8,101 |
15,799 |
||||||||||||||||||||
|
Northwest Florida Expansion Project (1) |
870 |
— |
870 |
— |
— |
3,484 |
6,500 |
||||||||||||||||||||
|
(Palm Beach County) Belvedere, Florida Project (1) |
— |
— |
— |
— |
— |
635 |
1,131 |
||||||||||||||||||||
|
Total |
$ |
8,445 |
$ |
3,341 |
$ |
16,642 |
$ |
6,609 |
$ |
17,909 |
$ |
39,274 |
$ |
50,567 |
|||||||||||||
|
(1) Gross margin amounts included in this table have not been adjusted to reflect the impact of the TCJA. Any refunds and/or rate reductions implemented in the Company's regulated businesses will be offset by lower Federal income taxes due to the TCJA. | |||||||||||||||||||||||||||
Ongoing Growth Initiatives
GRIP
GRIP is a natural gas pipe replacement program approved by the Florida PSC that allows automatic recovery in rates of capital related costs and a return on investment, associated with the replacement of mains and services. Since the program's inception in August 2012, we have invested $120.1 million to replace 250 miles of qualifying distribution mains, including $6.4 million during the first six months of 2018. GRIP generated additional gross margin of $306,000 and $602,000 for the three and six months ended June 30, 2018 compared to the same periods in 2017.
Regulatory Proceedings
Eastern Shore Rate Case/Settled Rates
Eastern Shore's rate case settlement agreement became final on April 1, 2018. The final agreement increases Eastern Shore's operating income by $6.6 million consisting of $9.8 million from increased rates and offset by the $3.2 million in lower federal income taxes. For the three and six months ended June 30, 2018, Eastern Shore recognized incremental gross margin of approximately $2.4 million and $5.1 million, respectively. As of June 30, 2018, Eastern Shore refunded its customers a total of $1.7 million related to the decrease in federal income taxes as a result of the TCJA. The settlement rates were effective January 1, 2018.
Florida Electric Reliability/Modernization Program
In December 2017, the Florida PSC approved a $1.6 million annualized rate increase, effective January 2018, for the recovery of a limited number of investments and costs related to reliability, safety and modernization for the Florida Public Utilities Company's ("FPU") electric distribution system. This increase will continue through at least the last billing cycle of December 2019. For the three and six months ended June 30, 2018, additional margin of $352,000 and $767,000, respectively, was generated.
Major Projects and Initiatives Currently Underway
New Smyrna Beach, Florida Project
In the fourth quarter of 2017, the Company commenced construction of a 14-mile gas transmission pipeline to provide additional capacity to serve current and planned customer growth in the Company's New Smyrna Beach service area. The project was partially placed into service at the end of 2017 and is expected to be fully in service in September 2018. For the three and six months ended June 30, 2018, the project generated incremental gross margin of approximately $352,000 and $704,000, respectively.
2017 Eastern Shore System Expansion Project
In November 2017, Eastern Shore began construction of a $117.0 million system expansion that will increase its capacity by 26 percent once completed. The Company has invested $89.6 million through June 30, 2018 and expects to invest approximately $24.8 million during the remainder of 2018 to substantially complete the project. The first phase of the project was placed into service in December 2017, and generated $859,000 and $2.0 million in incremental gross margin, including margin from interim services, during the three and six months ended June 30, 2018, respectively. With the exception of some minor facilities, the remaining segments are scheduled to be completed and begin generating margin during the second half of 2018. The project is expected to produce approximately $15.8 million in gross margin in its first full year of service.
Northwest Florida Expansion Project
Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), has completed construction of transmission lines and the Company's Florida natural gas division has completed construction of lateral distribution lines to serve two large customers and other customers close to these facilities. This is the Company's first expansion of natural gas service into Northwest Florida. The project was placed into service in May 2018 and generated incremental gross margin of $870,000 for the three and six months ended June 30, 2018. The estimated annual gross margin from this project is $6.5 million.
(Palm Beach County) Belvedere, Florida Project
Peninsula Pipeline is constructing a pipeline to bring gas directly to the Company's natural gas distribution system in West Palm Beach, Florida. The Company expects to complete this project by the end of the third quarter of 2018 and expects the project to generate $1.1 million in annual gross margin.
Other major factors influencing gross margin
Weather and Consumption
Gross margin increased by $1.1 million and $5.2 million in the three and six months ended June 30, 2018, respectively, as a result of colder temperatures, compared to the extremely warm temperatures experienced during the same period in 2017. While temperatures during the first half of 2018 were colder than 2017, temperatures were still warmer than normal, as shown in the table below. The Company estimates that it would have generated an additional $2.4 million in gross margin if temperatures for the six months ended June 30, 2018 had been normal. The following table summarizes heating degree-days ("HDD") and cooling degree-days ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three and six months ended June 30, 2018 and 2017.
HDD and CDD Information
|
Three Months Ended |
Six Months Ended |
||||||||||||||||
|
June 30, |
June 30, |
||||||||||||||||
|
2018 |
2017 |
Variance |
2018 |
2017 |
Variance | ||||||||||||
|
Delmarva |
|||||||||||||||||
|
Actual HDD |
424 |
288 |
136 |
2,719 |
2,246 |
473 |
|||||||||||
|
10-Year Average HDD ("Delmarva Normal") |
423 |
429 |
(6) |
2,785 |
2,783 |
2 |
|||||||||||
|
Variance from Delmarva Normal |
1 |
(141) |
(66) |
(537) |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual HDD |
17 |
13 |
4 |
507 |
298 |
209 |
|||||||||||
|
10-Year Average HDD ("Florida Normal") |
16 |
19 |
(3) |
533 |
555 |
(22) |
|||||||||||
|
Variance from Florida Normal |
1 |
(6) |
(26) |
(257) |
|||||||||||||
|
Ohio |
|||||||||||||||||
|
Actual HDD |
662 |
508 |
154 |
3,652 |
2,992 |
660 |
|||||||||||
|
10-Year Average HDD ("Ohio Normal") |
614 |
637 |
(23) |
3,683 |
3,774 |
(91) |
|||||||||||
|
Variance from Ohio Normal |
48 |
(129) |
(31) |
(782) |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual CDD |
952 |
935 |
17 |
1,091 |
1,080 |
11 |
|||||||||||
|
10-Year Average CDD ("Florida CDD Normal") |
969 |
955 |
14 |
1,058 |
1,037 |
21 |
|||||||||||
|
Variance from Florida CDD Normal |
(17) |
(20) |
33 |
43 |
|||||||||||||
Natural Gas Distribution Customer and Consumption Growth
The Company's natural gas distribution operations generated $1.6 million and $3.3 million of additional margin for the three and six months ended June 30, 2018, respectively. The breakdown of the increased margin is as follows:
|
Three Months Ended |
Six Months Ended | |||||||
|
In thousands |
June 30, 2018 |
June 30, 2018 | ||||||
|
Customer growth: |
||||||||
|
Residential |
$ |
351 |
$ |
864 |
||||
|
Commercial and industrial excluding new service in Northwest Florida |
303 |
604 |
||||||
|
New service in Northwest Florida |
276 |
305 |
||||||
|
Total customer growth |
930 |
1,773 |
||||||
|
Volume growth: |
||||||||
|
Residential |
151 |
855 |
||||||
|
Commercial and industrial |
387 |
1,026 |
||||||
|
Other - including unbilled revenue |
107 |
(312) |
||||||
|
Total volume growth |
645 |
1,569 |
||||||
|
Total natural gas distribution growth |
$ |
1,575 |
$ |
3,342 |
||||
Customer growth for the Company's Delmarva Peninsula and Florida natural gas distribution operations generated $930,000 and $1.8 million in additional gross margin for the three and six months ended June 30, 2018, respectively, compared to the same periods in 2017. The additional margin was generated from an approximately 3.8 percent increase in the average number of residential customers as well as growth in commercial and industrial customers on the Delmarva Peninsula in the second quarter and first six months of 2018, compared to the corresponding periods in 2017. Residential customer growth on the Delaware Peninsula has averaged 3.0 percent over the past five years. The Company's Florida natural gas distribution operations generated additional gross margin for the three and six months ended June 30, 2018, due to growth in all customer classes and new service to customers in Northwest Florida.
The Company's Delmarva Peninsula and Florida natural gas distribution operations generated $645,000 and $1.6 million in additional gross margin for the three and six months ended June 30, 2018, respectively, compared to the same periods in 2017 from higher sales to residential and commercial customers.
Propane Operations
The Company's Florida and Delmarva Peninsula propane operations generated $1.6 million and $5.7 million in incremental margin for the three and six months ended June 30, 2018, respectively, compared to the same periods in 2017. A return to more normal temperatures accounted for $806,000 and $2.9 million of the margin increase during the three and six months ended June 30, 2018, respectively. The balance of the increase reflects increased customer consumption driven by growth and other factors, higher sales and revenues from service contracts and increased wholesale sales activities.
PESCO
For the three and six months ended June 30, 2018, PESCO recorded a series of adjustments, MTM gains and recognized extraordinary costs, which impacted reported results. Excluding the impact of these items, PESCO's gross margin increased by $592,000 and $255,000 in the three and six months ended June 30, 2018, respectively, compared to the same periods in 2017. The total of the adjustments increased gross margin by $1.1 million and reduced gross margin by $863,000 for the three and six months ended June 30, 2018, respectively, compared to the same periods in 2017, respectively. The following table summarizes the changes in PESCO'S year-over-year margin for the three and six months ended June 30, 2018:
|
Three Months Ended |
Six Months Ended | ||||||
|
June 30, 2018 |
June 30, 2018 | ||||||
|
(in thousands) |
|||||||
|
Three and Six Months Ended June 30, 2017 Reported Results |
$ |
921 |
$ |
4,389 |
|||
|
Incremental Margin from Growth and ARM Acquisition in 2017 |
592 |
255 |
|||||
|
Nonrecurring Margin factors - non-renewal of Supply Agreement, MTM and Other Adjustments |
1,092 |
(863) |
|||||
|
2018 Margin |
$ |
2,605 |
$ |
3,781 |
|||
A more detailed discussion of PESCO's results is provided in the Company's Form 10-Q for the quarter ended June 30, 2018.
The following table compares the margin, operating expenses and operating income from PESCO for the three and six months ended June 30, 2018 and 2017:
|
Three Months Ended |
Six Months Ended | ||||||||||||||
|
June 30, |
June 30, | ||||||||||||||
|
in thousands |
2018 |
2017 |
2018 |
2017 | |||||||||||
|
Total Gross Margin |
$ |
2,606 |
$ |
921 |
$ |
3,781 |
$ |
4,389 |
|||||||
|
Operating Expense |
(1,918) |
(1,154) |
(3,857) |
(2,143) |
|||||||||||
|
Operating Income |
$ |
688 |
$ |
(233) |
$ |
(76) |
$ |
2,246 |
|||||||
Operating income for PESCO improved to $688,000 for the three months ended June 30, 2018, from a loss of $233,000 during the prior year period. The improvement reflects the benefit of several nonrecurring margin adjustments in the business, growth in margins from existing operations as well as the addition of margin from the business purchased from ARM during the third quarter of 2017. This was partially offset by a $764,000 increase in operating expenses, including $262,000 associated with the ARM margins previously mentioned, as well as $501,000 in increased staffing, infrastructure and risk management system costs to ensure the profitable future growth of this business.
For the six months ended June 30, 2018, PESCO reported an operating loss of $76,000, compared to income of $2.2 million during the prior year period. The decline primarily reflects increased expenses incurred to build out the staff, infrastructure and risk management systems necessary for the success of this business, as well as the impact of several nonrecurring margin adjustments, largely during the first quarter of 2018.
Xeron
Xeron's operations were wound down during the second quarter of 2017. Operating income for the three and six months ended June 30, 2018, improved by $173,000 and $870,000, respectively, due to the absence of wind-down expenses and the absence of operating losses for Xeron in 2018.
Capital Investment Growth and Financing Plan
The Company's capital expenditures were $134.7 million for the six months ended June 30, 2018. The Company originally budgeted $181.6 million for capital expenditures in 2018 and is currently projecting capital expenditures of approximately $216.4 million in 2018. The Company's current forecast by segment and by business line is shown below:
|
2018 | |||
|
(dollars in thousands) |
|||
|
Regulated Energy: |
|||
|
Natural gas distribution |
$ |
65,594 |
|
|
Natural gas transmission |
110,813 |
||
|
Electric distribution |
8,930 |
||
|
Total Regulated Energy |
185,337 |
||
|
Unregulated Energy: |
|||
|
Propane distribution |
13,359 |
||
|
Other unregulated energy |
7,413 |
||
|
Total Unregulated Energy |
20,772 |
||
|
Other: |
|||
|
Corporate and other businesses |
10,289 |
||
|
Total Other |
10,289 |
||
|
Total 2018 Forecasted Capital Expenditures |
$ |
216,398 |
|
Chesapeake Utilities' target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. This target capital structure ensures that the Company maintains a strong balance sheet to support continued growth. Over the past several years, the Company has been deploying increased amounts of capital on new projects, many of which have longer construction periods. The Company seeks to align the permanent financing of these capital projects with the in-service dates to the extent feasible.
In 2017, the Company refinanced $70.0 million of short-term debt as 3.25 percent senior notes. The refinancing will result in increased annual interest expense of $2.3 million during 2018, a portion of which impacted the second quarter and year-to-date results; however, the Company locked in a low interest rate for 15 years. The Company previously executed a shelf agreement with New York Life and subsequently issued $50.0 million of unsecured senior notes in May 2018 and will issue an additional tranche by November 2018 at an average interest rate of 3.53 percent for 20 years. The Company expects to access additional permanent capital to align the financing with new investments and to maintain a solid balance sheet to support future capital deployment.
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | |||||||||||||||
|
Three Months Ended |
Six Months Ended | ||||||||||||||
|
June 30, |
June 30, | ||||||||||||||
|
2018 |
2017 |
2018 |
2017 | ||||||||||||
|
Operating Revenues |
|||||||||||||||
|
Regulated Energy |
$ |
70,504 |
$ |
70,996 |
$ |
179,897 |
$ |
168,650 |
|||||||
|
Unregulated Energy and other |
66,160 |
54,088 |
196,123 |
141,594 |
|||||||||||
|
Total Operating Revenues |
136,664 |
125,084 |
376,020 |
310,244 |
|||||||||||
|
Operating Expenses |
|||||||||||||||
|
Regulated Energy cost of sales |
20,010 |
24,167 |
68,241 |
64,411 |
|||||||||||
|
Unregulated Energy and other cost of sales |
49,393 |
40,505 |
149,219 |
101,260 |
|||||||||||
|
Operations |
36,281 |
30,013 |
68,983 |
62,502 |
|||||||||||
|
Maintenance |
3,619 |
3,403 |
7,211 |
6,634 |
|||||||||||
|
Gain from a settlement |
(130) |
(130) |
(130) |
(130) |
|||||||||||
|
Depreciation and amortization |
9,839 |
9,094 |
19,543 |
17,906 |
|||||||||||
|
Other taxes |
4,404 |
3,971 |
9,299 |
8,501 |
|||||||||||
|
Total operating expenses |
123,416 |
111,023 |
322,366 |
261,084 |
|||||||||||
|
Operating Income |
13,248 |
14,061 |
53,654 |
49,160 |
|||||||||||
|
Other expense, net |
(262) |
(1,002) |
(194) |
(1,703) |
|||||||||||
|
Interest charges |
3,881 |
3,073 |
7,545 |
5,811 |
|||||||||||
|
Income Before Income Taxes |
9,105 |
9,986 |
45,915 |
41,646 |
|||||||||||
|
Income taxes |
2,718 |
3,940 |
12,674 |
16,456 |
|||||||||||
|
Net Income |
$ |
6,387 |
$ |
6,046 |
$ |
33,241 |
$ |
25,190 |
|||||||
|
Weighted Average Common Shares Outstanding: |
|||||||||||||||
|
Basic |
16,369,641 |
16,340,665 |
16,360,540 |
16,329,009 |
|||||||||||
|
Diluted |
16,417,082 |
16,382,207 |
16,410,061 |
16,373,038 |
|||||||||||
|
Earnings Per Share of Common Stock: |
|||||||||||||||
|
Basic |
$ |
0.39 |
$ |
0.37 |
$ |
2.03 |
$ |
1.54 |
|||||||
|
Diluted |
$ |
0.39 |
$ |
0.37 |
$ |
2.03 |
$ |
1.54 |
|||||||
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Assets |
June 30, 2018 |
December 31, 2017 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Property, Plant and Equipment |
||||||||
|
Regulated Energy |
$ |
1,174,407 |
$ |
1,073,736 |
||||
|
Unregulated Energy |
216,125 |
210,682 |
||||||
|
Other businesses and eliminations |
30,170 |
27,699 |
||||||
|
Total property, plant and equipment |
1,420,702 |
1,312,117 |
||||||
|
Less: Accumulated depreciation and amortization |
(287,942) |
(270,599) |
||||||
|
Plus: Construction work in progress |
101,904 |
84,509 |
||||||
|
Net property, plant and equipment |
1,234,664 |
1,126,027 |
||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
4,512 |
5,614 |
||||||
|
Trade and other receivables (less allowance for uncollectible accounts of $1,076 |
53,419 |
77,223 |
||||||
|
Accrued revenue |
12,353 |
22,279 |
||||||
|
Propane inventory, at average cost |
6,597 |
8,324 |
||||||
|
Other inventory, at average cost |
4,791 |
12,022 |
||||||
|
Regulatory assets |
13,330 |
10,930 |
||||||
|
Storage gas prepayments |
4,365 |
5,250 |
||||||
|
Income taxes receivable |
6,420 |
14,778 |
||||||
|
Prepaid expenses |
5,162 |
13,621 |
||||||
|
Mark-to-market energy assets |
534 |
1,286 |
||||||
|
Other current assets |
4,560 |
7,260 |
||||||
|
Total current assets |
116,043 |
178,587 |
||||||
|
Deferred Charges and Other Assets |
||||||||
|
Goodwill |
19,604 |
19,604 |
||||||
|
Other intangible assets, net |
4,277 |
4,686 |
||||||
|
Investments, at fair value |
7,486 |
6,756 |
||||||
|
Regulatory assets |
76,427 |
75,575 |
||||||
|
Other assets |
4,440 |
3,699 |
||||||
|
Total deferred charges and other assets |
112,234 |
110,320 |
||||||
|
Total Assets |
$ |
1,462,941 |
$ |
1,414,934 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Capitalization and Liabilities |
June 30, 2018 |
December 31, 2017 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Capitalization |
||||||||
|
Stockholders' equity |
||||||||
|
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no |
$ |
— |
$ |
— |
||||
|
Common stock, par value $0.4867 per share (authorized 50,000,000 shares) |
7,971 |
7,955 |
||||||
|
Additional paid-in capital |
255,356 |
253,470 |
||||||
|
Retained earnings |
250,377 |
229,141 |
||||||
|
Accumulated other comprehensive loss |
(5,718) |
(4,272) |
||||||
|
Deferred compensation obligation |
3,782 |
3,395 |
||||||
|
Treasury stock |
(3,782) |
(3,395) |
||||||
|
Total stockholders' equity |
507,986 |
486,294 |
||||||
|
Long-term debt, net of current maturities |
241,596 |
197,395 |
||||||
|
Total capitalization |
749,582 |
683,689 |
||||||
|
Current Liabilities |
||||||||
|
Current portion of long-term debt |
9,977 |
9,421 |
||||||
|
Short-term borrowing |
235,288 |
250,969 |
||||||
|
Accounts payable |
60,769 |
74,688 |
||||||
|
Customer deposits and refunds |
32,018 |
34,751 |
||||||
|
Accrued interest |
1,891 |
1,742 |
||||||
|
Dividends payable |
6,060 |
5,312 |
||||||
|
Accrued compensation |
7,953 |
13,112 |
||||||
|
Regulatory liabilities |
22,194 |
6,485 |
||||||
|
Mark-to-market energy liabilities |
886 |
6,247 |
||||||
|
Other accrued liabilities |
11,495 |
10,273 |
||||||
|
Total current liabilities |
388,531 |
413,000 |
||||||
|
Deferred Credits and Other Liabilities |
||||||||
|
Deferred income taxes |
143,147 |
135,850 |
||||||
|
Regulatory liabilities |
141,499 |
140,978 |
||||||
|
Environmental liabilities |
8,090 |
8,263 |
||||||
|
Other pension and benefit costs |
28,996 |
29,699 |
||||||
|
Deferred investment tax credits and other liabilities |
3,096 |
3,455 |
||||||
|
Total deferred credits and other liabilities |
324,828 |
318,245 |
||||||
|
Total Capitalization and Liabilities |
$ |
1,462,941 |
$ |
1,414,934 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Three Months Ended June 30, 2018 |
For the Three Months Ended June 30, 2017 | |||||||||||||||||||||||||||||||
|
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric |
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric | |||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
14,007 |
$ |
1,459 |
$ |
7,713 |
$ |
9,814 |
$ |
11,096 |
$ |
1,365 |
$ |
7,633 |
$ |
10,477 |
||||||||||||||||
|
Commercial |
7,752 |
1,524 |
6,809 |
9,709 |
6,424 |
1,395 |
7,449 |
10,075 |
||||||||||||||||||||||||
|
Industrial |
1,987 |
2,854 |
5,218 |
371 |
1,849 |
1,577 |
4,775 |
733 |
||||||||||||||||||||||||
|
Other (1) |
(3,496) |
480 |
(1,459) |
(1,532) |
(3,136) |
966 |
(1,271) |
(207) |
||||||||||||||||||||||||
|
Total Operating |
$ |
20,250 |
$ |
6,317 |
$ |
18,281 |
$ |
18,362 |
$ |
16,233 |
$ |
5,303 |
$ |
18,586 |
$ |
21,078 |
||||||||||||||||
|
Volume (in Dts for natural gas and MWHs for electric) |
||||||||||||||||||||||||||||||||
|
Residential |
759,202 |
85,526 |
329,284 |
66,682 |
583,108 |
76,365 |
304,669 |
69,298 |
||||||||||||||||||||||||
|
Commercial |
711,690 |
1,134,555 |
432,192 |
73,276 |
614,311 |
2,710,729 |
459,354 |
74,766 |
||||||||||||||||||||||||
|
Industrial |
1,308,129 |
7,024,154 |
1,245,950 |
3,540 |
1,206,698 |
1,501,779 |
1,100,430 |
4,750 |
||||||||||||||||||||||||
|
Other |
17,759 |
— |
463,846 |
1,907 |
20,216 |
— |
459,201 |
1,874 |
||||||||||||||||||||||||
|
Total |
2,796,780 |
8,244,235 |
2,471,272 |
145,405 |
2,424,333 |
4,288,873 |
2,323,654 |
150,688 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
71,038 |
16,391 |
55,580 |
24,714 |
68,442 |
15,786 |
54,352 |
24,582 |
||||||||||||||||||||||||
|
Commercial(2) |
6,994 |
1,517 |
3,932 |
7,493 |
6,836 |
1,430 |
4,072 |
7,429 |
||||||||||||||||||||||||
|
Industrial(2) |
155 |
16 |
2,284 |
2 |
144 |
78 |
2,055 |
2 |
||||||||||||||||||||||||
|
Other |
4 |
— |
11 |
— |
7 |
— |
— |
— |
||||||||||||||||||||||||
|
Total |
78,191 |
17,924 |
61,807 |
32,209 |
75,429 |
17,294 |
60,479 |
32,013 |
||||||||||||||||||||||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Six Months Ended June 30, 2018 |
For the Six Months Ended June 30, 2017 | |||||||||||||||||||||||||||||||
|
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric |
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric | |||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
49,321 |
$ |
3,219 |
$ |
18,888 |
$ |
21,346 |
$ |
36,806 |
$ |
2,917 |
$ |
18,401 |
$ |
19,804 |
||||||||||||||||
|
Commercial |
23,582 |
3,246 |
15,135 |
18,866 |
17,836 |
2,918 |
17,043 |
19,489 |
||||||||||||||||||||||||
|
Industrial |
4,293 |
4,725 |
11,590 |
771 |
3,683 |
3,336 |
10,702 |
1,204 |
||||||||||||||||||||||||
|
Other (1) |
(5,239) |
990 |
(4,119) |
(3,880) |
(1,678) |
1,866 |
(4,054) |
(1,796) |
||||||||||||||||||||||||
|
Total Operating |
$ |
71,957 |
$ |
12,180 |
$ |
41,494 |
$ |
37,103 |
$ |
56,647 |
$ |
11,037 |
$ |
42,092 |
$ |
38,701 |
||||||||||||||||
|
Volume (in Dts for natural gas and MWHs for electric) |
||||||||||||||||||||||||||||||||
|
Residential |
2,999,757 |
226,285 |
852,346 |
145,210 |
2,391,008 |
199,640 |
775,480 |
130,624 |
||||||||||||||||||||||||
|
Commercial |
2,417,116 |
2,374,462 |
967,736 |
141,015 |
1,995,719 |
5,668,445 |
1,060,557 |
140,628 |
||||||||||||||||||||||||
|
Industrial |
2,817,168 |
10,089,859 |
2,550,480 |
8,060 |
2,580,496 |
3,269,209 |
2,289,693 |
7,910 |
||||||||||||||||||||||||
|
Other |
30,292 |
— |
984,353 |
3,803 |
30,754 |
— |
947,111 |
3,747 |
||||||||||||||||||||||||
|
Total |
8,264,333 |
12,690,606 |
5,354,915 |
298,088 |
6,997,977 |
9,137,294 |
5,072,841 |
282,909 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
71,136 |
16,307 |
55,430 |
24,679 |
68,572 |
15,725 |
54,196 |
24,510 |
||||||||||||||||||||||||
|
Commercial(2) |
7,009 |
1,509 |
3,930 |
7,487 |
6,874 |
1,420 |
4,123 |
7,438 |
||||||||||||||||||||||||
|
Industrial(2) |
154 |
16 |
2,268 |
2 |
143 |
77 |
1,997 |
2 |
||||||||||||||||||||||||
|
Other |
5 |
— |
14 |
— |
6 |
— |
— |
— |
||||||||||||||||||||||||
|
Total |
78,304 |
17,832 |
61,642 |
32,168 |
75,595 |
17,222 |
60,316 |
31,950 |
||||||||||||||||||||||||
|
(1) |
Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties, and adjustments or changes in taxes, such as the TCJA, which are passed through to customers. This amount also includes the reserve for estimated customer refunds associated with the TCJA. |
|
(2) |
Certain commercial and industrial customers have been reclassified when compared to the prior year. |
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-reports-second-quarter-2018-results-300694464.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/9/2018Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
DOVER, Del., Aug. 8, 2018 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.37 per share on the Company's common stock. The $0.37 per share dividend will be paid on October 5, 2018 to all shareholders of record at the close of business on September 14, 2018.
Chesapeake has paid dividends to its shareholders without interruption for 57 years. During those 57 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-quarterly-dividend-300694262.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/8/2018Chesapeake Utilities Corporation Reports First Quarter 2018 Results
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., May 8, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced first quarter financial results. The Company's net income for the quarter ended March 31, 2018 was $26.9 million, compared to $19.1 million for the same quarter of 2017. Earnings per share ("EPS") for the quarter ended March 31, 2018 were $1.64 per share, compared to $1.17 per share for the same quarter of 2017. The higher net income and EPS reflected robust performance and results largely throughout the Company's businesses.
Higher earnings for the first quarter of 2018 reflect continued growth in the regulated natural gas and electric operations, pipeline expansion and favorable regulatory initiatives. Increased profitability and growth from propane delivery operations and Aspire Energy of Ohio, LLC ("Aspire Energy") and the positive impact of the lower effective tax rate from the Tax Cuts and Jobs Act (the "TCJA") in the Unregulated Energy segment generated additional earnings. The results also reflect a return to more normal weather during the first quarter of 2018, compared to weather that was 20.9 percent warmer than normal during the first quarter of 2017. A detailed discussion of operating results begins on page 3.
"We begin 2018 with strong first quarter financial results, which reflect the strength of our natural gas and propane operations under more normal weather conditions and the superior performance of the Company's investments and growth-oriented initiatives led by our dedicated team," stated Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "We look forward to continued growth in our Regulated and Unregulated Energy segments this year and in future years," Mr. McMasters added. "During 2018, we are focused on completing the construction of Eastern Shore Natural Gas Company's ("Eastern Shore") largest ever expansion project as well as other projects that are critical to meeting our growth targets in future years," he added. "Our energized employees continue to excel in identifying new growth opportunities and profitably managing current growth, while maintaining operating efficiency and providing safe, reliable service to our customers," he concluded.
Significant Item Impacting Earnings
Results for the first quarter of 2018 were impacted by the following significant item:
|
For the quarter ended March 31, 2018 |
Net Income |
EPS | |||
|
(in thousands, except per share data) |
|||||
|
Reported (GAAP) Earnings |
$ |
26,855 |
$ |
1.64 | |
|
Less: Realized Mark-to-Market ("MTM") gain |
(4,008) |
(0.24) | |||
|
Adjusted (Non-GAAP) Earnings* |
$ |
22,847 |
$ |
1.40 | |
Excluding the realized MTM gain, that corresponds to the MTM unrealized loss recorded in the prior quarter (fourth quarter of 2017), earnings for the first quarter would have been $1.40 per share. This represents an increase of 19.7 percent over the first quarter of 2017's EPS of $1.17 per share. A more detailed discussion of the MTM gain can be found in the discussion of Peninsula Energy Services Company, Inc. ("PESCO")'s results under "Other Major Factors Influencing Gross Margin" later in this release.
*This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin, adjusted earnings 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 "gross margin" by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance. This press release also includes gross margin that excludes the impact of unusual items, such as one-time impact from the enactment of the TCJA. The Company calculates "adjusted earnings" by adjusting reported (GAAP) earnings to exclude the impact of certain significant non-cash items, including the impact of realized MTM gains (losses) and calculates "adjusted EPS" by dividing adjusted earnings by the weighted average common shares outstanding.
Operating Results for the Quarters Ended March 31, 2018 and 2017
|
(in thousands) |
March 31, |
March 31, |
Change |
Percent | ||||||
|
Gross margin before the TCJA impact |
$ |
94,454 |
$ |
84,162 |
$ |
10,292 |
12.2% | |||
|
Impact of the TCJA reserves for customer refunds |
(3,155) |
— |
(3,155) |
N/A | ||||||
|
Gross margin |
91,299 |
84,162 |
7,137 |
8.5% | ||||||
|
Depreciation, amortization and property taxes |
13,697 |
12,483 |
1,214 |
9.7% | ||||||
|
Other operating expenses |
37,196 |
36,580 |
616 |
1.7% | ||||||
|
Operating income |
$ |
40,406 |
$ |
35,099 |
$ |
5,307 |
15.1% | |||
Operating income during the first quarter of 2018 increased by $5.3 million, or 15.1 percent, compared to the same period in 2017. This increase was driven by a $10.3 million, or 12.2 percent, increase in gross margin, which was partially offset by a $1.2 million increase in depreciation, amortization and property taxes and a $616,000 increase in other operating expenses. First quarter gross margin and operating income were also impacted by a reserve for estimated customer refunds of $3.2 million, associated with the TCJA, which are offset by an equivalent reduction in income tax expenses for the Regulated Energy segment. Excluding the estimated reserve for refunds to customers associated with the TCJA, operating income increased by $8.5 million, or 24.1 percent.
Regulated Energy Segment
|
(in thousands) |
March 31, |
March 31, |
Change |
Percent | ||||||
|
Gross margin before the TCJA impact |
$ |
64,317 |
$ |
57,410 |
$ |
6,907 |
12.0% | |||
|
Impact of the TCJA reserves for customer refunds |
(3,155) |
— |
(3,155) |
N/A | ||||||
|
Gross margin |
61,162 |
57,410 |
3,752 |
6.5% | ||||||
|
Depreciation, amortization and property taxes |
11,156 |
10,190 |
966 |
9.5% | ||||||
|
Other operating expenses |
23,295 |
23,825 |
(530) |
(2.2)% | ||||||
|
Operating income |
$ |
26,711 |
$ |
23,395 |
$ |
3,316 |
14.2% | |||
As a result of continued system expansions, customer growth across our regulated operations and more normal weather conditions, operating income for the Regulated Energy segment increased by $3.3 million, or 14.2 percent, in the first quarter of 2018 compared to the same period in 2017. This increase was driven by a $6.9 million increase in gross margin, offset by the TCJA reserve discussed above and $436,000 in higher operating expenses associated with the margin growth.
The significant components of the increase in gross margin are shown below:
|
(in thousands) |
Margin Impact | |
|
Implementation of Eastern Shore settled rates |
$ |
2,843 |
|
Return to more normal weather |
1,017 | |
|
Customer consumption (non-weather) |
949 | |
|
Natural gas growth (excluding service expansions) |
802 | |
|
Service expansions |
565 | |
|
Florida electric reliability/modernization program |
372 | |
|
Gas Reliability and Infrastructure Program ("GRIP") in Florida |
298 | |
|
Sandpiper's margin from an industrial customer and natural gas conversions |
257 | |
|
Other |
(196) | |
|
Total |
6,907 | |
|
Less: TCJA reserve impact for regulated entities* |
(3,155) | |
|
Quarter over quarter increase in gross margin |
$ |
3,752 |
*As a result of the TCJA, a preliminary reserve of $3.2 million was established during the first quarter of 2018 to reflect the impact of lower tax rates on the Company's regulated businesses, until final agreements are approved and permanent changes are made to customer rates. The reserves and lower customer rates are equal to the estimated reduction in Federal income taxes due to the TCJA and have no material impact on after-tax earnings from the Regulated Energy segment.
The significant components of the increase in other operating expenses are as follows:
|
(in thousands) |
Other | |
|
Higher depreciation, amortization and property taxes associated with recent capital projects |
$ |
966 |
|
Higher staffing costs for additional personnel to support growth |
589 | |
|
Lower outside services and facilities and maintenance costs |
(667) | |
|
Lower benefits and employee-related costs |
(413) | |
|
Other |
(39) | |
|
Quarter over quarter increase in other operating expenses |
$ |
436 |
Unregulated Energy Segment
|
(in thousands) |
March 31, |
March 31, |
Change |
Percent | ||||||
|
Gross margin |
$ |
30,301 |
$ |
26,819 |
$ |
3,482 |
13.0% | |||
|
Depreciation, amortization and property taxes |
2,505 |
2,250 |
255 |
11.3% | ||||||
|
Other operating expenses |
14,112 |
12,994 |
1,118 |
8.6% | ||||||
|
Operating income |
$ |
13,684 |
$ |
11,575 |
$ |
2,109 |
18.2% | |||
Operating income for the Unregulated Energy segment increased by $2.1 million for the first quarter of 2018 compared to the same period in 2017. The increase was driven by a $3.5 million, or 13.0 percent, increase in gross margin, which was partially offset by $1.4 million in higher operating expenses associated with growth. The improvements in gross margin and operating income were driven primarily by more normal weather and continued growth at Aspire Energy and within the Company's propane operations.
The significant components of the increase in gross margin are shown below:
|
(in thousands) |
Margin Impact | |
|
PESCO's net margin (see the discussion included later for the margin drivers) |
$ |
(2,292) |
|
Propane delivery operations - additional customer consumption related to weather |
1,956 | |
|
Propane delivery operations - increased margin driven by growth and other factors |
1,392 | |
|
Aspire Energy - higher customer consumption related to weather |
941 | |
|
Growth in wholesale propane margins and sales |
379 | |
|
Aspire Energy - increased margin driven by growth and other factors |
319 | |
|
Other |
787 | |
|
Quarter over quarter increase in gross margin |
$ |
3,482 |
The significant components of the increase in other operating expenses are as follows:
|
(in thousands) |
Other | |
|
Higher staffing costs for additional personnel to support growth |
$ |
969 |
|
Higher depreciation, amortization and property taxes associated with recent capital investments |
255 | |
|
Higher benefits and employee-related costs |
174 | |
|
Other |
(25) | |
|
Quarter over quarter increase in other operating expenses |
$ |
1,373 |
Matters discussed 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 2017 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
Unless otherwise noted, earnings per share are presented on a diluted basis.
Conference Call
Chesapeake Utilities will host a conference call on Friday, May 11, 2018, at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter ended March 31, 2018. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2018 First Quarter Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audiocast section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary | |||||
|
(in thousands, except per share data) | |||||
|
Three Months Ended | |||||
|
March 31, | |||||
|
2018 |
2017 | ||||
|
Gross Margin |
|||||
|
Regulated Energy segment |
$ |
61,162 |
$ |
57,410 | |
|
Unregulated Energy segment |
30,301 |
26,819 | |||
|
Other businesses and eliminations |
(164) |
(67) | |||
|
Total Gross Margin |
$ |
91,299 |
$ |
84,162 | |
|
Operating Income |
|||||
|
Regulated Energy segment |
$ |
26,711 |
$ |
23,395 | |
|
Unregulated Energy segment |
13,684 |
11,575 | |||
|
Other businesses and eliminations |
11 |
129 | |||
|
Total Operating Income |
40,406 |
35,099 | |||
|
Other Income (Expense), net |
68 |
(700) | |||
|
Interest Charges |
3,664 |
2,739 | |||
|
Pre-tax Income |
36,810 |
31,660 | |||
|
Income Taxes |
9,955 |
12,516 | |||
|
Net Income |
$ |
26,855 |
$ |
19,144 | |
|
Earnings Per Share of Common Stock |
|||||
|
Basic |
$ |
1.64 |
$ |
1.17 | |
|
Diluted |
$ |
1.64 |
$ |
1.17 | |
|
Financial Summary Highlights | |||||||||
|
Key variances, between the three months ended March 31, 2017 and 2018, included: | |||||||||
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | ||||||
|
First Quarter of 2017 Reported Results |
$ |
31,660 |
$ |
19,144 |
$ |
1.17 | |||
|
Increased Gross Margins: |
|||||||||
|
Return to more normal weather |
3,914 |
2,855 |
0.17 | ||||||
|
TCJA impact - estimated refunds to ratepayers (1) |
(3,155) |
(2,302) |
(0.14) | ||||||
|
Implementation of Eastern Shore settled rates* (2) |
2,843 |
2,074 |
0.13 | ||||||
|
PESCO |
(2,292) |
(1,672) |
(0.10) | ||||||
|
Unregulated Energy customer consumption (non-weather) |
1,682 |
1,227 |
0.07 | ||||||
|
Regulated Energy customer consumption (non-weather) |
949 |
692 |
0.04 | ||||||
|
Natural gas growth (excluding service expansions) |
802 |
585 |
0.04 | ||||||
|
Service expansions* |
565 |
412 |
0.03 | ||||||
|
Florida electric reliability/modernization program* |
372 |
272 |
0.02 | ||||||
|
GRIP* |
298 |
217 |
0.01 | ||||||
|
Sandpiper's margin from an industrial customer and natural gas conversions |
257 |
188 |
0.01 | ||||||
|
6,235 |
4,548 |
0.28 | |||||||
|
Decreased (Increased) Other Operating Expenses: |
|||||||||
|
Higher payroll expense |
(1,559) |
(1,137) |
(0.07) | ||||||
|
Higher depreciation, asset removal and property tax costs due to new capital |
(1,216) |
(887) |
(0.05) | ||||||
|
Absence of Xeron expenses, including wind-down expenses |
697 |
508 |
0.03 | ||||||
|
Lower outside services and facilities maintenance costs |
665 |
485 |
0.03 | ||||||
|
Lower regulatory expenses |
242 |
177 |
0.01 | ||||||
|
Lower benefit and other employee-related expenses |
240 |
175 |
0.01 | ||||||
|
(931) |
(679) |
(0.04) | |||||||
|
Interest charges |
(926) |
(675) |
(0.04) | ||||||
|
Income taxes - TCJA impact - decreased effective tax rate |
— |
4,594 |
0.28 | ||||||
|
Net other changes |
772 |
(77) |
(0.01) | ||||||
|
(154) |
3,842 |
0.23 | |||||||
|
First Quarter of 2018 Reported Results |
$ |
36,810 |
$ |
26,855 |
$ |
1.64 | |||
|
(1) Offset for the reserve to ratepayers is shown within this table under "Income taxes." | |||||||||
|
(2) The Company reserved an estimated $900,000 to refund to customers, which is included in the line above "TCJA impact - estimated refunds to ratepayers." The refunds were made to customers through April 30, 2018, are offset by the corresponding decrease in Federal income taxes and are expected to have no net impact on net income. | |||||||||
|
*See the Major Projects and Initiatives table later in this press release. | |||||||||
|
Recently Completed and Ongoing Major Projects and Initiatives | ||||||||||||||
|
The Company constantly seeks and develops additional projects and initiatives in order to further increase shareholder value and serve its customers. The following represent the major projects currently underway. In the future, the Company will add new projects to this table as projects are initiated. | ||||||||||||||
|
Gross Margin for the Period (1) | ||||||||||||||
|
(in thousands) |
Quarter |
Quarter |
Fiscal 2017 |
Fiscal 2018 |
Fiscal 2019 | |||||||||
|
Florida GRIP |
$ |
3,565 |
$ |
3,267 |
$ |
13,454 |
$ |
14,287 |
$ |
14,370 | ||||
|
Eastern Shore Rate Case/Settled Rates |
2,843 |
— |
3,693 |
9,800 |
9,800 | |||||||||
|
Florida Electric Reliability/Modernization Program |
372 |
— |
94 |
1,558 |
1,558 | |||||||||
|
New Smyrna Beach, Florida Project |
352 |
— |
235 |
1,409 |
1,409 | |||||||||
|
2017 Eastern Shore System Expansion Project - |
1,040 |
— |
433 |
7,446 |
15,799 | |||||||||
|
Northwest Florida Expansion Project |
— |
— |
— |
3,484 |
6,032 | |||||||||
|
(Palm Beach County) Belvedere, Florida Project |
— |
— |
— |
635 |
1,131 | |||||||||
|
Total |
$ |
8,172 |
$ |
3,267 |
$ |
17,909 |
$ |
38,619 |
$ |
50,099 | ||||
|
(1) Gross margin amounts included in this table have not been adjusted to reflect the impact of TCJA. Any reductions implemented would be offset by lower Federal income taxes due to the TCJA. | ||||||||||||||
Ongoing Growth Initiatives
GRIP
GRIP is a natural gas pipe replacement program, approved by the Florida Public Service Commission ("Florida PSC") that allows automatic recovery of the costs to replace mains and services. Since the program's inception in August 2012, the Company has invested $117.0 million to replace 250 miles of qualifying distribution mains, including $3.2 million of capital during the first quarter of 2018. For the three months ended March 31, 2018, the Company's Florida natural gas distribution operations generated incremental gross margin of $298,000 over the first quarter of 2017 from GRIP.
Regulatory Proceedings
Eastern Shore Rate Case/Settled Rates
In February 2018, the Federal Energy Regulatory Commission (the "FERC") approved Eastern Shore's rate case settlement agreement, which became final on April 1, 2018 upon the expiration of the right to rehearing. Under the terms of the settlement agreement, Eastern Shore will recover costs of its 2016 System Reliability Project, along with the cost of investments and expenses associated with various expansion, reliability and safety initiatives. Pursuant to the settlement agreement, Eastern Shore will record and recognize an increase in annual base rates of approximately $9.8 million, prior to any impact from the TCJA and will recognize approximately $6.6 million, on an annual basis, which reflects the impact of the change in its Federal corporate income tax rate. Any reductions in rates implemented would be offset by lower Federal income taxes due to TCJA. For the three months ended March 31, 2018, Eastern Shore recognized incremental gross margin of approximately $2.8 million, a portion of which was reserved as a regulatory liability to be refunded to customers. Eastern Shore refunded to its customers, with interest, the difference between the proposed rates and the settlement rates on April 30, 2018. The settlement rates were effective January 1, 2018.
Florida Electric Reliability/Modernization Program
In December 2017, the Florida PSC approved a $1.6 million annualized rate increase, effective for January 2018 meter readings, for the recovery of a limited number of investments and costs related to reliability, safety and modernization of FPU's electric distribution system. For the three months ended March 31, 2018, FPU generated incremental gross margin of approximately $372,000 as a result of this rate increase. This rate increase will continue in effect at least through the last billing cycle of December 2019. The settlement prescribes the methodology for adjusting the new rates as a result of the TCJA.
Major Projects and Initiatives Currently Underway
New Smyrna Beach, Florida Project
In the fourth quarter of 2017, the Company started construction of a 14-mile transmission pipeline that interconnects with Florida Gas Transmission Company's ("FGT") pipeline to provide additional capacity to serve current and planned growth of Florida gas distribution customers in the Company's New Smyrna Beach service area. The project was partially placed into service at the end of 2017 and is expected to be fully in service by the end of September 2018. For the three months ended March 31, 2018, FPU generated incremental gross margin of approximately $352,000 from this project.
2017 Eastern Shore System Expansion Project
The Company expects to invest approximately $117.0 million in 2018 to increase Eastern Shore's capacity by 26 percent. The new transportation services contracted for this capacity will generate approximately $15.8 million of gross margin in the first full year of service. In December 2017, the first phase of the project was placed into service, and the remaining segments are expected to be placed into service over the remainder of 2018. For the three months ended March 31, 2018, Eastern Shore generated incremental gross margin, including margin from interim services, of approximately $1.0 million.
Northwest Florida Expansion Project
Peninsula Pipeline and the Company's Florida natural gas division are constructing a pipeline that will interconnect with the FGT interstate pipeline. The project consists of transmission lines that will be operated by Peninsula Pipeline and lateral distribution lines that will be operated by the Company's Florida natural gas division. The Company has signed agreements to serve two large customers and continues to market to other customers close to the facilities. The estimated annual gross margin from this project is $6.0 million, and the project is currently expected to be in service by the end of the second quarter of 2018.
(Palm Beach County) Belvedere, Florida Project
Peninsula Pipeline is constructing a pipeline that will interconnect with FGT's pipeline and bring gas directly to FPU's distribution system in West Palm Beach, Florida. The project is expected to be in service by the end of the third quarter of 2018. The estimated annual gross margin associated with the project is approximately $1.1 million
Other major factors influencing gross margin
Weather and Consumption
Gross margin increased by $3.9 million in the first quarter of 2018, primarily as a result of colder temperatures, as compared to the extremely warm temperatures experienced during the first quarter of 2017. Despite being colder than the first quarter of 2017, the temperatures in the first quarter of 2018 were still warmer than normal. We estimate that an additional $1.7 million of gross margin would have been generated if the temperatures in the first quarter of 2018 had been normal.
The following table summarizes heating degree-days ("HDD") and cooling degree-days ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three months ended March 31, 2018 and 2017.
|
HDD and CDD Information | |||||
|
Three Months Ended |
|||||
|
March 31, |
|||||
|
2018 |
2017 |
Variance | |||
|
Delmarva |
|||||
|
Actual HDD |
2,295 |
1,958 |
337 | ||
|
10-Year Average HDD ("Delmarva Normal") |
2,354 |
2,403 |
(49) | ||
|
Variance from Delmarva Normal |
(59) |
(445) |
|||
|
Florida |
|||||
|
Actual HDD |
490 |
285 |
205 | ||
|
10-Year Average HDD ("Florida Normal") |
517 |
536 |
(19) | ||
|
Variance from Florida Normal |
(27) |
(251) |
|||
|
Ohio |
|||||
|
Actual HDD |
2,991 |
2,484 |
507 | ||
|
10-Year Average HDD ("Ohio Normal") |
3,069 |
3,137 |
(68) | ||
|
Variance from Ohio Normal |
(78) |
(653) |
|||
|
Florida |
|||||
|
Actual CDD |
139 |
145 |
(6) | ||
|
10-Year Average CDD ("Florida CDD Normal") |
89 |
82 |
7 | ||
|
Variance from Florida CDD Normal |
50 |
63 |
|||
Natural Gas Distribution Customer Growth
Customer growth for the Company's Delmarva Peninsula natural gas distribution operations generated $500,000 in additional gross margin for the quarter ended March 31, 2018, compared to the same period in 2017. The additional margin was generated from a 3.7 percent increase in the average number of residential customers as well as growth in commercial and industrial customers on the Delmarva Peninsula in the first quarter of 2018.
The Company's Florida natural gas distribution operations generated $302,000 in additional gross margin for the quarter ended March 31, 2018, compared to the same period in 2017, with approximately half of the margin growth generated from residential customers and the other half from commercial and industrial customers.
Propane Operations
The Company's Florida and Delmarva Peninsula propane distribution operations continue to pursue a multi-pronged growth plan, which includes: targeting retail and wholesale customer growth in existing markets, both organically as well as through acquisitions; incremental growth from recent and planned start-ups in new markets; targeting new community gas systems in high growth areas; further build-out of the Company's propane vehicular platform through AutoGas fueling stations; and optimization of its supply portfolio to generate incremental margin opportunities. As a member of AutoGas, the Company's Delmarva Peninsula propane distribution operations and AutoGas install and support propane vehicle conversion systems for vehicle fleets. The Company's Delmarva Peninsula propane distribution operations continues to convert fleets to bi-fuel propane-powered engines and provides on-site fueling infrastructure.
These operations generated $4.0 million in incremental margin for the three months ended March 31, 2018, compared to the same period in 2017. In addition to increased sales due to more normal weather conditions in the areas served, successful marketing initiatives led to increased volumes sold and revenues from service contracts. Supply management initiatives have increased retail propane margins as well as opportunities to generate incremental margin from wholesale sales.
PESCO
PESCO markets and sells natural gas to wholesale, industrial and commercial customers and manages natural gas storage and transportation assets in several market areas. PESCO also provides management of storage and transportation assets for natural gas producers and regulated utilities. These management transactions typically involve the release of storage and/or transportation capacity in combination with an obligation to purchase and/or deliver natural gas. In April 2017, PESCO entered into 3-year asset management agreements with the Company's Delmarva Peninsula natural gas distribution operations whereby PESCO manages a portion of their natural gas transportation and storage capacity.
In conjunction with the active management of these contracts, PESCO generates financial margin by identifying market opportunities and simultaneously entering into natural gas purchase/sale, storage or transportation contracts and/or financial derivatives contracts. The financial derivatives contracts consist primarily of exchange-traded futures that are used to manage volatility in natural gas market prices. Volatility in PESCO's recorded gross margin and operating income can occur over periods of time due to changes in the value of financial derivatives contracts prior to the time of the settlement of the financial derivatives and the purchase or sale of the underlying physical commodity. Derivatives accounting has no impact on economic gains or losses of the purchase or sale contracts. PESCO's results may also fluctuate based on the actual demand of its customers relative to its initial estimates of their demand, and PESCO's ability to manage its supply portfolio, considering weather and other factors, including pipeline constraints.
For the three months ended March 31, 2018, PESCO's gross margin decreased by $2.3 million compared to the same period in 2017. Lower first quarter 2018 margin from PESCO resulted from the following:
|
(in thousands) |
Margin Impact | |
|
PESCO First Quarter 2017 Margin |
$ |
3,467 |
|
Reversal of fourth quarter 2017 unrealized MTM loss |
5,713 | |
|
Margin from 2017 customer Supply Agreement that was not renewed |
(2,124) | |
|
Net impact for the Mid-Atlantic wholesale portfolio from extraordinary costs associated with the 2018 Bomb Cyclone |
(3,284) | |
|
Loss for the Mid-Atlantic retail portfolio caused by capacity constraints in January and warm weather in February |
(2,261) | |
|
Other |
(336) | |
|
PESCO First Quarter 2018 Margin |
$ |
1,175 |
The 2018 Bomb Cyclone refers to the early January high intensity winter storms that impacted the Company's Mid-Atlantic service territory and which had a residual impact on the Company's businesses through the month. The early days of January experienced higher levels of wintry precipitation (snow and wind) and an extended period of anomalously cold weather. The extraordinary weather conditions created by the 2018 Bomb Cyclone generated incremental margin for the Company's natural gas transmission and natural gas and propane distribution businesses. However, the exceedingly high demand and associated pipeline capacity and gas supply in the Delmarva Peninsula region created significant, unusual costs for PESCO. While these circumstances will recur infrequently, the Company's management has taken various steps to mitigate PESCO's exposure going forward. These mitigation steps resulted in improved results in February and March of 2018.
Xeron
Xeron's operations were wound down during the second quarter of 2017. Operating income for the quarter ended March 31, 2018, improved by $697,000 due to the absence of pre-tax losses generated by Xeron in the first quarter of 2017.
Capital Investment Growth and Financing Plan
The Company's capital expenditures were $61.2 million for the three months ended March 31, 2018. For 2018, the Company has budgeted capital expenditures of $181.6 million. The following table shows the 2018 capital expenditures budget by segment and business line:
|
2018 | ||
|
(dollars in thousands) |
||
|
Regulated Energy: |
||
|
Natural gas distribution |
$ |
53,899 |
|
Natural gas transmission |
92,562 | |
|
Electric distribution |
7,972 | |
|
Total Regulated Energy |
154,433 | |
|
Unregulated Energy: |
||
|
Propane distribution |
11,235 | |
|
Other unregulated energy |
5,827 | |
|
Total Unregulated Energy |
17,062 | |
|
Other: |
||
|
Corporate and other businesses |
10,097 | |
|
Total Other |
10,097 | |
|
Total 2018 Budgeted Capital Expenditures |
$ |
181,592 |
Chesapeake Utilities' target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. This target capital structure ensures that the Company maintains a strong balance sheet to support continued growth. Over the past several years, the Company has been deploying increased amounts of capital on new projects, many of which have longer construction periods. The Company seeks to align the permanent financing of these capital projects with the in-service dates to the extent feasible.
In 2017, the Company refinanced $70.0 million of short-term debt as 3.25 percent senior notes. The refinancing will result in increased annual interest expense of $2.3 million during 2018, a portion of which impacted the first quarter's results; however, the Company locked in a low interest rate for 15 years. The Company previously executed a shelf agreement with New York Life and will issue $100 million of unsecured senior notes in two tranches during 2018 at an average interest rate of 3.53 percent for 20 years. The Company expects to access additional permanent capital to align the financing with new investments and to maintain a solid balance sheet to support future capital deployment.
|
Chesapeake Utilities Corporation and Subsidiaries | |||||
|
Condensed Consolidated Statements of Income (Unaudited) | |||||
|
(in thousands, except shares and per share data) | |||||
|
Three Months Ended | |||||
|
March 31, | |||||
|
2018 |
2017 | ||||
|
Operating Revenues |
|||||
|
Regulated Energy |
$ |
109,393 |
$ |
97,654 | |
|
Unregulated Energy and other |
129,963 |
87,506 | |||
|
Total Operating Revenues |
239,356 |
185,160 | |||
|
Operating Expenses |
|||||
|
Regulated Energy cost of sales |
48,231 |
40,244 | |||
|
Unregulated Energy and other cost of sales |
99,826 |
60,754 | |||
|
Operations |
32,702 |
32,490 | |||
|
Maintenance |
3,593 |
3,231 | |||
|
Depreciation and amortization |
9,704 |
8,812 | |||
|
Other taxes |
4,894 |
4,530 | |||
|
Total operating expenses |
198,950 |
150,061 | |||
|
Operating Income |
40,406 |
35,099 | |||
|
Other income (expense), net |
68 |
(700) | |||
|
Interest charges |
3,664 |
2,739 | |||
|
Income Before Income Taxes |
36,810 |
31,660 | |||
|
Income taxes |
9,955 |
12,516 | |||
|
Net Income |
$ |
26,855 |
$ |
19,144 | |
|
Weighted Average Common Shares Outstanding: |
|||||
|
Basic |
16,351,338 |
16,317,224 | |||
|
Diluted |
16,402,985 |
16,363,796 | |||
|
Earnings Per Share of Common Stock: |
|||||
|
Basic |
$ |
1.64 |
$ |
1.17 | |
|
Diluted |
$ |
1.64 |
$ |
1.17 | |
|
Chesapeake Utilities Corporation and Subsidiaries | ||||||
|
Condensed Consolidated Balance Sheets (Unaudited) | ||||||
|
Assets |
March 31, 2018 |
December 31, 2017 | ||||
|
(in thousands, except shares and per share data) |
||||||
|
Property, Plant and Equipment |
||||||
|
Regulated Energy |
$ |
1,083,004 |
$ |
1,073,736 | ||
|
Unregulated Energy |
213,803 |
210,682 | ||||
|
Other businesses and eliminations |
27,892 |
27,699 | ||||
|
Total property, plant and equipment |
1,324,699 |
1,312,117 | ||||
|
Less: Accumulated depreciation and amortization |
(279,802) |
(270,599) | ||||
|
Plus: Construction work in progress |
131,640 |
84,509 | ||||
|
Net property, plant and equipment |
1,176,537 |
1,126,027 | ||||
|
Current Assets |
||||||
|
Cash and cash equivalents |
5,996 |
5,614 | ||||
|
Trade and other receivables (less allowance for uncollectible accounts of $901 |
69,447 |
77,223 | ||||
|
Accrued revenue |
18,907 |
22,279 | ||||
|
Propane inventory, at average cost |
7,345 |
8,324 | ||||
|
Other inventory, at average cost |
4,607 |
12,022 | ||||
|
Regulatory assets |
10,833 |
10,930 | ||||
|
Storage gas prepayments |
1,197 |
5,250 | ||||
|
Income taxes receivable |
4,378 |
14,778 | ||||
|
Prepaid expenses |
8,199 |
13,621 | ||||
|
Mark-to-market energy assets |
208 |
1,286 | ||||
|
Other current assets |
6,717 |
7,260 | ||||
|
Total current assets |
137,834 |
178,587 | ||||
|
Deferred Charges and Other Assets |
||||||
|
Goodwill |
22,104 |
22,104 | ||||
|
Other intangible assets, net |
4,482 |
4,686 | ||||
|
Investments, at fair value |
6,641 |
6,756 | ||||
|
Regulatory assets |
75,536 |
75,575 | ||||
|
Other assets |
4,316 |
3,699 | ||||
|
Total deferred charges and other assets |
113,079 |
112,820 | ||||
|
Total Assets |
$ |
1,427,450 |
$ |
1,417,434 | ||
|
Chesapeake Utilities Corporation and Subsidiaries | ||||||
|
Condensed Consolidated Balance Sheets (Unaudited) | ||||||
|
Capitalization and Liabilities |
March 31, 2018 |
December 31, 2017 | ||||
|
(in thousands, except shares and per share data) |
||||||
|
Capitalization |
||||||
|
Stockholders' equity |
||||||
|
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no |
$ |
— |
$ |
— | ||
|
Common stock, par value $0.4867 per share (authorized 50,000,000 shares) |
7,964 |
7,955 | ||||
|
Additional paid-in capital |
254,126 |
253,470 | ||||
|
Retained earnings |
250,024 |
229,141 | ||||
|
Accumulated other comprehensive loss |
(6,873) |
(4,272) | ||||
|
Deferred compensation obligation |
3,573 |
3,395 | ||||
|
Treasury stock |
(3,573) |
(3,395) | ||||
|
Total stockholders' equity |
505,241 |
486,294 | ||||
|
Long-term debt, net of current maturities |
222,014 |
197,395 | ||||
|
Total capitalization |
727,255 |
683,689 | ||||
|
Current Liabilities |
||||||
|
Current portion of long-term debt |
9,389 |
9,421 | ||||
|
Short-term borrowing |
229,108 |
250,969 | ||||
|
Accounts payable |
57,457 |
74,688 | ||||
|
Customer deposits and refunds |
34,795 |
34,751 | ||||
|
Accrued interest |
3,256 |
1,742 | ||||
|
Dividends payable |
5,318 |
5,312 | ||||
|
Accrued compensation |
5,444 |
13,112 | ||||
|
Regulatory liabilities |
18,503 |
6,485 | ||||
|
Mark-to-market energy liabilities |
2,359 |
6,247 | ||||
|
Other accrued liabilities |
8,694 |
10,273 | ||||
|
Total current liabilities |
374,323 |
413,000 | ||||
|
Deferred Credits and Other Liabilities |
||||||
|
Deferred income taxes |
141,484 |
135,850 | ||||
|
Regulatory liabilities |
141,346 |
140,978 | ||||
|
Environmental liabilities |
8,215 |
8,263 | ||||
|
Other pension and benefit costs |
28,981 |
29,699 | ||||
|
Deferred investment tax credits and other liabilities |
5,846 |
5,955 | ||||
|
Total deferred credits and other liabilities |
325,872 |
320,745 | ||||
|
Total Capitalization and Liabilities |
$ |
1,427,450 |
$ |
1,417,434 | ||
|
Chesapeake Utilities Corporation and Subsidiaries | ||||||||||||||||||||||||
|
Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||
|
For the Three Months Ended March 31, 2018 |
For the Three Months Ended March 31, 2017 | |||||||||||||||||||||||
|
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric |
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric | |||||||||||||||||
|
Operating Revenues | ||||||||||||||||||||||||
|
(in thousands) |
||||||||||||||||||||||||
|
Residential |
$ |
35,314 |
$ |
1,761 |
$ |
11,182 |
$ |
11,533 |
$ |
25,710 |
$ |
1,552 |
$ |
10,768 |
$ |
9,327 | ||||||||
|
Commercial |
15,830 |
1,722 |
8,331 |
9,157 |
11,412 |
1,523 |
9,594 |
9,414 | ||||||||||||||||
|
Industrial |
2,306 |
1,871 |
6,536 |
400 |
1,834 |
1,759 |
5,927 |
471 | ||||||||||||||||
|
Other (1) |
(1,743) |
510 |
(2,836) |
(2,349) |
1,458 |
900 |
(2,785) |
(1,589) | ||||||||||||||||
|
Total Operating Revenues |
$ |
51,707 |
$ |
5,864 |
$ |
23,213 |
$ |
18,741 |
$ |
40,414 |
$ |
5,734 |
$ |
23,504 |
$ |
17,623 | ||||||||
|
Volume (in Dts for natural gas and MWHs for electric) |
||||||||||||||||||||||||
|
Residential |
2,240,555 |
140,759 |
523,062 |
78,528 |
1,807,900 |
123,275 |
470,811 |
61,326 | ||||||||||||||||
|
Commercial |
1,705,426 |
1,239,936 |
535,544 |
67,740 |
1,381,408 |
2,957,716 |
601,203 |
65,862 | ||||||||||||||||
|
Industrial |
1,509,039 |
2,334,243 |
1,304,530 |
4,520 |
1,373,798 |
1,767,430 |
1,189,263 |
3,160 | ||||||||||||||||
|
Other |
12,533 |
— |
468,556 |
1,896 |
10,538 |
— |
487,910 |
1,873 | ||||||||||||||||
|
Total |
5,467,553 |
3,714,938 |
2,831,692 |
152,684 |
4,573,644 |
4,848,421 |
2,749,187 |
132,221 | ||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||
|
Residential |
71,233 |
16,223 |
55,280 |
24,644 |
68,701 |
15,664 |
54,041 |
24,437 | ||||||||||||||||
|
Commercial(2) |
7,024 |
1,460 |
3,927 |
7,481 |
6,910 |
1,409 |
4,892 |
7,446 | ||||||||||||||||
|
Industrial(2) |
153 |
73 |
2,251 |
2 |
142 |
75 |
1,109 |
2 | ||||||||||||||||
|
Other |
6 |
— |
17 |
— |
5 |
— |
— |
— | ||||||||||||||||
|
Total |
78,416 |
17,756 |
61,475 |
32,127 |
75,758 |
17,148 |
60,042 |
31,885 | ||||||||||||||||
|
(1) |
Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees |
|
(2) |
Certain commercial and industrial customers have been reclassified when compared to the prior year. |
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-reports-first-quarter-2018-results-300645002.html
SOURCE Chesapeake Utilities Corporation
Article Date
5/8/20184/17/2018 - Chesapeake Utilities Corporation To Host Conference Call To Review First Quarter 2018 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review First Quarter 2018 Financial Results
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., April 17, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, May 11, 2018, at 10:30 a.m. ET to discuss the Company's financial results for the first quarter ended March 31, 2018. The earnings press release will be issued on Wednesday, May 9, 2018, before the market opens.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2018 Financial Results Conference Call.
To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-first-quarter-2018-financial-results-300631661.html
SOURCE Chesapeake Utilities Corporation
Article Date
4/17/2018Chesapeake Utilities Corporation Corrects Single Business Unit Customer Count Included In Earnings Release To The Correct Numbers Included In The Annual Report On Form 10-K
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., March 1, 2018 /PRNewswire/ -- On February 28, 2018, Chesapeake Utilities Corporation (NYSE: CPK) issued a press release announcing its annual and quarterly results for the period ended December 31, 2017. The press release reflected incorrect numbers for Florida Public Utilities ("FPU") average electric commercial and total customers for the quarter and year ended December 31, 2017 as presented in the Distribution Utility Statistical Data.
These figures are corrected in the table below:
|
For the Three Months Ended December 31, 2017: |
|||||||
|
**Corrected** |
**Uncorrected** |
||||||
|
FPU Electric |
FPU Electric |
||||||
|
Distribution |
Distribution |
||||||
|
Residential |
24,648 |
24,648 |
|||||
|
Commercial |
7,468 |
9,301 |
|||||
|
Industrial |
2 |
2 |
|||||
|
Other |
- |
- |
|||||
|
Total |
32,118 |
33,951 |
|||||
|
For the Year Ended December 31, 2017: |
|||||||
|
**Corrected** |
**Uncorrected** |
||||||
|
FPU Electric |
FPU Electric |
||||||
|
Distribution |
Distribution |
||||||
|
Residential |
24,574 |
24,574 |
|||||
|
Commercial |
7,450 |
7,908 |
|||||
|
Industrial |
2 |
2 |
|||||
|
Other |
- |
- |
|||||
|
Total |
32,026 |
32,484 |
|||||
Chesapeake Utilities Corporation's 2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2018 reflected the accurate figures. The correction of the customer numbers has no effect on the financial results reported for the quarter and year ended December 31, 2017.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:SOURCE Chesapeake Utilities Corporation
Article Date
3/2/2018Chesapeake Utilities Corporation Reports Fourth Quarter And Fiscal Year 2017 Results
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., Feb. 28, 2018 /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, 2017. The Company's net income for the year was $58.1 million, or $3.55 per share, an increase of $13.4 million, or $0.69 per share, compared to 2016. The higher net income and earnings per share ("EPS") reflected continued customer growth in the Company's natural gas and propane distribution operations and expansion of its gas transmission operations, full year contributions from Eight Flags Energy LLC's ("Eight Flags") Combined Heat and Power ("CHP") plant, increased profitability for the propane operations and for Aspire Energy of Ohio, LLC ("Aspire Energy"), a partial year's impact of new base rates for Eastern Shore Natural Gas Company ("Eastern Shore"), and the favorable impact of Federal tax law changes on the revaluation of net deferred tax assets and liabilities of the Company's unregulated businesses. A detailed discussion of operating results begins on page 3.
"2017 was an exceptional year for the Company," stated Michael P. McMasters, President and Chief Executive Officer. "Recently completed growth projects, in addition to numerous other strategic growth initiatives across all of our businesses, generated our eleventh record year of earnings. Construction of Eastern Shore's largest ever expansion project is underway with expected completion in phases throughout 2018, and in Florida construction is underway on several pipeline and distribution projects to serve growth in new and existing market areas," he added. "Our employees continue to identify and evaluate new growth opportunities while profitably managing current projects, maintaining operating efficiency and providing safe, reliable service to our customers. Changing regulatory and energy environments and customer energy options create new challenges and opportunities that our team recognizes and embraces. We continually refine our strategic focus to harvest benefits from the challenges of accelerating change and to increase our portfolio of growth opportunities and profitable capital investments in 2018 and beyond," he concluded.
Significant Items Impacting Earnings
Results for the year and fourth quarter of 2017 were impacted by the following significant items:
|
For the period ended December 31, |
2017 |
Fourth Quarter | |||||||||||||
|
(in thousands, except per share data) |
Net Income |
EPS |
Net Income |
EPS | |||||||||||
|
Reported (GAAP) Earnings |
$ |
58,124 |
$ |
3.55 |
$ |
26,101 |
$ |
1.59 |
|||||||
|
Tax reform impact |
(14,299) |
(0.87) |
(14,299) |
(0.87) |
|||||||||||
|
Unrealized MTM loss |
3,499 |
0.21 |
3,467 |
0.21 |
|||||||||||
|
Adjusted (Non-GAAP) Earnings*
|
$ |
47,324 |
$ |
2.89 |
$ |
15,269 |
$ |
0.93 |
|||||||
Excluding the tax reform impact and the unrealized MTM loss, earnings for the year and fourth quarter would have been $2.89 and $0.93 per share, respectively.
As a result of the TCJA, the Company's 2017 annual and fourth quarter EPS included a $0.87 per share non-cash benefit from the revaluation of the Company's net deferred tax assets and liabilities associated with the Company's unregulated businesses. We are awaiting formal notice from the federal and state commissions that regulate our gas and electric distribution and transmission businesses on the applicability and timing of the implementation of the tax law changes in regard to customer rates as well as the applicability, timing, and treatment of net deferred tax assets and liabilities. We will provide updates as we receive formal notices and rate orders from the regulatory authorities. The Company estimates that, beginning in 2018, the TCJA corporate federal income tax rate will increase annual EPS between $0.10 and $0.15, primarily from unregulated businesses, assuming normal weather and business conditions, and absent the impact of fair value MTM accounting.
Peninsula Energy Services Company, Inc. ("PESCO") utilizes financial derivatives contracts to lock in the gross margin associated with physical gas purchased and pipeline capacity used for meeting expected demand under PESCO's various contracts, including its asset management contracts. Whenever possible, PESCO utilizes hedge accounting to better match hedged items and hedging instruments. However, in those situations where hedge accounting is not appropriate, the Company utilizes MTM accounting. As a result of the significant regional natural gas price movement at the end of the year, PESCO recognized an unrealized MTM loss of $0.21 per share that reflected the fair value of the financial derivative contracts on December 31, 2017. Derivatives accounting has no impact on the economic gain or loss from PESCO's purchase or sale contracts, even though MTM accounting may create mismatched gains or losses in different reporting periods.
For the fourth quarter of 2017, the Company reported net income of $26.1 million, or $1.59 per share, an increase of $14.2 million, or $0.86 per share, compared to the same quarter in 2016. Fourth quarter 2017 results also included the $0.87 gain from the tax law changes and the $0.21 charge for PESCO's unrealized MTM loss.
*This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin 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 "gross margin" by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance. The Company believes that gross margin is a useful and meaningful measure for investors as it excludes the impact of several unusual items, including fair value accounting, timing adjustments associated with energy-related transactions and the impact of tax reform, which will not impact future results in the same magnitude. The Company calculates Adjusted EPS by excluding the impact of certain significant new non-cash items, including the impact of the revaluation of the Company's unregulated energy segment's deferred assets and liabilities, due to the TCJA changes, and the timing related to the unrealized MTM loss.
Operating Results for the Years Ended December 31, 2017 and 2016
Operating income increased by $1.7 million to $85.8 million for 2017. This increase was driven by an $18.9 million, or seven percent, increase in gross margin, which was partially offset by a $17.2 million increase in operating expenses, due to a $5.1 million increase in depreciation, asset removal, amortization and property taxes and a $12.0 million increase in other operating expenses to support growth. Excluding the unrealized MTM loss, gross margin grew by $24.6 million, or nine percent, and operating income rose $7.5 million, or nine percent, for 2017 versus 2016.
Regulated Energy
Operating income for the Regulated Energy segment increased by $3.3 million in 2017 compared to 2016. This increase was driven by an $11.5 million increase in gross margin, which was partially offset by $8.2 million in higher operating expenses associated with the margin growth. The significant components of the gross margin increase included:
The significant drivers of the $8.2 million increase in operating expenses included:
Unregulated Energy
Operating income for the Unregulated Energy segment for 2017 was $12.5 million, a decrease of $1.4 million, or ten percent, compared to the same period in 2016. The decreased operating income was the net result of increased growth in all the unregulated energy businesses, which was more than offset by PESCO's unrealized MTM loss. Excluding the impact of the unrealized MTM loss, gross margin grew by $13.4 million, or 20.6 percent, and operating income rose by $4.4 million, or 31.9 percent, during 2017 compared to 2016. In particular, PESCO's gross margin and operating income, exclusive of the unrealized MTM loss, grew by $3.4 million, or 72.7 percent, and $772,000, or 41.4 percent, respectively.
The significant components of the gross margin increase included:
The significant components of the $9.0 million increase in operating expenses included:
Operating Results for the Quarters Ended December 31, 2017 and 2016
The Company's operating income for the fourth quarter of 2017 was $23.3 million, an increase of $1.4 million, or 6.6 percent, compared to the same quarter in 2016. Excluding PESCO's unrealized MTM loss, gross margin grew by $10.6 million, or 15.1 percent, and operating income rose by $7.2 million, or approximately 33.0 percent, for the fourth quarter of 2017 versus the same quarter in 2016.
Regulated Energy Segment
Operating income for the Regulated Energy segment increased by $4.1 million to $21.2 million for the fourth quarter of 2017, compared to the same quarter in 2016. The increased operating income resulted from a $5.8 million increase in gross margin, partially offset by a $1.7 million increase in operating expenses. The significant components of the gross margin increase included:
The significant components of the $1.7 million increase in operating expenses included:
Unregulated Energy Segment
Operating income for the Unregulated Energy segment for the fourth quarter of 2017 was $2.0 million, a decrease of $2.6 million compared to operating income for the same quarter in 2016. The decreased operating income reflects an $837,000 decrease in gross margin and a $1.8 million increase in operating expenses. Excluding the unrealized MTM loss previously mentioned, gross margin grew by $4.9 million, or 25.2 percent, and operating income increased by $3.2 million, or 69.1 percent, during the fourth quarter of 2017 compared to the same quarter in 2016.
Significant sources of higher gross margin included:
The significant components of the $1.8 million increase in operating expenses included:
Matters discussed 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 2017 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
Conference Call
Chesapeake Utilities Corporation will host a conference call on March 2, 2018 at 10:30 a.m. Eastern Time to discuss the Company's financial results for the year and quarter ended December 31, 2017. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2017 Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audiocast section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary (in thousands, except per-share data) | ||||||||||||||||
|
Year Ended |
Fourth Quarter | |||||||||||||||
|
For the Periods Ended December 31, |
2017 |
2016 |
2017 |
2016 | ||||||||||||
|
Gross Margin |
||||||||||||||||
|
Regulated Energy |
$ |
207,541 |
$ |
196,080 |
$ |
56,394 |
$ |
50,633 |
||||||||
|
Unregulated Energy |
72,572 |
64,962 |
18,745 |
19,582 |
||||||||||||
|
Other businesses and eliminations |
(444) |
(225) |
(119) |
(58) |
||||||||||||
|
Total Gross Margin |
$ |
279,669 |
$ |
260,817 |
$ |
75,020 |
$ |
70,157 |
||||||||
|
Operating Income |
||||||||||||||||
|
Regulated Energy |
$ |
73,160 |
$ |
69,851 |
$ |
21,245 |
$ |
17,191 |
||||||||
|
Unregulated Energy |
12,477 |
13,844 |
1,974 |
4,577 |
||||||||||||
|
Other businesses and eliminations |
206 |
401 |
44 |
51 |
||||||||||||
|
Total Operating Income |
$ |
85,843 |
$ |
84,096 |
$ |
23,263 |
$ |
21,819 |
||||||||
|
Other (expense) income |
(765) |
(441) |
(121) |
(372) |
||||||||||||
|
Interest charges |
12,645 |
10,639 |
3,513 |
2,643 |
||||||||||||
|
Income taxes |
14,309 |
28,341 |
(6,472) |
6,941 |
||||||||||||
|
Net Income |
$ |
58,124 |
$ |
44,675 |
$ |
26,101 |
$ |
11,863 |
||||||||
|
Earnings Per Share of Common Stock |
||||||||||||||||
|
Basic |
$ |
3.56 |
$ |
2.87 |
$ |
1.60 |
$ |
0.73 |
||||||||
|
Diluted |
$ |
3.55 |
$ |
2.86 |
$ |
1.59 |
$ |
0.73 |
||||||||
|
Financial Summary Highlights Key variances for the year ended December 31, 2017 included: | ||||||||||||
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Year ended December 31, 2016 Reported Results |
$ |
73,016 |
$ |
44,675 |
$ |
2.86 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
Federal tax reform impact |
— |
14,299 |
0.87 |
|||||||||
|
PESCO - unrealized MTM loss |
(5,783) |
(3,499) |
(0.21) |
|||||||||
|
Impact of winding down of Xeron operations and absence of 2016 loss |
745 |
451 |
0.03 |
|||||||||
|
Weather impact |
578 |
350 |
0.02 |
|||||||||
|
(4,460) |
11,601 |
0.71 |
||||||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Eight Flags' CHP plant |
4,901 |
2,965 |
0.19 |
|||||||||
|
Implementation of new base rates for Eastern Shore* |
3,693 |
2,234 |
0.14 |
|||||||||
|
PESCO - margin from operations |
3,365 |
2,036 |
0.13 |
|||||||||
|
Natural gas growth (excluding service expansions) |
2,818 |
1,705 |
0.11 |
|||||||||
|
Service expansions* |
2,062 |
1,248 |
0.08 |
|||||||||
|
GRIP* |
1,902 |
1,151 |
0.07 |
|||||||||
|
Aspire Energy rates and management fees |
1,125 |
680 |
0.04 |
|||||||||
|
Customer consumption (non-weather) |
721 |
436 |
0.03 |
|||||||||
|
Implementation of Delaware division settled rates |
831 |
503 |
0.03 |
|||||||||
|
Wholesale propane sales and margins |
678 |
410 |
0.03 |
|||||||||
|
Retail propane margins |
645 |
390 |
0.02 |
|||||||||
|
Sandpiper margins associated with conversions |
291 |
176 |
0.01 |
|||||||||
|
23,032 |
13,934 |
0.88 |
||||||||||
|
(Increased) Decreased Other Operating Expenses: |
||||||||||||
|
Higher payroll expense |
(6,487) |
(3,925) |
(0.25) |
|||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital investments |
(5,120) |
(3,098) |
(0.20) |
|||||||||
|
Eight Flags' operating expenses |
(2,920) |
(1,767) |
(0.11) |
|||||||||
|
Higher benefit and other employee-related expenses |
(1,485) |
(899) |
(0.06) |
|||||||||
|
Higher regulatory expenses associated with rate filings |
(1,005) |
(608) |
(0.04) |
|||||||||
|
Higher taxes other than property and income taxes |
(739) |
(447) |
(0.03) |
|||||||||
|
Lower credit, collections & customer service expenses |
515 |
311 |
0.02 |
|||||||||
|
Lower outside services and facilities maintenance costs |
417 |
252 |
0.02 |
|||||||||
|
Higher vehicle expenses |
(372) |
(225) |
(0.01) |
|||||||||
|
Higher sales and advertising expenses |
(259) |
(157) |
(0.01) |
|||||||||
|
(17,455) |
(10,563) |
(0.67) |
||||||||||
|
Increase in outstanding shares from the September 2016 public offering |
— |
— |
(0.16) |
|||||||||
|
Interest charges |
(2,006) |
(1,214) |
(0.08) |
|||||||||
|
Change in other expense |
(191) |
(115) |
(0.01) |
|||||||||
|
Change in effective tax rate prior to tax reform |
— |
(500) |
(0.03) |
|||||||||
|
Net other changes |
497 |
306 |
0.05 |
|||||||||
|
Year ended December 31, 2017 Reported Results |
$ |
72,433 |
$ |
58,124 |
$ |
3.55 |
||||||
|
* See the Major Projects and Initiatives table later in this press release. | ||||||||||||
Key variances for the quarter ended December 31, 2017 included:
|
(in thousands, except per share) |
Pre-tax |
Net |
Earnings | |||||||||
|
Fourth Quarter of 2016 Reported Results |
$ |
18,804 |
$ |
11,863 |
$ |
0.73 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
Federal tax reform impact |
— |
14,299 |
0.87 |
|||||||||
|
PESCO - unrealized MTM loss |
(5,765) |
(3,467) |
(0.21) |
|||||||||
|
Weather impact |
1,885 |
1,133 |
0.07 |
|||||||||
|
Impact of winding down of Xeron operations and absence of 2016 loss |
1,086 |
653 |
0.04 |
|||||||||
|
(2,794) |
12,618 |
0.77 |
||||||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Implementation of new base rates for Eastern Shore* |
2,673 |
1,607 |
0.10 |
|||||||||
|
PESCO - margin from operations |
1,587 |
954 |
0.06 |
|||||||||
|
Natural gas growth (excluding service expansions) |
791 |
476 |
0.03 |
|||||||||
|
Service expansions* |
639 |
384 |
0.02 |
|||||||||
|
Retail propane margins |
527 |
317 |
0.02 |
|||||||||
|
Delaware division rate case* |
413 |
248 |
0.02 |
|||||||||
|
Aspire Energy rates and management fees |
396 |
238 |
0.01 |
|||||||||
|
GRIP* |
283 |
170 |
0.01 |
|||||||||
|
Eight Flags' CHP* |
180 |
108 |
0.01 |
|||||||||
|
7,489 |
4,502 |
0.28 |
||||||||||
|
(Increased) Decreased Other Operating Expenses: |
||||||||||||
|
Higher payroll expense |
(3,497) |
(2,103) |
(0.13) |
|||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital |
(999) |
(601) |
(0.04) |
|||||||||
|
Lower outside services and facilities maintenance costs |
865 |
520 |
0.03 |
|||||||||
|
Lower benefit and other employee-related expenses |
172 |
104 |
0.01 |
|||||||||
|
Higher regulatory expenses |
(150) |
(90) |
(0.01) |
|||||||||
|
Lower Eight Flags' operating expenses |
99 |
60 |
— |
|||||||||
|
(3,510) |
(2,110) |
(0.14) |
||||||||||
|
Interest Charges |
(870) |
(523) |
(0.03) |
|||||||||
|
Change in effective tax rate prior to tax reform |
— |
(581) |
(0.04) |
|||||||||
|
Net Other Changes |
510 |
332 |
0.02 |
|||||||||
|
Fourth Quarter of 2017 Reported Results |
$ |
19,629 |
$ |
26,101 |
$ |
1.59 |
||||||
|
* See the Major Projects and Initiatives table later in this press release. | ||||||||||||
The following information highlights certain key factors contributing to the Company's results for the year and quarter ended December 31, 2017:
Major Projects and Initiatives
The following table summarizes gross margin (dollars in thousands) for the Company's existing and future major projects and initiatives. Gross margin reflects operating revenue less cost of sales, excluding depreciation, amortization and accretion:
|
Gross Margin for the Period | |||||||||||||||||||||||||||||||
|
Year Ended |
Three Months Ended |
||||||||||||||||||||||||||||||
|
December 31, |
December 31, |
Estimate for | |||||||||||||||||||||||||||||
|
2017 |
2016 |
Variance |
2017 |
2016 |
Variance |
2018 |
2019 | ||||||||||||||||||||||||
|
Existing Major Projects and |
|||||||||||||||||||||||||||||||
|
Capital Investment Projects |
$ |
38,251 |
$ |
29,819 |
$ |
8,432 |
$ |
9,887 |
$ |
9,218 |
$ |
669 |
$ |
34,041 |
$ |
34,137 |
|||||||||||||||
|
Eastern Shore Rate Case (1) |
3,693 |
— |
3,693 |
2,673 |
— |
2,673 |
9,800 |
9,800 |
|||||||||||||||||||||||
|
Settled Delaware Division Rate Case |
2,318 |
1,487 |
831 |
553 |
140 |
413 |
2,250 |
2,250 |
|||||||||||||||||||||||
|
Electric Limited Proceeding |
94 |
— |
94 |
94 |
— |
— |
1,558 |
1,558 |
|||||||||||||||||||||||
|
Total Existing Major Projects |
$ |
44,356 |
$ |
31,306 |
$ |
13,050 |
$ |
13,207 |
$ |
9,358 |
$ |
3,755 |
$ |
47,649 |
$ |
47,745 |
|||||||||||||||
|
Future Major Projects and |
|||||||||||||||||||||||||||||||
|
Capital Investment Projects |
|||||||||||||||||||||||||||||||
|
2017 Eastern Shore System Expansion |
$ |
433 |
$ |
— |
$ |
433 |
$ |
433 |
$ |
— |
$ |
433 |
$ |
9,708 |
$ |
15,799 |
|||||||||||||||
|
Northwest Florida Expansion |
— |
— |
— |
— |
— |
— |
3,484 |
6,032 |
|||||||||||||||||||||||
|
Other Florida Pipeline Expansions |
— |
— |
— |
— |
— |
— |
635 |
1,131 |
|||||||||||||||||||||||
|
Total Future Major Projects and |
$ |
433 |
$ |
— |
$ |
433 |
$ |
433 |
— |
$ |
433 |
$ |
13,827 |
$ |
22,962 |
||||||||||||||||
|
Total |
$ |
44,789 |
$ |
31,306 |
$ |
13,483 |
$ |
13,640 |
$ |
9,358 |
$ |
4,188 |
$ |
61,476 |
$ |
70,707 |
|||||||||||||||
|
(1) Eastern Shore filed an uncontested settlement agreement in December 2017, which is pending final approval by the Federal Energy Regulatory Commission ("FERC"). | |||||||||||||||||||||||||||||||
Major Projects and Initiatives Recently Completed
The following table summarizes gross margin generated by our major projects and initiatives recently completed (dollars in thousands):
|
Gross Margin for the Period | |||||||||||||||||||||||
|
Year Ended |
Three Months Ended | ||||||||||||||||||||||
|
December 31, |
December 31, | ||||||||||||||||||||||
|
2017 |
2016 |
Variance |
2017 |
2016 |
Variance | ||||||||||||||||||
|
Capital Investment Projects: |
|||||||||||||||||||||||
|
Service Expansions: |
|||||||||||||||||||||||
|
Short-term contracts (Delaware) |
$ |
6,522 |
$ |
11,454 |
$ |
(4,932) |
$ |
1,330 |
$ |
3,184 |
$ |
(1,854) |
|||||||||||
|
Long-term contracts (Delaware) |
8,141 |
1,815 |
6,326 |
2,274 |
449 |
1,825 |
|||||||||||||||||
|
Long-term contracts (Florida) |
235 |
— |
235 |
235 |
— |
235 |
|||||||||||||||||
|
Total Service Expansions |
14,898 |
13,269 |
1,629 |
3,839 |
3,633 |
206 |
|||||||||||||||||
|
Florida GRIP |
13,454 |
11,552 |
1,902 |
3,452 |
3,169 |
283 |
|||||||||||||||||
|
Eight Flags' CHP Plant |
9,899 |
4,998 |
4,901 |
2,596 |
2,416 |
180 |
|||||||||||||||||
|
Total Capital Investment Projects |
$ |
38,251 |
$ |
29,819 |
$ |
8,432 |
$ |
9,887 |
$ |
9,218 |
$ |
669 |
|||||||||||
Service Expansions
White Oak Mainline Expansion Project
In August 2014, Eastern Shore entered into a precedent agreement with an electric power generator in Kent County, Delaware, to provide a 20-year OPT<90 natural gas transmission service for 45,000 Dts/day. In July 2016, the FERC authorized Eastern Shore to construct and operate the project, which consists of 5.4 miles of 16-inch pipeline looping and new compression capability in Delaware. Eastern Shore provided interim services to this customer until construction was completed and long-term service commenced in March 2017. This service generated an additional gross margin of $85,000 during the year ended December 31, 2017 compared to 2016. There was no incremental margin during the fourth quarter as the permanent services replaced the interim services. Service provided under the 20-year agreement generated gross margin of $7.5 million during 2017 and is expected to generate between $5.8 million and $7.8 million annually through the remaining term of the agreement.
TETLP Upgrades
In March 2016, Eastern Shore completed improvements at its Texas Eastern Transmission, LP ("TETLP") interconnect facilities to increase natural gas receipts from TETLP by 53,000 Dts/day, for a total capacity of 160,000 Dts/day. This increased capacity generated additional gross margin of $1.2 million in 2017 compared to 2016.
2016 Eastern Shore System Reliability Project
In the second quarter of 2017, Eastern Shore completed construction of approximately 10.1 miles of 16-inch pipeline looping and auxiliary facilities in New Castle and Kent Counties, Delaware, and a new compressor at its existing compressor station in Sussex County, Delaware, to further enhance the reliability of its system. The 2016 System Reliability Project was included in Eastern Shore's January 2017 base rate case filing, for which a settlement agreement was filed with the FERC in December 2017. A discussion of the settlement agreement can be found below under "Regulatory Proceedings."
New Smyrna Beach, Florida Project
In the fourth quarter of 2017, Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), the Company's wholly-owned Florida intrastate pipeline subsidiary, started construction of a 14-mile transmission pipeline in Volusia County, Florida, that interconnects with Florida Gas Transmission Company's ("FGT") pipeline. Peninsula Pipeline entered into a 20-year agreement with Florida Public Utilities ("FPU"), which provides FPU with capacity to serve its current and planned customer growth. Peninsula Pipeline recognized $235,000 of gross margin from this expansion during the year and quarter ended December 31, 2017, and expects to recognize gross margin of approximately $1.4 million annually thereafter.
GRIP
GRIP is a natural gas pipe replacement program approved by the Florida Public Service Commission ("PSC"), designed to expedite the replacement of qualifying distribution mains and services (any material other than coated steel or plastic) to enhance the reliability and integrity of the Florida natural gas distribution systems. This program allows recovery, through regulated rates, of capital and other program-related costs, inclusive of a return on investment, associated with the replacement of the mains and services. Since the program's inception in August 2012, the Company has invested $113.6 million to replace 247 miles of qualifying distribution mains, including $10.8 million and $26.0 million during 2017 and 2016, respectively. GRIP generated additional gross margin of $1.9 million and $283,000 for the year and quarter ended December 31, 2017, compared to the same periods in 2016, respectively.
Eight Flags' CHP Plant
Eight Flags' CHP plant consists of a natural-gas-fired turbine and electric and steam generator on Amelia Island, Florida, which produces approximately 21 MW of base load power and 75,000 pounds per hour of residual steam. In June 2016, Eight Flags began selling power generated from the plant to FPU under a 20-year power purchase agreement for distribution to its retail electric customers. In July 2016, Eight Flags began selling steam, under a separate 20-year contract, to the industrial customer that owns the property on which the plant is located.
The CHP plant is powered by natural gas transported by FPU, through its distribution system, and by Peninsula Pipeline. For the year and quarter ended December 31, 2017, Eight Flags and other affiliates of Chesapeake Utilities generated $4.9 million and $180,000, respectively, in additional gross margin as a result of these services. The increase for the year ended December 31, 2017, includes $537,000 in gross margin from FPU and Peninsula Pipeline.
Regulatory Proceedings
Eastern Shore Rate Case
In December 2017, Eastern Shore filed an uncontested settlement agreement for its January 2017 base rate case filing with the FERC. Under the terms of the settlement agreement, Eastern Shore will recover the costs of its 2016 System Reliability Project, along with the cost of investments and expenses associated with various expansion, reliability and safety initiatives. Pursuant to the settlement agreement, which is now subject to the FERC's review and action, Eastern Shore will record and recognize an increase in annual base rates of approximately $9.8 million, prior to any federal tax reform impact. The settlement agreement prescribes the methodology for adjusting these rates as a result of tax reform. For the twelve and three months ended December 31, 2017, Eastern Shore recognized incremental gross margin of $3.7 million and $2.7 million, respectively.
Delaware Division Rate Case
In December 2016, the Delaware PSC approved a settlement agreement, which, among other things, provided for an increase in the Company's Delaware division revenue requirement of $2.3 million and a rate of return on common equity of 9.75 percent. The new authorized rates went into effect on January 1, 2017. For the year and three months ended December 31, 2017, the Company recorded incremental gross margin of approximately $831,000 and $413,000, respectively, related to the rate case.
Electric Limited Proceeding
In July 2017, FPU filed a petition with the Florida PSC for the recovery of a limited number of investments and associated costs related to reliability, safety and modernization initiatives for its electric distribution systems, as well as the investment and costs associated with the previously filed Florida Power & Light interconnect project. In December 2017, the Florida PSC approved FPU's electric limited proceeding filing via a settlement agreement, including a $1.6 million annualized rate increase effective for meter reads beginning in early January 2018. This increase will continue at least until the last billing cycle of December 2019. For the quarter and year ended December 31, 2017, additional margin of $94,000 was generated. The settlement agreement prescribes the methodology for adjusting the new rates as a result of the recent federal tax reform.
Major Projects and Initiatives Currently Underway
2017 Expansion Project
This project will expand Eastern Shore's firm service capacity by 26 percent, providing 61,162 Dts/day of additional firm natural gas transportation service on Eastern Shore's pipeline system with an additional 52,500 Dts/day of firm transportation service at certain Eastern Shore receipt facilities pursuant to precedent agreements entered into with existing customers. The Company expects to invest approximately $117.0 million in this expansion project, which will generate approximately $15.8 million of gross margin in the first full year after the new transportation services go into effect. In October 2017, the FERC issued a Certificate of Public Convenience and Necessity authorizing Eastern Shore to construct and operate the proposed 2017 Expansion Project. In December 2017, the TETLP interconnect was placed into service, as requested. In conjunction with this interconnect going into service, Eastern Shore recognized incremental gross margin of $433,000, including interim services, for the year ended December 31, 2017. The remaining segments of the 2017 Expansion Project are expected to be placed into service in various phases over the second through fourth quarters of 2018.
Northwest Florida Expansion Project
Peninsula Pipeline and the Company's Florida natural gas division are constructing a pipeline in Escambia County, Florida, that will interconnect with the FGT interstate pipeline. The project consists of 33 miles of 12-inch transmission line from the FGT interconnect along with 4.7 miles of 10-inch transmission line that will be operated by Peninsula Pipeline and 4.8 miles of 8-inch lateral distribution lines that will be operated by the Company's Florida natural gas division. The Company has signed agreements to serve two large customers and continues to market to other customers close to the facilities. The estimated annual gross margin from this project is $6.0 million, and the project is currently expected to be in service by the end of the second quarter of 2018. The Company is currently in negotiations with several customers to provide additional services that could, if finalized, necessitate a capacity increase in this expansion project and, therefore, generate additional gross margin.
(Palm Beach County) Belvedere, Florida Project
Peninsula Pipeline is constructing a pipeline in Palm Beach County, Florida, that will interconnect with FGT's pipeline. The project consists of approximately two miles of transmission pipe that will bring gas directly to FPU's distribution system in West Palm Beach. Completion of this project is expected by the end of the third quarter of 2018. Estimated annual gross margin associated with the project is approximately $600,000.
Other Natural Gas Growth - Distribution Operations
Customer growth for the Delmarva natural gas distribution operations generated $1.6 million and $594,000 in additional gross margin for the year and quarter ended December 31, 2017, respectively, compared to the same periods in 2016. The average number of residential customers on the Delmarva Peninsula increased by 3.8 percent in 2017 compared to 2016.
Florida natural gas distribution operations generated $1.2 million and $197,000 in additional gross margin for the year and quarter ended December 31, 2017, respectively, compared to the same periods in 2016, with approximately two-thirds of the margin growth generated from commercial and industrial customers and one-third of the margin growth generated from new residential customers.
Weather and Consumption
Colder temperatures during the fourth quarter of 2017 increased customer consumption and generated $1.9 million in additional gross margin compared to 2016. Although 2017 was warmer than the prior year, colder temperatures in the fourth quarter generated additional margin for the year of $578,000. Compared to normal, weather for the quarter and year ended 2017 was warmer, which reduced gross margin by $2.0 million and by $1.0 million for the year and fourth quarter, respectively. The following table summarizes the heating degree-days ('HDD") and cooling degree-days ("CDD") information for the years and quarters ended December 31, 2017 and 2016 and shows variances between actual and "Normal" (10-year average) HDD and CDD for those periods.
HDD and CDD Information
|
For the Periods Ended December 31, |
2017 |
2016 |
Variance |
Q4 2017 |
Q4 2016 |
Variance | |||||||||||
|
Delmarva |
|||||||||||||||||
|
Actual HDD |
3,800 |
3,979 |
(179) |
1,538 |
1,389 |
149 |
|||||||||||
|
10-Year Average HDD ("Normal") |
4,374 |
4,453 |
(79) |
1,529 |
1,533 |
(4) |
|||||||||||
|
Variance from Normal |
(574) |
(474) |
9 |
(144) |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual HDD |
533 |
672 |
(139) |
235 |
158 |
77 |
|||||||||||
|
10-Year Average HDD ("Normal") |
818 |
828 |
(10) |
263 |
275 |
(12) |
|||||||||||
|
Variance from Normal |
(285) |
(156) |
(28) |
(117) |
|||||||||||||
|
Ohio |
|||||||||||||||||
|
Actual HDD |
5,126 |
5,529 |
(403) |
2,057 |
1,936 |
121 |
|||||||||||
|
10-Year Average HDD ("Normal") |
5,914 |
5,918 |
(4) |
2,048 |
2,055 |
(7) |
|||||||||||
|
Variance from Normal |
(788) |
(389) |
9 |
(119) |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual CDD |
3,013 |
3,152 |
(139) |
407 |
360 |
47 |
|||||||||||
|
10-Year Average CDD ("Normal") |
2,865 |
2,820 |
45 |
286 |
272 |
14 |
|||||||||||
|
Variance from Normal |
148 |
332 |
121 |
88 |
|||||||||||||
Note: The Company continually refines and updates its weather calculations. These refinements may result in the annual impact varying from the aggregate of the quarterly variances previously disclosed.
Propane Results
The Company's Florida and Delmarva Peninsula propane distribution operations continue to pursue a multi-pronged growth strategy, which includes targeting retail and wholesale customer growth in existing markets, both organically and through acquisitions; incremental growth from recent and planned start-ups in new markets, targeting new community gas systems in high growth areas; further build-out of the Company's propane vehicular platform through its Alliance AutoGas fueling stations; and optimization of its supply portfolio to generate incremental margin opportunities. Over the years, the Company has been focused on meeting customer energy demand. It has created a portfolio of offerings regardless of whether the customer is served via a pipeline or through an individual tank. Alliance AutoGas is the Company's most recent offering that meets customers' demands for clean-burning fuel alternatives.
These operations generated $2.8 million and $1.4 million in incremental margin for the year and quarter ended December 31, 2017, respectively, compared to the same periods in 2016. Higher volume due to colder weather in the latter part of December 2017 was the most significant driver for the quarter. In addition, successful marketing initiatives led to increased volumes sold and revenues from service contracts. Supply management initiatives, including favorable hedging of propane purchases, have facilitated improvement in retail propane margins as well as opportunities to generate incremental margin from wholesale sales.
The following tables summarize gross margin for the Company's propane distribution operations for the year and quarter ended December 31, 2017:
|
Gross Margin Increase | |||
|
For the Year Ended |
12/31/2017 | ||
|
Growth in wholesale propane margins and sales |
$ |
678 |
|
|
Increased customer consumption driven by growth and other factors |
657 |
||
|
Higher retail propane margins per gallon |
645 |
||
|
Higher service contract revenue |
248 |
||
|
Additional growth in Alliance AutoGas |
171 |
||
|
Additional customer consumption - weather |
122 |
||
|
Other |
279 |
||
|
$ |
2,800 |
||
|
For the Quarter Ended |
12/31/2017 | ||
|
Additional customer consumption - weather |
$ |
694 |
|
|
Higher retail propane margins per gallon |
527 |
||
|
Increased customer consumption driven by growth and other factors |
97 |
||
|
Other |
82 |
||
|
$ |
1,400 |
||
PESCO
PESCO markets and sells natural gas to wholesale, industrial and commercial customers and manages natural gas storage and transportation assets in several regions. PESCO also provides management of storage and transportation assets for natural gas producers and regulated utilities. These management transactions typically involve the release of storage and/or transportation capacity in combination with either an obligation to purchase and/or deliver natural gas.
In conjunction with the active management of these contracts, PESCO generates financial margin by identifying market opportunities and simultaneously entering into natural gas purchase/sale, storage or transportation contracts and/or financial derivatives contracts. The financial derivatives contracts consist primarily of exchange-traded futures that are used to manage volatility in natural gas market prices. Volatility in PESCO's recorded gross margin and operating income can occur over periods of time due to changes in the value of financial derivatives contracts prior to the time of the settlement of the financial derivatives and the purchase or sale of the underlying physical commodity. Derivatives accounting does not impact the economic gains or losses arising from the purchase/sale contracts. PESCO's results may also fluctuate based on the actual demand of its customers, relative to its initial estimates of their demand, and PESCO's ability to manage its supply portfolio considering weather and other factors, including pipeline constraints.
In April 2017, PESCO entered into 3-year asset management agreements with the Company's Delmarva Peninsula natural gas distribution operations, whereby PESCO manages a portion of their natural gas transportation and storage capacity. In the fourth quarter, PESCO executed financial derivatives contracts to lock in margin associated with a specified quantity of natural gas to be delivered in the first quarter of 2018. As regional natural gas prices rose suddenly at the end of the fourth quarter, the financial derivatives contracts were valued based on MTM accounting at year end, and an unrealized loss was recorded. Upon their settlement during the first quarter of 2018, these derivatives contracts will be matched against the physical contracts with the margin realized at that time.
For the year and quarter ended December 31, 2017, PESCO's gross margin decreased by $2.4 million and $4.2 million, respectively, largely due to the $5.8 million of unrealized MTM loss related to financial derivatives contracts that were valued at the end of the year. This loss was offset by $3.4 million and $1.6 million for the year and quarter ended December 31, 2017, respectively, from: (a) additional gross margin generated primarily from natural gas sales to end users within one Columbia Gas of Ohio customer pool under a supplier agreement, which expired on March 31, 2017, and (b) increased margin from commercial and industrial customers served in Florida.
PESCO utilizes hedge accounting to better match the hedged items and the hedging instruments, when appropriate, and, in those situations where hedge accounting is not appropriate, the Company utilizes MTM accounting. The Company will be adopting the updated hedge accounting standard in 2018, which it expects will reduce the MTM volatility in PESCO's results due to better alignment of risk management activities and financial reporting, risk component hedging and certain other simplifications of hedge accounting guidance. PESCO's results for the year and fourth quarter of 2017, adjusted for the unrealized MTM loss were as follows:
|
Gross Margin |
Operating Income | ||||||||||||||
|
For the period ended December 31, |
2017 |
Fourth |
2017 |
Fourth | |||||||||||
|
(in thousands) |
|||||||||||||||
|
As Reported |
$ |
2,212 |
$ |
(3,537) |
$ |
(3,147) |
$ |
(5,328) |
|||||||
|
Unrealized MTM loss |
5,783 |
5,765 |
5,783 |
5,765 |
|||||||||||
|
Adjusted totals excluding unrealized MTM loss |
$ |
7,995 |
$ |
2,228 |
$ |
2,636 |
$ |
437 |
|||||||
Xeron
As disclosed previously, Xeron's operations were wound down during the second quarter of 2017. Operating income for the year and quarter ended December 31, 2017, improved by $880,000 and $854,000, respectively, due to the absence of the trading losses experienced in 2016. As part of the wind down, the Company incurred non-recurring employee severance costs and other costs associated with the termination of leased office space in Houston, Texas. These expenses were recorded in other expense. The Company does not anticipate incurring any additional costs that will have a material impact associated with winding down Xeron's operations.
Positioning the Company for Future Growth
Resource Allocation
To support and continue its growth, the Company has expanded, and will continue to expand, its resources and capabilities. Eastern Shore continues to significantly expand its transmission system, and has therefore increased its staffing. Growth in non-regulated energy businesses, including Aspire Energy, PESCO and Eight Flags, requires additional staff as well as corporate resources to support the increased level of business operations. Finally, to allow the Company to continue to identify and move growth initiatives forward and to manage their integration into Chesapeake Utilities' growing portfolio, resources have been added in the Company's corporate shared services departments. In the twelve and three months ended December 31, 2017, the Company's staffing and associated costs increased by $8.0 million and $3.3 million, or 10.4 percent and 4.4 percent, respectively, compared to the same periods in 2016. The Company requested recovery of most of Eastern Shore's increased staffing costs in its 2017 rate case filing, for which we have filed an uncontested settlement agreement with the FERC. The Company is prudently managing the pace and magnitude of the investments being made, while ensuring that it appropriately expands its human resources and systems capabilities to manage current growth and to identify and capitalize on future growth opportunities. In support of these financial goals, the Company continues to pursue investments that are typically earnings accretive within the first twelve months.
Financing the Growth
Chesapeake Utilities' target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. This target capital structure ensures that the Company maintains a strong balance sheet to support continued growth. Over the past several years, the Company has been deploying increased amounts of capital on new projects, many of which have longer construction periods. The Company seeks to align the permanent financing of these capital projects with the in-service dates to the extent feasible.
Accordingly, the Company has utilized increasing amounts of short-term debt to fund these projects. In 2016, shortly after the completion of Eight Flags' CHP plant and several other key growth projects, the Company completed a $59.8 million public offering of its common stock, pursuant to which the number of outstanding shares increased by 960,488. This increase in outstanding shares lowered EPS by approximately $0.16 per share for the twelve months ended December 31, 2017.
As several large projects were completed in 2017, the Company also refinanced $70.0 million of short-term debt as 3.25 percent senior notes. While very competitively priced, the refinancing resulted in increased interest expense of $1.6 million, or $0.06 per share. The Company has also recently executed a $100 million shelf agreement with New York Life Investors LLC, pursuant to which $100 million of new senior notes will be issued in two tranches in 2018 at an average interest rate of 3.53 percent. The Company expects to access additional permanent capital to align the financing with new investments and to maintain a solid balance sheet to support future capital deployment.
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) For the Periods Ended December 31, 2017 and 2016 (in thousands, except shares and per share data) | |||||||||||||||
|
Year Ended |
Fourth Quarter | ||||||||||||||
|
2017 |
2016 |
2017 |
2016 | ||||||||||||
|
Operating Revenues |
|||||||||||||||
|
Regulated Energy |
$ |
326,310 |
$ |
305,689 |
$ |
87,957 |
$ |
79,059 |
|||||||
|
Unregulated Energy |
324,595 |
203,778 |
104,133 |
67,417 |
|||||||||||
|
Other businesses and eliminations |
(33,322) |
(10,607) |
(11,687) |
(4,602) |
|||||||||||
|
Total Operating Revenues |
617,583 |
498,860 |
180,403 |
141,874 |
|||||||||||
|
Operating Expenses |
|||||||||||||||
|
Regulated energy cost of sales |
118,769 |
109,609 |
31,563 |
28,425 |
|||||||||||
|
Unregulated energy and other cost of sales |
219,145 |
128,434 |
73,819 |
43,291 |
|||||||||||
|
Operations |
127,571 |
117,571 |
34,582 |
32,200 |
|||||||||||
|
Maintenance |
12,701 |
12,391 |
3,331 |
3,466 |
|||||||||||
|
Gain from a settlement |
(130) |
(130) |
— |
— |
|||||||||||
|
Depreciation and amortization |
36,599 |
32,159 |
9,331 |
8,667 |
|||||||||||
|
Other taxes |
17,085 |
14,730 |
4,513 |
4,006 |
|||||||||||
|
Total operating expenses |
531,740 |
414,764 |
157,139 |
120,055 |
|||||||||||
|
Operating Income |
85,843 |
84,096 |
23,263 |
21,819 |
|||||||||||
|
Other expense |
(765) |
(441) |
(121) |
(372) |
|||||||||||
|
Interest charges |
12,645 |
10,639 |
3,513 |
2,643 |
|||||||||||
|
Income Before Income Taxes |
72,433 |
73,016 |
19,629 |
18,804 |
|||||||||||
|
Income taxes |
14,309 |
28,341 |
(6,472) |
6,941 |
|||||||||||
|
Net Income |
$ |
58,124 |
$ |
44,675 |
$ |
26,101 |
$ |
11,863 |
|||||||
|
Weighted Average Common Shares Outstanding: |
|||||||||||||||
|
Basic |
16,336,789 |
15,570,539 |
16,344,442 |
16,302,021 |
|||||||||||
|
Diluted |
16,383,352 |
15,613,091 |
16,397,332 |
16,349,110 |
|||||||||||
|
Earnings Per Share of Common Stock: |
|||||||||||||||
|
Basic |
$ |
3.56 |
$ |
2.87 |
$ |
1.60 |
$ |
0.73 |
|||||||
|
Diluted |
$ |
3.55 |
$ |
2.86 |
$ |
1.59 |
$ |
0.73 |
|||||||
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited) | ||||||||
|
As of December 31, | ||||||||
|
Assets |
2017 |
2016 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Property, Plant and Equipment |
||||||||
|
Regulated energy |
$ |
1,073,736 |
$ |
957,681 |
||||
|
Unregulated energy |
210,682 |
196,800 |
||||||
|
Other |
27,699 |
21,114 |
||||||
|
Total property, plant and equipment |
1,312,117 |
1,175,595 |
||||||
|
Less: Accumulated depreciation and amortization |
(270,599) |
(245,207) |
||||||
|
Plus: Construction work in progress |
84,509 |
56,276 |
||||||
|
Net property, plant and equipment |
1,126,027 |
986,664 |
||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
5,614 |
4,178 |
||||||
|
Accounts receivable (less allowance for uncollectible accounts of $936 and $909, respectively) |
77,223 |
62,803 |
||||||
|
Accrued revenue |
22,279 |
16,986 |
||||||
|
Propane inventory, at average cost |
8,324 |
6,457 |
||||||
|
Other inventory, at average cost |
12,022 |
4,576 |
||||||
|
Regulatory assets |
10,930 |
7,694 |
||||||
|
Storage gas prepayments |
5,250 |
5,484 |
||||||
|
Income taxes receivable |
14,778 |
22,888 |
||||||
|
Prepaid expenses |
13,621 |
6,792 |
||||||
|
Derivative assets, at fair value |
1,286 |
823 |
||||||
|
Other current assets |
7,260 |
2,470 |
||||||
|
Total current assets |
178,587 |
141,151 |
||||||
|
Deferred Charges and Other Assets |
||||||||
|
Goodwill |
22,104 |
15,070 |
||||||
|
Other intangible assets, net |
4,686 |
1,843 |
||||||
|
Investments, at fair value |
6,756 |
4,902 |
||||||
|
Regulatory assets |
75,575 |
76,803 |
||||||
|
Receivables and other deferred charges |
3,699 |
2,786 |
||||||
|
Total deferred charges and other assets |
112,820 |
101,404 |
||||||
|
Total Assets |
$ |
1,417,434 |
$ |
1,229,219 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited) | ||||||||||
|
As of December 31, | ||||||||||
|
Capitalization and Liabilities |
2017 |
2016 | ||||||||
|
(in thousands, except shares and per share data) |
||||||||||
|
Capitalization |
||||||||||
|
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding |
$ |
— |
$ |
— |
||||||
|
Common stock, par value $0.4867 per share (authorized 50,000,000 shares) |
7,955 |
7,935 |
||||||||
|
Additional paid-in capital |
253,470 |
250,967 |
||||||||
|
Retained earnings |
229,141 |
192,062 |
||||||||
|
Accumulated other comprehensive loss |
(4,272) |
(4,878) |
||||||||
|
Deferred compensation obligation |
3,395 |
2,416 |
||||||||
|
Treasury stock |
(3,395) |
(2,416) |
||||||||
|
Total stockholders' equity |
486,294 |
446,086 |
||||||||
|
Long-term debt, net of current maturities |
197,395 |
136,954 |
||||||||
|
Total capitalization |
683,689 |
583,040 |
||||||||
|
Current Liabilities |
||||||||||
|
Current portion of long-term debt |
9,421 |
12,099 |
||||||||
|
Short-term borrowing |
250,969 |
209,871 |
||||||||
|
Accounts payable |
74,688 |
56,935 |
||||||||
|
Customer deposits and refunds |
34,751 |
29,238 |
||||||||
|
Accrued interest |
1,742 |
1,312 |
||||||||
|
Dividends payable |
5,312 |
4,973 |
||||||||
|
Accrued compensation |
13,112 |
10,496 |
||||||||
|
Regulatory liabilities |
6,485 |
1,291 |
||||||||
|
Derivative liabilities, at fair value |
6,247 |
773 |
||||||||
|
Other accrued liabilities |
10,273 |
7,063 |
||||||||
|
Total current liabilities |
413,000 |
334,051 |
||||||||
|
Deferred Credits and Other Liabilities |
||||||||||
|
Deferred income taxes |
135,850 |
222,894 |
||||||||
|
Regulatory liabilities |
140,978 |
43,064 |
||||||||
|
Environmental liabilities |
8,263 |
8,592 |
||||||||
|
Other pension and benefit costs |
29,699 |
32,828 |
||||||||
|
Deferred investment tax credits and Other liabilities |
5,955 |
4,750 |
||||||||
|
Total deferred credits and other liabilities |
320,745 |
312,128 |
||||||||
|
Total Capitalization and Liabilities |
$ |
1,417,434 |
$ |
1,229,219 |
||||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Three Months Ended December 31, 2017 |
For the Three Months Ended December 31, 2016 | |||||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake Utilities' Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution |
Delmarva NG Distribution |
Chesapeake Utilities' Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution | |||||||||||||||||||||||||
|
Operating Revenues |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
14,854 |
$ |
1,435 |
$ |
8,157 |
$ |
10,166 |
$ |
12,767 |
$ |
1,312 |
$ |
7,442 |
$ |
9,548 |
||||||||||||||||
|
Commercial |
7,860 |
1,493 |
7,170 |
9,951 |
6,697 |
1,323 |
7,657 |
9,890 |
||||||||||||||||||||||||
|
Industrial |
2,236 |
1,676 |
5,921 |
1,609 |
2,146 |
1,666 |
5,185 |
1,343 |
||||||||||||||||||||||||
|
Other (1) |
5,090 |
1,039 |
(444) |
(1,640) |
2,574 |
1,040 |
348 |
(2,095) |
||||||||||||||||||||||||
|
Total Operating Revenues |
$ |
30,040 |
$ |
5,643 |
$ |
20,804 |
$ |
20,086 |
$ |
24,184 |
$ |
5,341 |
$ |
20,632 |
$ |
18,686 |
||||||||||||||||
|
Volumes (in Dts for natural gas and MWHs for electric) |
||||||||||||||||||||||||||||||||
|
Residential |
792,602 |
86,682 |
327,815 |
66,998 |
732,491 |
82,560 |
314,989 |
61,963 |
||||||||||||||||||||||||
|
Commercial |
829,713 |
1,165,579 |
436,272 |
74,689 |
867,780 |
1,942,337 |
499,922 |
71,258 |
||||||||||||||||||||||||
|
Industrial |
1,375,672 |
3,042,088 |
1,171,381 |
15,130 |
1,352,489 |
2,600,411 |
1,106,017 |
12,230 |
||||||||||||||||||||||||
|
Other |
29,142 |
— |
593,768 |
1,885 |
24,514 |
— |
451,014 |
1,906 |
||||||||||||||||||||||||
|
Total |
3,027,129 |
4,294,349 |
2,529,236 |
158,702 |
2,977,274 |
4,625,308 |
2,371,942 |
147,357 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
69,532 |
15,967 |
54,704 |
24,648 |
66,867 |
15,453 |
53,555 |
24,351 |
||||||||||||||||||||||||
|
Commercial |
6,848 |
1,435 |
3,962 |
9,301 |
6,746 |
1,399 |
4,200 |
7,420 |
||||||||||||||||||||||||
|
Industrial |
155 |
80 |
2,186 |
2 |
131 |
73 |
1,864 |
2 |
||||||||||||||||||||||||
|
Other |
3 |
— |
3 |
— |
6 |
— |
2 |
— |
||||||||||||||||||||||||
|
Total |
76,538 |
17,482 |
60,855 |
33,951 |
73,750 |
16,925 |
59,621 |
31,773 |
||||||||||||||||||||||||
|
For the Year Ended December 31, 2017 |
For the Year Ended December 31, 2016 | |||||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake Utilities' Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution |
Delmarva NG Distribution |
Chesapeake Utilities' Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution | |||||||||||||||||||||||||
|
Operating Revenues |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
57,365 |
$ |
5,600 |
$ |
33,103 |
$ |
44,082 |
$ |
49,841 |
$ |
5,289 |
$ |
28,040 |
$ |
46,459 |
||||||||||||||||
|
Commercial |
31,585 |
5,756 |
30,283 |
41,141 |
27,274 |
5,171 |
28,569 |
41,704 |
||||||||||||||||||||||||
|
Industrial |
7,619 |
6,535 |
21,647 |
3,561 |
7,420 |
6,474 |
20,583 |
3,497 |
||||||||||||||||||||||||
|
Other (1) |
3,504 |
3,858 |
(5,353) |
(5,918) |
1,409 |
3,704 |
(2,266) |
(7,505) |
||||||||||||||||||||||||
|
Total Operating Revenues |
$ |
100,073 |
$ |
21,749 |
$ |
79,680 |
$ |
82,866 |
$ |
85,944 |
$ |
20,638 |
$ |
74,926 |
$ |
84,155 |
||||||||||||||||
|
Volumes (in Dts for natural gas and MWHs for electric) |
||||||||||||||||||||||||||||||||
|
Residential |
3,368,603 |
340,570 |
1,350,413 |
291,510 |
3,227,594 |
342,964 |
1,308,906 |
303,654 |
||||||||||||||||||||||||
|
Commercial |
3,274,975 |
5,156,823 |
1,863,147 |
304,235 |
3,407,184 |
6,060,468 |
2,133,842 |
304,458 |
||||||||||||||||||||||||
|
Industrial |
5,125,633 |
11,561,309 |
4,543,775 |
27,380 |
5,032,872 |
11,005,835 |
4,294,573 |
29,700 |
||||||||||||||||||||||||
|
Other |
95,415 |
— |
1,875,761 |
7,511 |
92,807 |
— |
846,115 |
8,484 |
||||||||||||||||||||||||
|
Total |
11,864,626 |
17,058,702 |
9,633,096 |
630,636 |
11,760,457 |
17,409,267 |
8,583,436 |
646,296 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
68,699 |
15,796 |
54,410 |
24,574 |
66,175 |
15,340 |
53,300 |
24,289 |
||||||||||||||||||||||||
|
Commercial |
6,845 |
1,421 |
4,054 |
7,908 |
6,746 |
1,393 |
4,236 |
7,404 |
||||||||||||||||||||||||
|
Industrial |
147 |
79 |
2,078 |
2 |
125 |
73 |
1,786 |
2 |
||||||||||||||||||||||||
|
Other |
5 |
— |
3 |
— |
5 |
— |
2 |
— |
||||||||||||||||||||||||
|
Total |
75,696 |
17,296 |
60,545 |
32,484 |
73,051 |
16,806 |
59,324 |
31,695 |
||||||||||||||||||||||||
|
(1) Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties and adjustments for pass-through taxes. | ||||||||||||||||||||||||||||||||
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-reports-fourth-quarter-and-fiscal-year-2017-results-300606239.html
SOURCE Chesapeake Utilities Corporation
Article Date
2/28/2018Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., Feb. 27, 2018 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.325 per share on the Company's common stock. The $0.325 per share dividend will be paid on April 5, 2018 to all shareholders of record at the close of business on March 15, 2018.
Chesapeake has paid dividends to its shareholders without interruption for 57 years. During those 57 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-quarterly-dividend-300605196.html
SOURCE Chesapeake Utilities Corporation
Article Date
2/27/2018Chesapeake Utilities Corporation To Host Conference Call To Review Fourth Quarter And Annual 2017 Financial Results
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., Feb. 8, 2018 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, March 2, 2018, at 10:30 a.m. ET to discuss the Company's financial results for the fourth quarter and year ended December 31, 2017. The earnings press release will be issued on Wednesday, February 28, 2018, after the market closes.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2017 Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-fourth-quarter-and-annual-2017-financial-results-300596186.html
SOURCE Chesapeake Utilities Corporation
Article Date
2/8/2018Eastern Shore Natural Gas Company Files Uncontested Rate Case Settlement Agreement
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., Dec. 13, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today announced that Eastern Shore Natural Gas Company (ESNG), its interstate natural gas transmission subsidiary, filed with the Federal Energy Regulatory Commission (Commission) an uncontested settlement agreement associated with its current rate case proceeding.
As a result of the settlement agreement, which is now subject to Commission review and action, ESNG will record an increase in base rates of approximately $9.8 million.
Under the terms of the settlement agreement, ESNG will recover the costs of its System Reliability Project (placed into service in 2017), along with the cost of investments and expenses associated with various expansion, reliability and safety initiatives.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
About Eastern Shore Natural Gas Company
Eastern Shore Natural Gas Company, a subsidiary of Chesapeake Utilities Corporation, owns and operates a 448-mile interstate pipeline that transports natural gas from various points in Pennsylvania to customers in Delaware, Maryland and Pennsylvania. For more information, visit www.esng.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Steve Thompson
Senior Vice President, Chesapeake Utilities Corporation and
President, Eastern Shore Natural Gas Company
302.734.6799
Beth Cooper
Senior Vice President and Chief Financial Officer
Chesapeake Utilities Corporation
302.734.6799
View original content:http://www.prnewswire.com/news-releases/eastern-shore-natural-gas-company-files-uncontested-rate-case-settlement-agreement-300571091.html
SOURCE Chesapeake Utilities Corporation
Article Date
12/13/2017Chesapeake Utilities Corporation Honored With 2017 Governance Team of the Year Award
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., Nov. 17, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) announced today that its Corporate Governance team was recognized as Governance Team of the Year for small to mid-cap sized companies. The team took top honors at Corporate Secretary magazine's tenth annual Corporate Governance Awards ceremony in New York City on November 9. This prestigious award celebrates the best overall corporate governance team among small to mid-cap companies throughout the country.
"The Governance Team of the Year award recognizes our commitment to the highest ethical standards, compliance and best practices in corporate governance, which are embedded in the Company's culture and values," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "The foundation of any public company is its commitment, as demonstrated by our Corporate Governance team, to do its very best for its stakeholders, including customers, employees, investors and the communities we serve."
This is the third year the Company has been recognized by Corporate Secretary magazine for its outstanding Corporate Governance practices, and the second time it has taken top honors. This year, a record number of nominations were received in the ten-year history of the ceremony. Other award winners included Apple, Eli Lilly and Company, Honeywell, Intel Corporation, Microsoft, PepsiCo, Visa and USAA.
"Congratulations to Chesapeake Utilities Corporation for winning Governance Team of the Year (small to mid-cap) at last week's Corporate Governance Awards," said Ben Maiden, editor, Corporate Secretary magazine. "The Corporate Governance team did excellent work. Well done, again."
"It was a wonderful night of achievement, recognition and celebration of some of the best in corporate governance, with a commitment to a culture that promotes integrity and accountability," said James F. Moriarty, Senior Vice President, General Counsel and Corporate Secretary of Chesapeake Utilities Corporation. "Congratulations to Stacie Roberts, Director of Corporate Governance, and the entire team for their hard work, passion for excellence, and for making a positive contribution each and every day."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Mike Stock
Senior Director, Corporate Communications
Chesapeake Utilities Corporation
302.736.7808
mstock@chpk.com
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-honored-with-2017-governance-team-of-the-year-award-300558668.html
SOURCE Chesapeake Utilities Corporation
Article Date
11/17/2017Chesapeake Utilities Corporation Reports Third Quarter Results
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., Nov. 9, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today reported third quarter financial results. The Company's net income for the quarter ended September 30, 2017 was $6.8 million, compared to $4.4 million for the same quarter of 2016. Earnings per share ("EPS") for the quarter ended September 30, 2017 were $0.42 per share, compared to $0.29 per share for the same quarter of 2016. The increase in net income reflected margin growth across business units for both the Regulated Energy and Unregulated Energy segments, as well as lower operating and maintenance expenses for the quarter.
For the nine months ended September 30, 2017, the Company reported net income of $32.0 million, or $1.96 per share. This represents a decrease of $789,000, or $0.18 per share, compared to the same period in 2016. Higher margins from the Eight Flags Energy, LLC ("Eight Flags") combined heat and power ("CHP") plant, Peninsula Energy Services Company, Inc. ("PESCO"), and Aspire Energy of Ohio, LLC ("Aspire Energy"), new services and customer growth in the natural gas transmission and distribution operations in Florida and on the Delmarva Peninsula, and new rates for Eastern Shore Natural Gas Company ("Eastern Shore") offset the increase in higher expenses to generate and support growth and the impact of warmer weather. An increase in outstanding shares as a result of the equity issuance in September 2016 lowered earnings per share by approximately $0.12 per share for the nine months ended September 30, 2017.
"Our solid results for the third quarter reflect the diverse sources of new gross margin throughout our Company," stated Michael P. McMasters, President and Chief Executive Officer. "Recently completed growth projects are adding value for our stockholders. In the near term, we will commence construction of Eastern Shore's largest ever expansion project, expected to be completed in early 2018, as well other projects that will cultivate future growth," he added. "Investments in system expansion, acquisitions, new service offerings and unique projects like Eight Flags, enhance the continued growth in customers and deliveries in our natural gas distribution and transmission businesses. Our employees continue to excel in identifying new opportunities for growth, and profitably managing current growth. We are also maintaining operating efficiency while providing safe, reliable service to our customers," he concluded.
A more detailed discussion and analysis of the Company's results for each segment is provided in the following pages.
Comparative Results for the Quarters Ended September 30, 2017 and 2016
Operating income for the third quarter increased by $4.1 million to $14.2 million, compared to the same period in 2016, driven by higher retail propane sales volumes and margins, implementation of new rates for Eastern Shore (subject to refund), additional margin from the Gas Reliability Infrastructure Program ("GRIP"), and continued growth from the Company's Delmarva and Florida natural gas distribution operations. Gross margin increased by $4.6 million, or 8.2 percent, which was offset by an increase in other operating expenses of $473,000, or 1.0 percent.
Regulated Energy Segment
Operating income for the Regulated Energy segment increased by $2.1 million, or 15.7 percent, compared to the same period in 2016. Higher operating income resulted from increased gross margin of $1.5 million during the quarter, or 3.4 percent, and a decrease in other operating expenses of $519,000.
The significant components of the $1.5 million gross margin increase included:
The significant factors contributing to the net decrease of $519,000 in other operating expenses included:
Unregulated Energy Segment
Operating income for the Unregulated Energy segment increased by $2.1 million, or 67.9 percent, compared to the same period in 2016. Gross margin increased by $3.1 million, or 30.1 percent, which was offset by an increase of $1.0 million, or 7.4 percent, in other operating expenses.
The significant components of the $3.1 million gross margin increase were as follows:
The principal components of the $1.0 million increase in other operating expenses were: $730,000 in higher staffing and associated costs for additional personnel to support growth, $293,000 in expenses associated with the incremental margin from Eight Flags, and $347,000 in higher depreciation, amortization and property tax costs due to increased capital investments and amortization of intangible assets acquired through acquisitions in 2017.
Comparative Results for the Nine Months Ended September 30, 2017 and 2016
Operating income for the nine months ended September 30, 2017 increased by $303,000 to $62.6 million, compared to $62.3 million for the same period in 2016. Gross margin increased by $14.0 million, or 7.3 percent, net of the negative impact of weather, which reduced margin by approximately $1.8 million for the first nine months. Other operating expenses increased by $13.7 million, or 10.7 percent, due primarily to a $4.3 million increase in depreciation, amortization and property taxes and a $9.4 million increase in other operating expenses to support growth.
Regulated Energy Segment
Operating income for the Regulated Energy segment decreased by $745,000, or 1.4 percent, compared to the same period in 2016, due principally to weather and the level and timing of costs associated with growth. Gross margin increased by $5.7 million, despite the impact of weather, which reduced margin by approximately $850,000 for the nine months ended September 30, 2017. The $3.5 million increase in depreciation, amortization and taxes and $3.0 million increase in other operating expenses largely reflect costs associated with recently completed and planned growth projects. Of the total $6.4 million increase in other operating expenses, $4.7 million is associated with Eastern Shore's recently completed projects as well as initiatives that are currently underway.
The significant components of the $5.7 million gross margin increase included:
The foregoing increases were offset by a decrease in gross margin of $1.2 million from lower customer consumption of energy for the Company's distribution operations in Florida and on the Delmarva Peninsula, due primarily to weather, particularly warmer weather during the first quarter.
The significant components of the $6.4 million increase in other operating expenses included:
Unregulated Energy Segment
Operating income for the Unregulated Energy segment for the nine months ended September 30, 2017 was $10.5 million, an increase of $1.2 million, or 13.3 percent, compared to the same period in 2016. Gross margin increased by $8.4 million, or 18.6 percent, which was offset by an increase of $7.2 million, or 20.0 percent, in operating expenses for the nine months ended September 30, 2017.
The significant components of the $8.4 million gross margin increase were as follows:
The significant components of the $7.2 million increase in other operating expenses included:
The Company also incurred $367,000 in non-operating expenses to complete the wind-down of Xeron's operations.
Matters discussed 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 2016 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
The discussions of the results use the term "gross margin," a non-Generally Accepted Accounting Principles ("GAAP") financial measure, which management uses to evaluate the performance of the Company's business segments. For an explanation of the calculation of "gross margin," see the footnote to the Financial Summary.
Unless otherwise noted, earnings per share are presented on a diluted basis.
Conference Call
Chesapeake Utilities will host a conference call on Friday, November 10, 2017, at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter and nine months ended September 30, 2017. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2017 Third Quarter Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audio cast section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary (in thousands, except per share data) | |||||||||||||||
|
Three Months Ended |
Nine Months Ended | ||||||||||||||
|
September 30, |
September 30, | ||||||||||||||
|
2017 |
2016 |
2017 |
2016 | ||||||||||||
|
Gross Margin (1) |
|||||||||||||||
|
Regulated Energy segment |
$ |
46,909 |
$ |
45,375 |
$ |
151,147 |
$ |
145,446 |
|||||||
|
Unregulated Energy segment |
13,272 |
10,202 |
53,827 |
45,380 |
|||||||||||
|
Other businesses and eliminations |
(105) |
(57) |
(325) |
(166) |
|||||||||||
|
Total Gross Margin |
$ |
60,076 |
$ |
55,520 |
$ |
204,649 |
$ |
190,660 |
|||||||
|
Operating Income |
|||||||||||||||
|
Regulated Energy segment |
$ |
15,168 |
$ |
13,115 |
$ |
51,915 |
$ |
52,660 |
|||||||
|
Unregulated Energy segment |
(989) |
(3,080) |
10,504 |
9,267 |
|||||||||||
|
Other businesses and eliminations |
60 |
121 |
161 |
350 |
|||||||||||
|
Total Operating Income |
14,239 |
10,156 |
62,580 |
62,277 |
|||||||||||
|
Other Income (Expense), net |
239 |
(28) |
(643) |
(68) |
|||||||||||
|
Interest Charges |
3,321 |
2,722 |
9,133 |
7,996 |
|||||||||||
|
Pre-tax Income |
11,157 |
7,406 |
52,804 |
54,213 |
|||||||||||
|
Income Taxes |
4,324 |
2,990 |
20,781 |
21,401 |
|||||||||||
|
Net Income |
$ |
6,833 |
$ |
4,416 |
$ |
32,023 |
$ |
32,812 |
|||||||
|
Earnings Per Share of Common Stock |
|||||||||||||||
|
Basic |
$ |
0.42 |
$ |
0.29 |
$ |
1.96 |
$ |
2.14 |
|||||||
|
Diluted |
$ |
0.42 |
$ |
0.29 |
$ |
1.96 |
$ |
2.14 |
|||||||
|
(1) "Gross margin" is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. The Company's management uses gross margin in measuring its business units' performance. Other companies may calculate gross margin in a different manner. | |||||||||||||||
|
Financial Summary Highlights Key variances, between the three months ended September 30, 2016 and 2017, included: | ||||||||||||
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Third Quarter of 2016 Reported Results |
$ |
7,406 |
$ |
4,416 |
$ |
0.29 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
Absence of Xeron's third quarter 2016 loss |
545 |
334 |
0.02 |
|||||||||
|
Weather impact |
(333) |
(204) |
(0.01) |
|||||||||
|
212 |
130 |
0.01 |
||||||||||
|
Increased Gross Margins: |
||||||||||||
|
Customer consumption (non-weather) |
1,166 |
714 |
0.05 |
|||||||||
|
Implementation of new rates for Eastern Shore* |
1,020 |
625 |
0.04 |
|||||||||
|
Retail propane margins |
440 |
270 |
0.02 |
|||||||||
|
GRIP* |
406 |
249 |
0.02 |
|||||||||
|
Natural gas growth (excluding service expansions) |
347 |
213 |
0.01 |
|||||||||
|
Eight Flags' CHP plant |
304 |
186 |
0.01 |
|||||||||
|
Pricing amendments to Aspire Energy's long-term agreements |
291 |
178 |
0.01 |
|||||||||
|
Higher wholesale propane volumes and margins |
271 |
166 |
0.01 |
|||||||||
|
4,245 |
2,601 |
0.17 |
||||||||||
|
Decreased (Increased) Other Operating Expenses: |
||||||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital |
(1,710) |
(1,047) |
(0.07) |
|||||||||
|
Lower outside services and facilities maintenance costs |
1,678 |
1,028 |
0.07 |
|||||||||
|
Higher payroll expense |
(913) |
(559) |
(0.04) |
|||||||||
|
Lower benefit and other employee-related expenses |
295 |
181 |
0.01 |
|||||||||
|
Eight Flags' operating expenses |
293 |
179 |
0.01 |
|||||||||
|
(357) |
(218) |
(0.02) |
||||||||||
|
Net other changes |
(349) |
(96) |
(0.01) |
|||||||||
|
(349) |
(96) |
(0.01) |
||||||||||
|
EPS impact of increase in outstanding shares due to September 2016 offering |
— |
— |
(0.02) |
|||||||||
|
Third Quarter of 2017 Reported Results |
$ |
11,157 |
$ |
6,833 |
$ |
0.42 |
||||||
|
*See the Major Projects and Initiatives table later in this press release. | ||||||||||||
Key variances, between the nine months ended September 30, 2016 and 2017, included:
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Nine Months Ended September 30, 2016 Reported Results |
$ |
54,213 |
$ |
32,812 |
$ |
2.14 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
Weather impact |
(1,782) |
(1,081) |
(0.07) |
|||||||||
|
Wind-down and absence of loss from Xeron operations |
(341) |
(207) |
(0.01) |
|||||||||
|
(2,123) |
(1,288) |
(0.08) |
||||||||||
|
Increased Gross Margins: |
||||||||||||
|
Eight Flags' CHP plant |
4,721 |
2,863 |
0.19 |
|||||||||
|
Natural gas marketing |
1,760 |
1,067 |
0.07 |
|||||||||
|
GRIP* |
1,619 |
982 |
0.06 |
|||||||||
|
Natural gas growth (excluding service expansions) |
1,574 |
955 |
0.06 |
|||||||||
|
Service expansions* |
1,371 |
831 |
0.05 |
|||||||||
|
Pricing amendments to Aspire Energy's long-term agreements |
1,143 |
693 |
0.04 |
|||||||||
|
Implementation of new rates for Eastern Shore* |
1,020 |
619 |
0.04 |
|||||||||
|
Wholesale propane margins |
728 |
441 |
0.03 |
|||||||||
|
Customer consumption (non-weather) |
700 |
425 |
0.03 |
|||||||||
|
Implementation of Delaware Division settled rates |
249 |
151 |
0.01 |
|||||||||
|
14,885 |
9,027 |
0.58 |
||||||||||
|
Increased Other Operating Expenses: |
||||||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital |
(4,251) |
(2,578) |
(0.17) |
|||||||||
|
Higher payroll expense |
(3,074) |
(1,864) |
(0.12) |
|||||||||
|
Eight Flags' operating expenses |
(2,821) |
(1,711) |
(0.11) |
|||||||||
|
Higher benefit and other employee-related expenses |
(1,669) |
(1,012) |
(0.07) |
|||||||||
|
Higher regulatory expenses associated with rate filings |
(855) |
(519) |
(0.03) |
|||||||||
|
Higher outside services and facilities maintenance costs |
(318) |
(193) |
(0.01) |
|||||||||
|
(12,988) |
(7,877) |
(0.51) |
||||||||||
|
Interest charges |
(1,136) |
(689) |
(0.04) |
|||||||||
|
Net other changes |
(47) |
38 |
(0.01) |
|||||||||
|
(1,183) |
(651) |
(0.05) |
||||||||||
|
EPS impact of increase in outstanding shares due to September 2016 offering |
— |
— |
(0.12) |
|||||||||
|
Nine Months Ended September 30, 2017 Reported Results |
$ |
52,804 |
$ |
32,023 |
$ |
1.96 |
||||||
|
*See the Major Projects and Initiatives table later in this press release. |
||||||||||||
Major Projects and Initiatives
The following table summarizes gross margin for the Company's major projects and initiatives recently completed and initiatives currently underway, but which will be completed in the future. Gross margin reflects operating revenue less cost of sales, excluding depreciation, amortization and accretion (dollars in thousands):
|
Gross Margin for the Period | |||||||||||||||||||||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
Year Ended |
|||||||||||||||||||||||||||||||||||||
|
September 30, |
September 30, |
December 31, |
Estimate for | ||||||||||||||||||||||||||||||||||||
|
2017 |
2016 |
Variance |
2017 |
2016 |
Variance |
2016 |
2017 |
2018 |
2019 | ||||||||||||||||||||||||||||||
|
Major Projects and Initiatives |
|||||||||||||||||||||||||||||||||||||||
|
Capital Investment Projects |
$ |
9,807 |
$ |
8,963 |
$ |
844 |
$ |
29,533 |
$ |
21,822 |
$ |
7,711 |
$ |
29,819 |
$ |
35,346 |
$ |
31,814 |
$ |
32,724 | |||||||||||||||||||
|
Eastern Shore Rate Case (1) |
1,020 |
— |
1,020 |
1,020 |
— |
1,020 |
— |
TBD |
TBD |
TBD | |||||||||||||||||||||||||||||
|
Settled Delaware Division Rate Case |
431 |
469 |
(38) |
1,596 |
1,347 |
249 |
1,487 |
2,250 |
2,250 |
2,250 | |||||||||||||||||||||||||||||
|
Total Major Projects and Initiatives Recently Completed |
11,258 |
9,432 |
1,826 |
32,149 |
23,169 |
8,980 |
31,306 |
37,596 |
34,064 |
34,974 | |||||||||||||||||||||||||||||
|
Future Major Projects and Initiatives |
|||||||||||||||||||||||||||||||||||||||
|
Capital Investment Projects |
|||||||||||||||||||||||||||||||||||||||
|
2017 Eastern Shore System Expansion |
— |
— |
— |
— |
— |
— |
— |
126 |
9,313 |
15,799 | |||||||||||||||||||||||||||||
|
Northwest Florida Expansion |
— |
— |
— |
— |
— |
— |
— |
— |
3,484 |
5,127 | |||||||||||||||||||||||||||||
|
Other Florida Pipeline Expansions |
— |
— |
— |
— |
— |
— |
— |
— |
2,044 |
2,542 | |||||||||||||||||||||||||||||
|
Total Future Major Projects and Initiatives |
— |
— |
— |
— |
— |
— |
— |
126 |
14,841 |
23,468 | |||||||||||||||||||||||||||||
|
Total |
$ |
11,258 |
$ |
9,432 |
$ |
1,826 |
$ |
32,149 |
$ |
23,169 |
$ |
8,980 |
$ |
31,306 |
$ |
37,722 |
$ |
48,905 |
$ |
58,442 | |||||||||||||||||||
|
(1) In January 2017, Eastern Shore filed a rate case with the FERC to recover the costs of the 2016 System Reliability Project and other investments and expenses | |||||||||||||||||||||||||||||||||||||||
Major Projects and Initiatives Recently Completed
The following table summarizes gross margin generated from the Company's major projects and initiatives recently completed (dollars in thousands):
|
Gross Margin for the Period | |||||||||||||||||||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
Year Ended |
|||||||||||||||||||||||||||||||||||
|
September 30, |
September 30, |
December 31, |
Estimate for | ||||||||||||||||||||||||||||||||||
|
2017 |
2016 |
Variance |
2017 |
2016 |
Variance |
2016 |
2017 |
2018 |
2019 | ||||||||||||||||||||||||||||
|
Capital Investment Projects: |
|||||||||||||||||||||||||||||||||||||
|
Service Expansions: |
|||||||||||||||||||||||||||||||||||||
|
Short-term contracts (Delaware) |
$ |
1,283 |
$ |
3,080 |
$ |
(1,797) |
$ |
5,140 |
$ |
8,271 |
$ |
(3,131) |
$ |
11,454 |
$ |
5,642 |
$ |
1,096 |
$ |
1,096 | |||||||||||||||||
|
Long-term contracts (Delaware) |
2,793 |
862 |
1,931 |
7,089 |
2,587 |
4,502 |
1,815 |
7,611 |
7,605 |
7,583 | |||||||||||||||||||||||||||
|
Total Service Expansions |
4,076 |
3,942 |
134 |
12,229 |
10,858 |
1,371 |
13,269 |
13,253 |
8,701 |
8,679 | |||||||||||||||||||||||||||
|
Florida GRIP |
3,393 |
2,987 |
406 |
10,002 |
8,383 |
1,619 |
11,552 |
13,727 |
14,407 |
15,085 | |||||||||||||||||||||||||||
|
Eight Flags' CHP Plant |
2,338 |
2,034 |
304 |
7,302 |
2,581 |
4,721 |
4,998 |
8,366 |
8,706 |
8,960 | |||||||||||||||||||||||||||
|
Total Capital Investment Projects |
9,807 |
8,963 |
844 |
29,533 |
21,822 |
7,711 |
29,819 |
35,346 |
31,814 |
32,724 | |||||||||||||||||||||||||||
|
Eastern Shore Rate Case (1) |
1,020 |
— |
1,020 |
1,020 |
— |
1,020 |
— |
TBD |
TBD |
TBD | |||||||||||||||||||||||||||
|
Settled Delaware Division Rate Case |
431 |
469 |
(38) |
1,596 |
1,347 |
249 |
1,487 |
2,250 |
2,250 |
2,250 | |||||||||||||||||||||||||||
|
Total Major Projects and Initiatives Recently Completed |
$ |
11,258 |
$ |
9,432 |
$ |
1,826 |
$ |
32,149 |
$ |
23,169 |
$ |
8,980 |
$ |
31,306 |
$ |
37,596 |
$ |
34,064 |
$ |
34,974 | |||||||||||||||||
|
(1) In January 2017, Eastern Shore filed a rate case with the FERC to recover the costs of the 2016 System Reliability Project and other investments and expenses associated with the expansion, reliability and safety initiatives completed by ESNG since its last rate settlement in 2012. Settlement discussions among Eastern Shore, intervenors and the FERC Staff are ongoing and future margin contributions will be provided once a settlement is finalized. For the third quarter of 2017, a portion of the increase in rates, implemented subject to refund in August 2017, has been recorded as revenue and the remainder has been reserved pending the settlement. | |||||||||||||||||||||||||||||||||||||
Service Expansions
In August 2014, Eastern Shore entered into a precedent agreement with an electric power generator in Kent County, Delaware, to provide a 20-year OPT 90≤ natural gas transmission service for 45,000 dekatherms per day ("Dts/d") deliverable to the lateral serving the customer's facility. In July 2016, the FERC authorized Eastern Shore to construct and operate the project, which consists of 5.4 miles of 16-inch pipeline looping and new compression capability in Delaware. Eastern Shore provided interim services to this customer pending construction of facilities. Construction of the project was completed, and long-term service commenced in March 2017. This service generated an additional gross margin of $106,000 during the nine months ended September 30, 2017 compared to the same period in 2016. There was no incremental margin change during the third quarter as the margin generated from the permanent services equated to the margin generated from providing interim services during the third quarter of 2016. This service is expected to generate gross margin of $7.0 million for 2017 and between $5.8 million and $7.8 million annually through the remaining term of the agreement.
In October 2015, Eastern Shore submitted an application to the FERC to make certain meter tube and control valve replacements and related improvements at its Texas Eastern Transmission, LP ("TETLP") interconnect facilities to increase natural gas receipts from TETLP by 53,000 Dts/d, for a total capacity of 160,000 Dts/d. In December 2015, the FERC authorized Eastern Shore to proceed with this project, which was completed and placed in service in March 2016. Approximately 35 percent of the increased capacity has been subscribed on a short-term firm service basis through October 2017. This service generated an additional gross margin of $80,000 and $1.3 million for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016. The remaining capacity is available for firm or interruptible service.
System Reliability Project: In July 2016, the FERC authorized Eastern Shore to construct and operate the proposed System Reliability Project, which consisted of approximately 10.1 miles of 16-inch pipeline looping and auxiliary facilities in New Castle and Kent Counties, Delaware, and a new compressor at its existing Bridgeville compressor station in Sussex County, Delaware. A 2.5 mile looping segment was completed and placed into service in December 2016. The remaining looping and the new compressor were completed and placed into service in the second quarter of 2017. This project was included in Eastern Shore's January 2017 base rate case filing with the FERC. The Company has assumed recovery of this project's costs in August 2017, coinciding with the proposed effectiveness of new rates, subject to refund pending final resolution of the base rate case.
GRIP
GRIP is a natural gas pipe replacement program approved by the Florida Public Service Commission ("PSC"), designed to expedite the replacement of qualifying distribution mains and services (any material other than coated steel or plastic) to enhance the reliability and integrity of the Company's Florida natural gas distribution systems. This program allows recovery, through regulated rates, of capital and other program-related costs, inclusive of a return on investment, associated with the replacement of the mains and services. Since the program's inception in August 2012, the Company has invested $110.5 million to replace 240 miles of qualifying distribution mains, including $7.6 million during the first nine months of 2017. The increased investment in GRIP generated additional gross margin of $406,000 and $1.6 million for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016.
Eight Flags' CHP plant
In June 2016, Eight Flags completed construction of a CHP plant on Amelia Island, Florida. This CHP plant, which consists of a natural-gas-fired turbine and associated electric generator, produces approximately 20 megawatts of base load power and includes a heat recovery steam generator capable of providing approximately 75,000 pounds per hour of residual steam. In June 2016, Eight Flags began selling power generated from the CHP plant to Florida Public Utilities Company ("FPU"), the Company's wholly-owned subsidiary, pursuant to a 20-year power purchase agreement for distribution to FPU's retail electric customers. In July 2016, it also started selling steam to the industrial customer that owns the property on which Eight Flags' CHP plant is located, pursuant to a separate 20-year contract.
The CHP plant is powered by natural gas transported by FPU through its distribution system and by Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), the Company's wholly-owned Florida intrastate pipeline subsidiary. For the three and nine months ended September 30, 2017, Eight Flags and other affiliates of the Company generated $304,000 and $4.7 million, respectively, in additional gross margin as a result of these services that began in June 2016. This amount includes gross margin of $7,000 and $534,000, for the three and nine months ended September 30, 2017, respectively, attributable to natural gas distribution and transportation services provided to the CHP plant by the Company's regulated affiliates.
Major Projects and Initiatives Currently Underway
Northwest Florida Expansion Project: Peninsula Pipeline and the Company's Florida natural gas division are constructing a pipeline in Escambia County, Florida that will interconnect with the Florida Gas Transmission Company ("FGT") interstate pipeline. The project consists of 33 miles of 12-inch transmission line from the FGT interconnect that will be operated by Peninsula Pipeline and 8 miles of 8-inch lateral distribution lines that will be operated by the Company's Florida natural gas division. The Company has signed agreements to serve two large customers and is marketing to other customers close to the facilities. The estimated annual gross margin associated with this project, once in service, is approximately $5.1 million.
New Smyrna Beach, Florida Project: Peninsula Pipeline is constructing a pipeline in Volusia County, Florida that will interconnect with FGT's pipeline. The project consists of 14 miles of transmission line from the FGT interconnect that will be operated by Peninsula Pipeline. The Company entered into an agreement to serve FPU customers. The estimated annual gross margin associated with this project, once in service, is approximately $1.4 million.
2017 Expansion Project: In May 2016, Eastern Shore submitted a request to the FERC to initiate the FERC's pre-filing process for its proposed 2017 Expansion Project. This project, which will expand Eastern Shore's firm service capacity by 26 percent, will provide 61,162 Dts/d of additional firm natural gas transportation service on Eastern Shore's pipeline system with an additional 52,500 Dts/d of firm transportation service at certain Eastern Shore receipt facilities pursuant to precedent agreements Eastern Shore entered into with existing customers. We expect to invest approximately $115.0 million in this expansion project and for the project to generate approximately $15.8 million of gross margin in the first full year after the new transportation services go into effect. On October 4, 2017, FERC issued a Certificate of Public Convenience and Necessity authorizing Eastern Shore to construct and operate the proposed 2017 Expansion Project.
Other major factors influencing gross margin
Weather and Consumption
Temperature variation in 2017 negatively impacted the Company's earnings. Compared to the prior year, cooler temperatures in Florida during the third quarter of 2017, reduced gross margin by $333,000, and warmer temperatures in all of the Company's service territories during the first nine months of 2017, reduced gross margin by $1.8 million, respectively. Warmer than normal temperatures for the quarter and nine months ended September 30, 2017, reduced gross margin by $193,000 and $4.3 million, respectively. The following table summarizes heating degree-day ("HDD") and cooling degree-day ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three and nine months ended September 30, 2017 and 2016.
|
HDD and CDD Information | |||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
||||||||||||||||
|
September 30, |
September 30, |
||||||||||||||||
|
2017 |
2016 |
Variance |
2017 |
2016 |
Variance | ||||||||||||
|
Delmarva |
|||||||||||||||||
|
Actual HDD |
16 |
11 |
5 |
2,262 |
2,590 |
(328) |
|||||||||||
|
10-Year Average HDD ("Delmarva Normal") |
62 |
65 |
(3) |
2,845 |
2,919 |
(74) |
|||||||||||
|
Variance from Delmarva Normal |
(46) |
(54) |
(583) |
(329) |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual HDD |
— |
— |
— |
298 |
514 |
(216) |
|||||||||||
|
10-Year Average HDD ("Florida Normal") |
— |
— |
— |
602 |
553 |
49 |
|||||||||||
|
Variance from Florida Normal |
— |
— |
(304) |
(39) |
|||||||||||||
|
Ohio |
|||||||||||||||||
|
Actual HDD |
80 |
39 |
41 |
3,072 |
3,596 |
(524) |
|||||||||||
|
10-Year Average HDD ("Ohio Normal") |
92 |
103 |
(11) |
3,866 |
3,865 |
1 |
|||||||||||
|
Variance from Ohio Normal |
(12) |
(64) |
(794) |
(269) |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual CDD |
1,526 |
1,679 |
(153) |
2,606 |
2,792 |
(186) |
|||||||||||
|
10-Year Average CDD ("Florida CDD Normal") |
1,542 |
1,523 |
19 |
2,579 |
2,548 |
31 |
|||||||||||
|
Variance from Florida CDD Normal |
(16) |
156 |
27 |
244 |
|||||||||||||
Propane Operations
The Company's Florida and Delmarva propane distribution operations added $2.0 million and $1.4 million, in incremental margin for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016. Higher volumes sold to retail customers and improved margins due to effective supply management activities generated $905,000 and $440,000, in incremental margin, for the three months ended September 30, 2017, respectively, compared to the same period in 2016 and higher service revenue added $187,000 in additional margin, during the quarter.
For the nine months ended September 2017, higher volumes sold to retail customers and improved margins due to effective supply management activities generated $142,000 and $121,000, in incremental margin, respectively, compared to the same period in 2016 and higher service revenue added $244,000, in additional margin during the period.
Wholesale propane margins increased, generating additional gross margin of $271,000 and $728,000 for the three and nine months ended September 30, 2017, respectively, due primarily to higher volumes sold and improved margins resulting from supply management activities.
PESCO
PESCO provides natural gas supply and supply management services to residential, commercial, industrial and wholesale customers in Florida, on the Delmarva Peninsula, in Ohio, and, as a result of the recent acquisition of certain operating assets of ARM Energy Management, LLC, in western Pennsylvania. PESCO competes with regulated utilities and other unregulated third-party marketers to sell natural gas supplies directly to residential, commercial and industrial customers through competitively-priced contracts. PESCO does not currently own or operate any natural gas transmission or distribution assets but sells gas that is delivered to retail, commercial or wholesale customers through affiliated and non-affiliated local distribution company systems and transmission pipelines. The Company's Delmarva natural gas distribution operations entered into asset management agreements with PESCO to manage a portion of their natural gas pipeline and storage capacity for three years beginning on April 1, 2017.
For the three months ended September 30, 2017, PESCO's gross margin increased by $56,000. For the nine months ended September 30, 2017, PESCO generated additional gross margin of $1.8 million compared to the same period in 2016, largely as a result of revenues from a natural gas supplier agreement with a customer in Ohio which expired on March 31, 2017, as well as additional customers in Florida, partially offset by lower margin in the Mid-Atlantic region, primarily during the first quarter of 2017.
Xeron
As disclosed previously, Xeron's operations were wound down during the second quarter of 2017. As a result, Xeron did not generate an operating loss during the third quarter of 2017 and will not report operating results during the fourth quarter of 2017 or subsequent years. During the third quarter of 2016, Xeron generated a pre-tax loss of $486,000. On a year-to-date basis, Xeron's pre-tax operating loss increased by $375,000, compared to the same period in 2016, driven primarily by non-recurring employee severance costs and costs associated with the termination of leased office space in Houston, Texas. The Company does not anticipate incurring any additional costs that will have a material impact associated with winding down Xeron's operations.
Other Natural Gas Growth - Distribution Operations
In addition to service expansions, the Company's natural gas distribution operations on the Delmarva Peninsula generated $379,000 and $1.0 million in additional gross margin for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016, due to an increase in residential, commercial and industrial customers served. The average number of residential customers on the Delmarva Peninsula increased by 3.7 percent and 3.8 percent during the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016. The Company's natural gas distribution operations in Florida generated $187,000 and $1.2 million in additional gross margin for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016, due primarily to an increase in commercial and industrial customers in Florida.
Regulatory Proceedings
Delaware Division Rate Case
In December 2016, the Delaware PSC approved a settlement agreement, which, among other things, provided for an increase in the Company's Delaware division revenue requirement of $2.25 million and a rate of return on common equity of 9.75 percent. The new authorized rates went into effect on January 1, 2017. For the three months ended September 30, 2017, compared to the same period in 2016, revenue decreased by $38,000, reflecting the variance between settled and interim rates. For the nine months ended September 30, 2017, compared to the same period in 2016, the Company recorded incremental revenue of approximately $249,000 related to the rate case. Any amounts collected through 2016 interim rates in excess of the respective portion of the $2.25 million were refunded to the ratepayers in March 2017.
Eastern Shore Rate Case
In January 2017, Eastern Shore filed a base rate proceeding with the FERC, as required by the terms of its 2012 rate case settlement agreement. Eastern Shore's proposed rates were based on a cost of service of approximately $60 million, resulting in an overall requested revenue increase of approximately $18.9 million and a requested rate of return on common equity of 13.75 percent. The filing includes incremental rates for the White Oak Mainline Expansion project, which benefits a single customer. Eastern Shore also proposed a revision to its depreciation rates and negative salvage rate based on the results of independent, third-party depreciation and negative salvage value studies. In March 2017, the FERC issued an order suspending the effectiveness of the proposed tariff rates for the usual five-month period.
On August 1, 2017, Eastern Shore implemented new rates, subject to refund based upon the outcome of the rate proceeding. Eastern Shore recorded incremental revenue of approximately $1.0 million for the three and nine months ended September 30, 2017, and established a regulatory liability to reserve a portion of the total incremental revenues generated by the new rates until resolution of the rate case. Settlement discussions continue with the other parties to the case.
Investing for Future Growth
To support and continue its growth, the Company has expanded, and will continue to expand, its resources and capabilities. Eastern Shore has expanded, and has announced significant additional expansions to, its transmission system, and is, therefore, increasing its staffing. The Company requested recovery of most of Eastern Shore's increased staffing costs in its 2017 rate case filing. Growth in non-regulated energy businesses, including Aspire Energy, PESCO and Eight Flags, requires additional staff as well as corporate resources to support the increased level of business operations. Finally, to allow the Company to continue to identify and move growth initiatives forward and to assist in developing additional initiatives, resources have been added in the Company's corporate shared services departments. In the three and nine months ended September 30, 2017, the Company's staffing and associated costs increased by $617,000 and $4.7 million, or three percent and nine percent, respectively, compared to the same periods in 2016. The Company is prudently managing the pace and magnitude of the investments being made, while ensuring that it appropriately expands its human resources and systems capabilities to capitalize on future growth opportunities.
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | |||||||||||||||
|
Three Months Ended |
Nine Months Ended | ||||||||||||||
|
September 30, |
September 30, | ||||||||||||||
|
2017 |
2016 |
2017 |
2016 | ||||||||||||
|
Operating Revenues |
|||||||||||||||
|
Regulated Energy |
$ |
69,703 |
$ |
70,019 |
$ |
238,353 |
$ |
226,630 |
|||||||
|
Unregulated Energy and other |
57,233 |
38,329 |
198,827 |
130,356 |
|||||||||||
|
Total Operating Revenues |
126,936 |
108,348 |
437,180 |
356,986 |
|||||||||||
|
Operating Expenses |
|||||||||||||||
|
Regulated Energy cost of sales |
22,794 |
24,644 |
87,206 |
81,184 |
|||||||||||
|
Unregulated Energy and other cost of sales |
44,066 |
28,183 |
145,325 |
85,142 |
|||||||||||
|
Operations |
29,667 |
30,126 |
92,990 |
85,370 |
|||||||||||
|
Maintenance |
2,737 |
3,542 |
9,370 |
8,925 |
|||||||||||
|
Gain from a settlement |
— |
— |
(130) |
(130) |
|||||||||||
|
Depreciation and amortization |
9,362 |
8,209 |
27,267 |
23,493 |
|||||||||||
|
Other taxes |
4,071 |
3,488 |
12,572 |
10,725 |
|||||||||||
|
Total operating expenses |
112,697 |
98,192 |
374,600 |
294,709 |
|||||||||||
|
Operating Income |
14,239 |
10,156 |
62,580 |
62,277 |
|||||||||||
|
Other income (expense), net |
239 |
(28) |
(643) |
(68) |
|||||||||||
|
Interest charges |
3,321 |
2,722 |
9,133 |
7,996 |
|||||||||||
|
Income Before Income Taxes |
11,157 |
7,406 |
52,804 |
54,213 |
|||||||||||
|
Income taxes |
4,324 |
2,990 |
20,781 |
21,401 |
|||||||||||
|
Net Income |
$ |
6,833 |
$ |
4,416 |
$ |
32,023 |
$ |
32,812 |
|||||||
|
Weighted Average Common Shares Outstanding: |
|||||||||||||||
|
Basic |
16,344,442 |
15,372,413 |
16,334,210 |
15,324,932 |
|||||||||||
|
Diluted |
16,389,635 |
15,412,783 |
16,378,633 |
15,365,955 |
|||||||||||
|
Earnings Per Share of Common Stock: |
|||||||||||||||
|
Basic |
$ |
0.42 |
$ |
0.29 |
$ |
1.96 |
$ |
2.14 |
|||||||
|
Diluted |
$ |
0.42 |
$ |
0.29 |
$ |
1.96 |
$ |
2.14 |
|||||||
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)
| ||||||||
|
Assets |
September 30, 2017 |
December 31, 2016 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Property, Plant and Equipment |
||||||||
|
Regulated Energy |
$ |
1,050,332 |
$ |
957,681 |
||||
|
Unregulated Energy |
207,331 |
196,800 |
||||||
|
Other businesses and eliminations |
26,061 |
21,114 |
||||||
|
Total property, plant and equipment |
1,283,724 |
1,175,595 |
||||||
|
Less: Accumulated depreciation and amortization |
(267,138) |
(245,207) |
||||||
|
Plus: Construction work in progress |
69,053 |
56,276 |
||||||
|
Net property, plant and equipment |
1,085,639 |
986,664 |
||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
3,386 |
4,178 |
||||||
|
Accounts receivable (less allowance for uncollectible accounts of $912 and $909, respectively) |
52,775 |
62,803 |
||||||
|
Accrued revenue |
14,307 |
16,986 |
||||||
|
Propane inventory, at average cost |
5,226 |
6,457 |
||||||
|
Other inventory, at average cost |
12,711 |
4,576 |
||||||
|
Regulatory assets |
9,761 |
7,694 |
||||||
|
Storage gas prepayments |
6,876 |
5,484 |
||||||
|
Income taxes receivable |
26,741 |
22,888 |
||||||
|
Prepaid expenses |
10,899 |
6,792 |
||||||
|
Mark-to-market energy assets |
1,526 |
823 |
||||||
|
Other current assets |
4,797 |
2,470 |
||||||
|
Total current assets |
149,005 |
141,151 |
||||||
|
Deferred Charges and Other Assets |
||||||||
|
Goodwill |
21,944 |
15,070 |
||||||
|
Other intangible assets, net |
4,608 |
1,843 |
||||||
|
Investments, at fair value |
6,380 |
4,902 |
||||||
|
Regulatory assets |
75,793 |
76,803 |
||||||
|
Receivables and other deferred charges |
3,381 |
2,786 |
||||||
|
Total deferred charges and other assets |
112,106 |
101,404 |
||||||
|
Total Assets |
$ |
1,346,750 |
$ |
1,229,219 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Capitalization and Liabilities |
September 30, 2017 |
December 31, 2016 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Capitalization |
||||||||
|
Stockholders' equity |
||||||||
|
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no |
$ |
— |
$ |
— |
||||
|
Common stock, par value $0.4867 per share (authorized 25,000,000 shares) |
7,955 |
7,935 |
||||||
|
Additional paid-in capital |
252,722 |
250,967 |
||||||
|
Retained earnings |
208,402 |
192,062 |
||||||
|
Accumulated other comprehensive loss |
(5,259) |
(4,878) |
||||||
|
Deferred compensation obligation |
3,366 |
2,416 |
||||||
|
Treasury stock |
(3,366) |
(2,416) |
||||||
|
Total stockholders' equity |
463,820 |
446,086 |
||||||
|
Long-term debt, net of current maturities |
201,248 |
136,954 |
||||||
|
Total capitalization |
665,068 |
583,040 |
||||||
|
Current Liabilities |
||||||||
|
Current portion of long-term debt |
12,136 |
12,099 |
||||||
|
Short-term borrowing |
203,098 |
209,871 |
||||||
|
Accounts payable |
53,284 |
56,935 |
||||||
|
Customer deposits and refunds |
32,493 |
29,238 |
||||||
|
Accrued interest |
3,361 |
1,312 |
||||||
|
Dividends payable |
5,312 |
4,973 |
||||||
|
Accrued compensation |
8,544 |
10,496 |
||||||
|
Regulatory liabilities |
5,338 |
1,291 |
||||||
|
Mark-to-market energy liabilities |
1,732 |
773 |
||||||
|
Other accrued liabilities |
13,972 |
7,063 |
||||||
|
Total current liabilities |
339,270 |
334,051 |
||||||
|
Deferred Credits and Other Liabilities |
||||||||
|
Deferred income taxes |
252,273 |
222,894 |
||||||
|
Regulatory liabilities |
42,915 |
43,064 |
||||||
|
Environmental liabilities |
8,382 |
8,592 |
||||||
|
Other pension and benefit costs |
32,059 |
32,828 |
||||||
|
Deferred investment tax credits and other liabilities |
6,783 |
4,750 |
||||||
|
Total deferred credits and other liabilities |
342,412 |
312,128 |
||||||
|
Total Capitalization and Liabilities |
$ |
1,346,750 |
$ |
1,229,219 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Three Months Ended September 30, 2017 |
For the Three Months Ended September 30, 2016 | |||||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake |
FPU NG Distribution |
FPU Electric Distribution |
Delmarva NG Distribution |
Chesapeake |
FPU NG Distribution |
FPU Electric Distribution | |||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
5,705 |
$ |
1,247 |
$ |
6,544 |
$ |
14,112 |
$ |
5,327 |
$ |
1,139 |
$ |
5,016 |
$ |
15,186 |
||||||||||||||||
|
Commercial |
5,888 |
1,344 |
6,070 |
11,701 |
5,136 |
1,201 |
5,752 |
11,991 |
||||||||||||||||||||||||
|
Industrial |
1,700 |
1,524 |
5,025 |
748 |
1,695 |
1,581 |
4,825 |
676 |
||||||||||||||||||||||||
|
Other (1) |
92 |
954 |
(854) |
(2,481) |
(76) |
908 |
797 |
(1,805) |
||||||||||||||||||||||||
|
Total Operating Revenues |
$ |
13,385 |
$ |
5,069 |
$ |
16,785 |
$ |
24,080 |
$ |
12,082 |
$ |
4,829 |
$ |
16,390 |
$ |
26,048 |
||||||||||||||||
|
Volume (in Dts/MWHs) |
||||||||||||||||||||||||||||||||
|
Residential |
184,993 |
53,228 |
247,118 |
93,889 |
176,886 |
47,274 |
196,831 |
99,896 |
||||||||||||||||||||||||
|
Commercial |
449,543 |
1,172,625 |
366,318 |
88,917 |
469,921 |
1,313,963 |
409,155 |
90,013 |
||||||||||||||||||||||||
|
Industrial |
1,169,465 |
2,393,709 |
1,082,701 |
4,340 |
1,135,077 |
2,313,776 |
1,029,165 |
5,890 |
||||||||||||||||||||||||
|
Other |
35,519 |
— |
(46,834) |
1,880 |
28,208 |
— |
601 |
1,979 |
||||||||||||||||||||||||
|
Total |
1,839,520 |
3,619,562 |
1,649,303 |
189,026 |
1,810,092 |
3,675,013 |
1,635,752 |
197,778 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
68,118 |
15,782 |
54,543 |
24,628 |
65,663 |
15,337 |
53,314 |
24,367 |
||||||||||||||||||||||||
|
Commercial |
6,782 |
1,425 |
4,007 |
7,455 |
6,695 |
1,408 |
4,216 |
7,401 |
||||||||||||||||||||||||
|
Industrial |
145 |
78 |
2,132 |
2 |
125 |
74 |
1,814 |
2 |
||||||||||||||||||||||||
|
Other |
3 |
— |
— |
— |
6 |
— |
— |
— |
||||||||||||||||||||||||
|
Total |
75,048 |
17,285 |
60,682 |
32,085 |
72,489 |
16,819 |
59,344 |
31,770 |
||||||||||||||||||||||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Nine Months Ended September 30, 2017 |
For the Nine Months Ended September 30, 2016 | |||||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake |
FPU NG Distribution |
FPU Electric Distribution |
Delmarva NG Distribution |
Chesapeake |
FPU NG Distribution |
FPU Electric Distribution | |||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
42,511 |
$ |
4,165 |
$ |
24,945 |
$ |
33,915 |
$ |
37,074 |
$ |
3,977 |
$ |
20,597 |
$ |
36,911 |
||||||||||||||||
|
Commercial |
23,724 |
4,262 |
23,114 |
31,190 |
20,576 |
3,847 |
20,912 |
31,814 |
||||||||||||||||||||||||
|
Industrial |
5,383 |
4,860 |
15,727 |
1,952 |
5,274 |
4,808 |
15,399 |
2,154 |
||||||||||||||||||||||||
|
Other (1) |
(1,586) |
2,819 |
(4,909) |
(4,277) |
(1,164) |
2,665 |
(2,615) |
(5,410) |
||||||||||||||||||||||||
|
Total Operating |
$ |
70,032 |
$ |
16,106 |
$ |
58,877 |
$ |
62,780 |
$ |
61,760 |
$ |
15,297 |
$ |
54,293 |
$ |
65,469 |
||||||||||||||||
|
Volume (in Dts/MWHs) |
||||||||||||||||||||||||||||||||
|
Residential |
2,576,001 |
253,888 |
1,022,598 |
224,513 |
2,495,103 |
260,404 |
993,917 |
241,691 |
||||||||||||||||||||||||
|
Commercial |
2,445,262 |
3,991,244 |
1,426,875 |
229,545 |
2,539,404 |
4,118,131 |
1,633,920 |
233,199 |
||||||||||||||||||||||||
|
Industrial |
3,749,961 |
8,519,221 |
3,372,394 |
12,250 |
3,680,383 |
8,405,424 |
3,188,556 |
17,470 |
||||||||||||||||||||||||
|
Other |
66,273 |
— |
(62,710) |
5,627 |
68,293 |
— |
(4,723) |
6,577 |
||||||||||||||||||||||||
|
Total |
8,837,497 |
12,764,353 |
5,759,157 |
471,935 |
8,783,183 |
12,783,959 |
5,811,670 |
498,937 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
68,419 |
15,739 |
54,312 |
24,549 |
65,943 |
15,303 |
53,215 |
24,268 |
||||||||||||||||||||||||
|
Commercial |
6,843 |
1,417 |
4,084 |
7,443 |
6,745 |
1,391 |
4,247 |
7,399 |
||||||||||||||||||||||||
|
Industrial |
145 |
78 |
2,042 |
2 |
123 |
72 |
1,760 |
2 |
||||||||||||||||||||||||
|
Other |
6 |
— |
— |
— |
5 |
— |
— |
— |
||||||||||||||||||||||||
|
Total |
75,413 |
17,234 |
60,438 |
31,994 |
72,816 |
16,766 |
59,222 |
31,669 |
||||||||||||||||||||||||
|
(1) Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, | ||||||||||||||||||||||||||||||||
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-reports-third-quarter-results-300552517.html
SOURCE Chesapeake Utilities Corporation
Article Date
11/9/2017Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., Nov. 8, 2017 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.325 per share on the Company's common stock. The $0.325 per share dividend will be paid on January 5, 2018 to all shareholders of record at the close of business on December 15, 2017.
Chesapeake has paid dividends to its shareholders without interruption for 57 years. During those 57 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-quarterly-dividend-300552224.html
SOURCE Chesapeake Utilities Corporation
Article Date
11/8/2017Dr. Ronald G. Forsythe Jr., Chesapeake Utilities Corporation Board Member, Among Savoy Magazine's 2017 Most Influential Black Corporate Directors
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., Nov. 1, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced that Dr. Ronald G. Forsythe Jr., a member of the Board of Directors since 2014, has been named one of the 2017 Most Influential Black Corporate Directors by Savoy Magazine. A national business publication reporting on African-American success and achievement, Savoy Magazine issues an annual listing of prominent executives, influencers and achievers contributing leadership to corporate boards.
"I am honored to be named to Savoy Magazine's 2017 Most Influential Black Corporate Directors," said Dr. Forsythe. "I very much appreciate the opportunity I have to contribute to Chesapeake Utilities Corporation, its Board of Directors and its senior management team. I am enriched by the talent, culture, care and drive that I see throughout this Company."
"We congratulate Ron on this very special honor," said Michael P. McMasters, Chesapeake Utilities Corporation President and Chief Executive Officer. "The business acumen and experience that Ron and his fellow Board members bring to the Company sustain our efforts to deliver value to our customers, employees, investors and the communities we serve."
"Ron's contributions to the Company's Board have been invaluable, and this recognition is very well-deserved," said John R. Schimkaitis, Chairman of Chesapeake Utilities Corporation Board of Directors. "Ron's experience in both the public and private sectors, coupled with his expertise in information technology, engineering, renewable energy and economic and workforce development have added to the breadth and depth of the already diverse backgrounds and skill sets of our Board."
Dr. Forsythe is President and Chief Executive Officer of Quality Health Strategies and previously served as its Chief Operating Officer. He served as Chief Information Officer and Vice President at the University of Maryland Eastern Shore. In addition, Dr. Forsythe is a member of the Regional Advisory Board of Branch Banking and Trust Company and previously served as a member of the Advisory Board for the Worcester County, Maryland School System STEM Initiative, and a member of the Boards of the Peninsula Regional Medical Center Foundation, Quality Health Foundation, and Horizons® at the Salisbury School. Dr. Forsythe holds masters and doctoral degrees in chemical engineering from the University of Maryland.
In 2017, Dr. Forsythe joined colleagues serving on other public boards, including Fortune 500 companies, as a recipient of the highest recognition for corporate directors – the National Association of Corporate Directors Board Leadership Fellowship.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Mike Stock
Sr. Director, Corporate Communications
mstock@chpk.com
302.736.7808
View original content with multimedia:http://www.prnewswire.com/news-releases/dr-ronald-g-forsythe-jr-chesapeake-utilities-corporation-board-member-among-savoy-magazines-2017-most-influential-black-corporate-directors-300547351.html
SOURCE Chesapeake Utilities Corporation
Article Date
11/1/201710/19/2017 - Chesapeake Utilities Corporation To Host Conference Call To Review Third Quarter 2017 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review Third Quarter 2017 Financial Results
Source: PR Newswire
Orignial Article: https://www.prnewswire.co...
DOVER, Del., Oct. 19, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, November 10, 2017, at 10:30 a.m. ET to discuss the Company's financial results for the third quarter ended September 30, 2017. The earnings press release will be issued on Thursday, November 9, 2017, before the market opens.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2017 Third Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-third-quarter-2017-financial-results-300540146.html
SOURCE Chesapeake Utilities Corporation
Article Date
10/19/2017Peninsula Energy Services Company, A Subsidiary Of Chesapeake Utilities Corporation, Expands Its Retail Market Area Into Western Pennsylvania
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Aug. 8, 2017 /PRNewswire/ -- On August 1, 2017, Peninsula Energy Services Company (PESCO), a subsidiary of Chesapeake Utilities Corporation (NYSE: CPK) acquired certain commercial and industrial marketing assets -- specifically located in Western Pennsylvania -- from ARM Energy Management, LLC (AEM), a subsidiary of ARM Energy. PESCO is Chesapeake Utilities' non-regulated energy marketing business that provides energy services to commercial and industrial customers in the Southeast, Mid-Atlantic and Mid-West regions.
The transaction mutually benefits PESCO and AEM as the acquired assets complement PESCO's current portfolio and will expand PESCO's retail demand in a market where it has existing pipeline capacity and wholesale liquidity. In addition, the acquisition will generate opportunities for PESCO to execute its strategy of aggregating supply and providing associated services. ARM Energy and AEM, on the other hand, will continue to expand their thriving physical marketing and financial hedging advisory services as well as other midstream solutions throughout the U.S. and Canada.
Taylor Tipton, President of AEM, noted, "We have successfully built a strong retail book in the Western Pennsylvania region and we are fully confident that it will continue to grow under PESCO's care. That being said, the sale grants ARM Energy and AEM the additional flexibility to focus its attention on the ever increasing opportunities presented in the physical marketing and financial hedging advisory services space in other regions as well as the midstream sector."
About ARM Energy
ARM is a producer services company operating in the physical marketing, trading and midstream sectors. ARM Energy also operates a crude oil gathering and natural gas gathering and processing system in the STACK play of Oklahoma. Additionally, ARM provides hedging advisory services to over 130 upstream companies.
About Peninsula Energy Services Company
Peninsula Energy Services Company provides natural gas supply and supply management services to more than 3,000 customers in the Southeast, Mid-Atlantic and Mid-West regions. PESCO provides natural gas producer services, asset management, transportation and storage coordination, structured wholesale transactions, risk management, wholesale supply and retail supply.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Note to Editors: This is a clarification with additional details relating to the press release from Chesapeake Utilities Corporation (Chesapeake Utilities) in connection with the purchase of certain assets of ARM Energy Management, LLC (AEM), dated August 3, 2017. Specific to the clarification, the transaction involved only certain commercial and industrial marketing assets located only in Western Pennsylvania.
Mike Stock
Senior Director, Corporate Communications
Chesapeake Utilities Corporation
mstock@chpk.com
302.736.7808
View original content:http://www.prnewswire.com/news-releases/peninsula-energy-services-company-a-subsidiary-of-chesapeake-utilities-corporation-expands-its-retail-market-area-into-western-pennsylvania-300501605.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/8/2017Chesapeake Utilities Corporation Subsidiary Acquires the Assets of ARM Energy Management
Source: PR Newswire
DOVER, Del., Aug. 3, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) announced today that its wholly-owned subsidiary, Peninsula Energy Services Company (PESCO), has acquired the assets of ARM Energy Management (AEM), a natural gas marketing company servicing commercial and industrial customers in Western Pennsylvania. PESCO is the Company's non-regulated energy marketing business that has been providing energy services to commercial and industrial customers in the Southeast, Mid-Atlantic and Mid-West regions.
"AEM's services are an excellent strategic fit for PESCO and Chesapeake Utilities," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "This acquisition will allow us to extend our regional footprint and deepen our commercial relationships with natural gas producers and end-users as we pursue new growth opportunities for the Company that generate value for our customers, employees, investors and the communities we serve."
The acquired assets complement PESCO's current portfolio and will expand the Company's retail demand in a market where it has existing pipeline capacity and wholesale liquidity. In addition, the acquisition will generate opportunities for PESCO to execute its strategy of aggregating supply and providing associated services. This strategy is similar to the strategy the Company has executed with producers served by its Aspire Energy subsidiary, throughout the Appalachian region of the United States.
About Peninsula Energy Services Company
Peninsula Energy Services Company provides natural gas supply and supply management services to more than 3,000 customers in the Southeast, Mid-Atlantic and Mid-West regions. PESCO provides natural gas producer services, asset management, transportation and storage coordination, structured wholesale transactions, risk management, wholesale supply and retail supply.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Elaine Bittner
Senior Vice President of Strategic Development
Chesapeake Utilities Corporation
ebittner@chpk.com
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-subsidiary-acquires-the-assets-of-arm-energy-management-300499543.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/3/2017Chesapeake Utilities Corporation Reports Second Quarter Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Aug. 3, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today reported second quarter financial results. The Company's net income for the quarter ended June 30, 2017 was $6.0 million, compared to $8.0 million in the same quarter of 2016. Earnings per share ("EPS") for the quarter ended June 30, 2017 were $0.37 per share, compared to $0.52 for the same quarter of 2016. The decline in net income reflected expenses incurred and investments to generate and support growth as well as the impact of weather on the Delmarva Peninsula that was 41 percent warmer than the prior quarter. These factors were partially offset by higher margins from natural gas transmission and distribution operations in Florida and on the Delmarva Peninsula, the Eight Flags Energy LLC ("Eight Flags") combined heat and power ("CHP") plant and Aspire Energy of Ohio, LLC ("Aspire Energy").
For the six months ended June 30, 2017, the Company reported net income of $25.2 million, or $1.54 per share. This represents a decrease of $3.2 million, or $0.31 per share, compared to the same period in 2016. Similar to the second quarter of 2017, the decline in net income for the first six months of 2017 principally reflected higher expenses incurred and investments to generate and support growth, as well as the impact of warmer weather. These factors were partially offset by higher margins from the Eight Flags CHP plant, natural gas transmission and distribution operations in Florida and on the Delmarva Peninsula, Aspire Energy, and the Company's natural gas marketing operation, Peninsula Energy Services Company, Inc. ("PESCO"). An increase in outstanding shares as a result of the equity issuance in September 2016 lowered EPS by approximately $0.10 per share for the six months ended June 30, 2017.
"Growth in our businesses will drive our future earnings. We have continued to expand our internal capabilities to manage and cultivate growth, while aggressively pursuing opportunities that will position the Company for future growth," stated Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Earnings growth and costs incurred to support business growth do not always move in tandem. Our results for the second quarter and year-to-date should be viewed in the context of the major growth projects and initiatives recently completed and those currently underway, in addition to the negative impact of warmer weather. Our employees have completed several significant projects in 2017 and are laying the groundwork to commence Eastern Shore Natural Gas Company's ("Eastern Shore") largest ever expansion project in addition to several other key projects and initiatives that are also scheduled to go into service in 2018," he added.
A more detailed discussion and analysis of the Company's results for each segment is provided in the following pages.
Comparative Results for the Quarters Ended June 30, 2017 and 2016
Operating income for the second quarter decreased by $2.1 million to $13.7 million compared to the same period in 2016, as higher expenses to support growth exceeded increased gross margins for the quarter. Gross margin increased by $2.6 million during the quarter, despite the negative impact of warmer weather, which reduced margin by approximately $675,000. The $1.3 million increase in depreciation, amortization and property taxes and $3.4 million increase in other operating expenses largely reflect higher expenses to support growth of the Company's businesses and costs associated with pursuing additional growth initiatives. Costs such as depreciation and employee costs are recognized evenly over the four quarters of each year, while gross margin from most of the Company's businesses is driven by deliveries, which are concentrated in the first and fourth quarters.
Regulated Energy Segment
Operating income for the Regulated Energy segment decreased by $1.5 million, or 9.8 percent, compared to the same period in 2016, due principally to warmer weather and the level and timing of costs associated with growth. Gross margin increased by $1.1 million during the quarter, despite the impact of warmer weather, which reduced gross margin by approximately $354,000 for the three months. The $1.2 million increase in depreciation, amortization and property taxes and $1.4 million increase in other operating expenses, largely reflect costs associated with recently completed and planned growth projects. Specifically, of the total $2.6 million increase in costs, $1.5 million is associated with Eastern Shore's recently completed projects as well as initiatives underway.
The significant components of the $1.1 million gross margin increase included:
The foregoing increases were offset by $354,000 from lower customer consumption of energy for the Company's regulated energy distribution operations in Florida and on the Delmarva Peninsula.
The significant components of the increase in other operating expenses included:
Unregulated Energy Segment
Operating income for the Unregulated Energy segment decreased $450,000 compared to the same period in 2016, as increased operating income from Eight Flags and Aspire Energy were offset by lower results from PESCO and the propane distribution businesses. Gross margin increased by $1.7 million, despite the impact of warmer weather, which reduced margin by approximately $321,000 for the three months. The $2.1 million increase in other operating expenses, largely reflects operating costs for Eight Flags and higher expenses to support growth initiatives.
The significant components of the $1.7 million gross margin increase were as follows:
The above gross margin increases were offset by the following factors:
The significant components of the increase in other operating expenses included:
The Company also incurred $346,000 in non-operating expenses to complete the wind-down of Xeron's operations.
Comparative Results for the Six Months Ended June 30, 2017 and 2016
Operating income for the six months ended June 30, 2017 decreased by $3.8 million to $48.3 million compared to the same period in 2016. Gross margin increased by $9.4 million, or 7.0 percent, net of the negative impact of warmer weather, which reduced margin by approximately $1.4 million for the first six months. The $2.7 million increase in depreciation, amortization and property taxes and $10.5 million increase in other operating expenses reflects, higher expenses to support growth of the Company's businesses, costs associated with the wind-down of Xeron's operations and costs associated with pursuing additional growth initiatives.
Regulated Energy Segment
Operating income for the Regulated Energy segment decreased by $2.8 million, or 7.1 percent, compared to the same period in 2016 due principally to warmer weather and the level and timing of costs associated with growth. Gross margin increased by $4.2 million, despite the impact of warmer weather, which reduced margin by approximately $452,000 for the six months ended June 30, 2017. The $2.1 million increase in depreciation, amortization and taxes and $4.9 million increase in other operating expenses largely reflects costs associated with recently completed and planned growth projects. Of the total $7.0 million increase in other operating expenses, $3.8 million is associated with Eastern Shore's recently completed projects as well as initiatives underway.
The significant components of the $4.2 million gross margin increase included:
The foregoing increases were offset by $797,000 from lower customer consumption of energy for the Company's distribution operations in Florida and on the Delmarva Peninsula, due primarily to warmer weather, particularly during the first quarter, which was the third warmest first quarter on the Delmarva Peninsula in the past fifty years.
The significant components of the increase in other operating expenses included:
Unregulated Energy Segment
Operating income for the Unregulated Energy segment for the six months ended June 30, 2017 was $11.5 million, a decrease of $855,000 compared to the same period in 2016, as contributions from Eight Flags, Aspire Energy, and PESCO, were exceeded by the impact of warmer weather, lower retail propane margins per gallon and higher expenses associated with recent and future growth. Gross margin increased by $5.4 million, net of the impact of warmer weather, which reduced margins by $912,000 for the six months ended June 30, 2017.
The significant components of the $5.4 million gross margin increase were as follows:
The above gross margin increases were offset by the following:
The significant components of the increase in other operating expenses included:
The Company also incurred $346,000 in non-operating expenses to complete the wind-down of Xeron's operations.
Matters discussed 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 2016 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
The discussions of the results use the term "gross margin," a non-Generally Accepted Accounting Principles ("GAAP") financial measure, which management uses to evaluate the performance of the Company's business segments. For an explanation of the calculation of "gross margin," see the footnote to the Financial Summary.
Unless otherwise noted, earnings per share are presented on a diluted basis.
Conference Call
Chesapeake Utilities will host a conference call on Friday, August 4, 2017, at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter and six months ended June 30, 2017. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2017 Second Quarter Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audio cast section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary | |||||||||||||||
|
(in thousands, except per share data) | |||||||||||||||
|
Three Months Ended |
Six Months Ended | ||||||||||||||
|
June 30, |
June 30, | ||||||||||||||
|
2017 |
2016 |
2017 |
2016 | ||||||||||||
|
Gross Margin (1) |
|||||||||||||||
|
Regulated Energy segment |
$ |
46,829 |
$ |
45,760 |
$ |
104,239 |
$ |
100,071 |
|||||||
|
Unregulated Energy segment |
13,736 |
12,077 |
40,555 |
35,178 |
|||||||||||
|
Other businesses and eliminations |
(154) |
(64) |
(221) |
(109) |
|||||||||||
|
Total Gross Margin |
$ |
60,411 |
$ |
57,773 |
$ |
144,573 |
$ |
135,140 |
|||||||
|
Operating Income |
|||||||||||||||
|
Regulated Energy segment |
$ |
13,730 |
$ |
15,226 |
$ |
36,747 |
$ |
39,545 |
|||||||
|
Unregulated Energy segment |
(38) |
412 |
11,492 |
12,347 |
|||||||||||
|
Other businesses and eliminations |
(26) |
104 |
102 |
230 |
|||||||||||
|
Total Operating Income |
13,666 |
15,742 |
48,341 |
52,122 |
|||||||||||
|
Other Expense, net |
(607) |
(8) |
(884) |
(42) |
|||||||||||
|
Interest Charges |
3,073 |
2,624 |
5,811 |
5,274 |
|||||||||||
|
Pre-tax Income |
9,986 |
13,110 |
41,646 |
46,806 |
|||||||||||
|
Income Taxes |
3,940 |
5,081 |
16,456 |
18,410 |
|||||||||||
|
Net Income |
$ |
6,046 |
$ |
8,029 |
$ |
25,190 |
$ |
28,396 |
|||||||
|
Earnings Per Share of Common Stock |
|||||||||||||||
|
Basic |
$ |
0.37 |
$ |
0.52 |
$ |
1.54 |
$ |
1.86 |
|||||||
|
Diluted |
$ |
0.37 |
$ |
0.52 |
$ |
1.54 |
$ |
1.85 |
|||||||
(1) "Gross margin" is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. Chesapeake Utilities believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by Chesapeake Utilities under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. Chesapeake Utilities' management uses gross margin in measuring its business units' performance. Other companies may calculate gross margin in a different manner.
|
Financial Summary Highlights | ||||||||||||
|
Key variances between the three months ended June 30, 2016 and 2017 included: | ||||||||||||
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Second Quarter of 2016 Reported Results |
$ |
13,110 |
$ |
8,029 |
$ |
0.52 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
Weather impact |
(675) |
(409) |
(0.03) |
|||||||||
|
Wind-down of Xeron operations |
(351) |
(213) |
(0.01) |
|||||||||
|
(1,026) |
(622) |
(0.04) |
||||||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Eight Flags' CHP plant* |
2,128 |
1,289 |
0.08 |
|||||||||
|
GRIP* |
532 |
322 |
0.02 |
|||||||||
|
Service expansions* |
478 |
289 |
0.02 |
|||||||||
|
Natural gas marketing |
(450) |
(272) |
(0.02) |
|||||||||
|
Natural gas growth (excluding service expansions) |
325 |
197 |
0.01 |
|||||||||
|
Pricing amendments to Aspire Energy's long-term agreements |
271 |
164 |
0.01 |
|||||||||
|
3,284 |
1,989 |
0.12 |
||||||||||
|
Increased Other Operating Expenses: |
||||||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital investments |
(1,337) |
(810) |
(0.05) |
|||||||||
|
Eight Flags' operating expenses |
(1,260) |
(763) |
(0.05) |
|||||||||
|
Higher staffing and associated costs |
(976) |
(591) |
(0.04) |
|||||||||
|
Higher outside services and facilities maintenance costs |
(335) |
(203) |
(0.01) |
|||||||||
|
Higher regulatory expenses |
(295) |
(179) |
(0.01) |
|||||||||
|
(4,203) |
(2,546) |
(0.16) |
||||||||||
|
Interest charges |
(449) |
(272) |
(0.02) |
|||||||||
|
Change in other expense |
(253) |
(153) |
(0.01) |
|||||||||
|
Net other changes |
(477) |
(379) |
(0.02) |
|||||||||
|
(1,179) |
(804) |
(0.05) |
||||||||||
|
EPS impact of increase in outstanding shares due to September 2016 offering |
— |
— |
(0.02) |
|||||||||
|
Second Quarter of 2017 Reported Results |
$ |
9,986 |
$ |
6,046 |
$ |
0.37 |
||||||
*See the Major Projects and Initiatives table later in this press release.
Key variances between the six months ended June 30, 2016 and 2017 included:
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Six Months Ended June 30, 2016 Reported Results |
$ |
46,806 |
$ |
28,396 |
$ |
1.85 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
Weather impact |
(1,363) |
(825) |
(0.05) |
|||||||||
|
Wind-down of Xeron operations |
(886) |
(536) |
(0.03) |
|||||||||
|
(2,249) |
(1,361) |
(0.08) |
||||||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Eight Flags' CHP plant* |
4,424 |
2,676 |
0.17 |
|||||||||
|
Natural gas marketing |
1,704 |
1,031 |
0.07 |
|||||||||
|
Service expansions* |
1,237 |
748 |
0.05 |
|||||||||
|
GRIP* |
1,213 |
734 |
0.05 |
|||||||||
|
Natural gas growth (excluding service expansions) |
1,130 |
683 |
0.04 |
|||||||||
|
Pricing amendments to Aspire Energy's long-term agreements |
844 |
510 |
0.03 |
|||||||||
|
Implementation of Delaware Division new rates* |
417 |
252 |
0.02 |
|||||||||
|
Lower retail propane margins |
(305) |
(184) |
(0.01) |
|||||||||
|
10,664 |
6,450 |
0.42 |
||||||||||
|
Increased Other Operating Expenses: |
||||||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital investments |
(2,696) |
(1,631) |
(0.11) |
|||||||||
|
Eight Flags' operating expenses |
(2,528) |
(1,529) |
(0.10) |
|||||||||
|
Higher payroll expense |
(2,219) |
(1,342) |
(0.09) |
|||||||||
|
Higher outside services and facilities maintenance costs |
(2,054) |
(1,243) |
(0.08) |
|||||||||
|
Higher benefits and other employee-related expenses |
(1,966) |
(1,189) |
(0.08) |
|||||||||
|
Higher regulatory expenses |
(664) |
(401) |
(0.03) |
|||||||||
|
(12,127) |
(7,335) |
(0.49) |
||||||||||
|
Interest charges |
(537) |
(325) |
(0.02) |
|||||||||
|
Change in other expense |
(476) |
(288) |
(0.02) |
|||||||||
|
Net other changes |
(435) |
(347) |
(0.02) |
|||||||||
|
(1,448) |
(960) |
(0.06) |
||||||||||
|
EPS impact of increase in outstanding shares due to September 2016 offering |
— |
— |
(0.10) |
|||||||||
|
Six Months Ended June 30, 2017 Reported Results |
$ |
41,646 |
$ |
25,190 |
$ |
1.54 |
||||||
*See the Major Projects and Initiatives table later in this press release.
Major Projects and Initiatives
The following table summarizes gross margin for the Company's major projects and initiatives recently completed and initiatives currently underway, but which will be completed in the future. Gross margin reflects operating revenue less cost of sales, excluding depreciation, amortization and accretion (dollars in thousands):
|
Gross Margin for the Period | ||||||||||||||||||||||||||||||||||||||
|
Three Months Ended |
Six Months Ended |
Year Ended |
||||||||||||||||||||||||||||||||||||
|
June 30, |
June 30, |
December 31, |
Estimate for | |||||||||||||||||||||||||||||||||||
|
2017 |
2016 |
Variance |
2017 |
2016 |
Variance |
2016 |
2017 |
2018 |
2019 | |||||||||||||||||||||||||||||
|
Major Projects and Initiatives Recently Completed |
||||||||||||||||||||||||||||||||||||||
|
Capital Investment Projects |
$ |
9,601 |
$ |
6,463 |
$ |
3,138 |
$ |
18,922 |
$ |
12,049 |
$ |
6,873 |
$ |
29,819 |
$ |
35,393 |
$ |
32,125 |
$ |
33,035 |
||||||||||||||||||
|
Settled Delaware Division Rate Case |
425 |
555 |
(130) |
1,295 |
878 |
417 |
1,487 |
2,250 |
2,250 |
2,250 |
||||||||||||||||||||||||||||
|
Total Major Projects and Initiatives Recently Completed |
10,026 |
7,018 |
3,008 |
20,217 |
12,927 |
7,290 |
31,306 |
37,643 |
34,375 |
35,285 |
||||||||||||||||||||||||||||
|
Future Major Projects and Initiatives |
||||||||||||||||||||||||||||||||||||||
|
Capital Investment Projects |
||||||||||||||||||||||||||||||||||||||
|
2017 Eastern Shore System Expansion |
— |
— |
— |
— |
— |
— |
— |
126 |
9,313 |
15,799 |
||||||||||||||||||||||||||||
|
Northwest Florida Expansion |
— |
— |
— |
— |
— |
— |
— |
— |
3,970 |
5,100 |
||||||||||||||||||||||||||||
|
Eastern Shore System Reliability (1) |
— |
— |
— |
— |
— |
— |
— |
1,875 |
4,500 |
4,500 |
||||||||||||||||||||||||||||
|
Total Future Major Projects and Initiatives |
— |
— |
— |
— |
— |
— |
— |
2,001 |
17,783 |
25,399 |
||||||||||||||||||||||||||||
|
Total |
$ |
10,026 |
$ |
7,018 |
$ |
3,008 |
$ |
20,217 |
$ |
12,927 |
$ |
7,290 |
$ |
31,306 |
$ |
39,644 |
$ |
52,158 |
$ |
60,684 |
||||||||||||||||||
(1) In January 2017, Eastern Shore, filed a rate case with the Federal Energy Regulatory Commission ("FERC"). The outcome of the rate case is not known at this time. This table assumes recovery in the rate case of the costs of the System Reliability Project only, as further discussed below.
Major Projects and Initiatives Recently Completed
The following table summarizes gross margin generated from the Company's major projects and initiatives recently completed (dollars in thousands):
|
Gross Margin for the Period (1) | |||||||||||||||||||||||||||||||||||||
|
Three Months Ended |
Six Months Ended |
Year Ended |
|||||||||||||||||||||||||||||||||||
|
June 30, |
June 30, |
December 31, |
Estimate for | ||||||||||||||||||||||||||||||||||
|
2017 |
2016 |
Variance |
2017 |
2016 |
Variance |
2016 |
2017 |
2018 |
2019 | ||||||||||||||||||||||||||||
|
Capital Investment Projects: |
|||||||||||||||||||||||||||||||||||||
|
Service Expansions: |
|||||||||||||||||||||||||||||||||||||
|
Short-term contracts (Delaware) |
$ |
1,194 |
$ |
2,648 |
$ |
(1,454) |
$ |
3,857 |
$ |
5,191 |
$ |
(1,334) |
$ |
11,454 |
$ |
5,689 |
$ |
1,407 |
$ |
1,407 |
|||||||||||||||||
|
Long-term contracts (Delaware) |
2,387 |
455 |
1,932 |
3,481 |
911 |
2,570 |
1,815 |
7,611 |
7,605 |
7,583 |
|||||||||||||||||||||||||||
|
Total Service Expansions |
3,581 |
3,103 |
478 |
$ |
7,338 |
$ |
6,102 |
$ |
1,236 |
13,269 |
13,300 |
9,012 |
8,990 |
||||||||||||||||||||||||
|
Florida GRIP |
3,341 |
2,809 |
532 |
6,609 |
5,396 |
1,213 |
11,552 |
13,727 |
14,407 |
15,085 |
|||||||||||||||||||||||||||
|
Eight Flags' CHP Plant |
2,679 |
551 |
2,128 |
4,975 |
551 |
4,424 |
4,998 |
8,366 |
8,706 |
8,960 |
|||||||||||||||||||||||||||
|
Total Capital Investment Projects |
9,601 |
6,463 |
3,138 |
18,922 |
12,049 |
6,873 |
29,819 |
35,393 |
32,125 |
33,035 |
|||||||||||||||||||||||||||
|
Settled Delaware Division Rate Case |
425 |
555 |
(130) |
1,295 |
878 |
417 |
1,487 |
2,250 |
2,250 |
2,250 |
|||||||||||||||||||||||||||
|
Total Major Projects and Initiatives Recently Completed |
$ |
10,026 |
$ |
7,018 |
$ |
3,008 |
$ |
20,217 |
$ |
12,927 |
$ |
7,290 |
$ |
31,306 |
$ |
37,643 |
$ |
34,375 |
$ |
35,285 |
|||||||||||||||||
(1) Does not include gross margin of $3.5 million and $9.3 million for the three and six months ended June 30, 2017, respectively, and $13.9 million for the year ended December 31, 2016, which consists primarily of gross margin attributable to Aspire Energy for those periods. The acquisition of Aspire Energy was previously disclosed as a major project; however, the gross margin attributable to Aspire Energy is now being excluded from this table.
Service Expansions
In August 2014, Eastern Shore entered into a precedent agreement with an electric power generator in Kent County, Delaware, to provide, upon the satisfaction of certain conditions, a 20-year natural gas transmission service for 45,000 dekatherms per day ("Dts/d") deliverable to the lateral serving the customer's facility. In July 2016, the FERC authorized Eastern Shore to construct and operate the proposed project, which consists of 5.4 miles of 16-inch pipeline looping and new compression capability in Delaware. Eastern Shore provided interim services to this customer pending construction of facilities. Construction of the project is complete, and long-term service commenced on March 1, 2017, pursuant to a 20-year OPT 90 ≤ service agreement. This service generated an additional gross margin of $106,000 during the six months ended June 30, 2017 compared to the same period in 2016. There was no incremental margin change during the second quarter as the margin generated from the permanent services equated to the margin generated from providing interim services during the second quarter of 2016. This service is expected to generate gross margin of $7.0 million for 2017 and between $5.8 million and $7.8 million annually through the remaining term of the agreement.
In October 2015, Eastern Shore submitted an application to the FERC to make certain meter tube and control valve replacements and related improvements at its Texas Eastern Transmission, LP ("TETLP") interconnect facilities, which would enable Eastern Shore to increase natural gas receipts from TETLP by 53,000 Dts/d, for a total capacity of 160,000 Dts/d. In December 2015, the FERC authorized Eastern Shore to proceed with this project, which was completed and placed in service in March 2016. Approximately 35 percent of the increased capacity has been subscribed on a short-term firm service basis through October 2017. This service generated an additional gross margin of $540,000 and $1.2 million for the three and six months ended June 30, 2017, respectively, compared to the same periods in 2016. The remaining capacity is available for firm or interruptible service.
GRIP
GRIP is a natural gas pipe replacement program approved by the Florida Public Service Commission ("PSC"), designed to expedite the replacement of qualifying distribution mains and services (any material other than coated steel or plastic) to enhance the reliability and integrity of the Company's Florida natural gas distribution systems. This program allows recovery, through regulated rates, of capital and other program-related costs, inclusive of a return on investment, associated with the replacement of the mains and services. Since the program's inception in August 2012, the Company has invested $108.1 million to replace 240 miles of qualifying distribution mains, including $5.2 million during the first six months of 2017. The increased investment in GRIP generated additional gross margin of $532,000 and $1.2 million for the three and six months ended June 30, 2017, respectively, compared to the same periods in 2016.
Eight Flags' CHP plant
In June 2016, Eight Flags completed construction of a CHP plant on Amelia Island, Florida. This CHP plant, which consists of a natural-gas-fired turbine and associated electric generator, produces approximately 20 megawatts of base load power and includes a heat recovery steam generator capable of providing approximately 75,000 pounds per hour of residual steam. In June 2016, Eight Flags began selling power generated from the CHP plant to Florida Public Utilities Company ("FPU"), the Company's wholly-owned subsidiary, pursuant to a 20-year power purchase agreement for distribution to FPU's retail electric customers. In July 2016, it also started selling steam to the industrial customer that owns the property on which Eight Flags' CHP plant is located, pursuant to a separate 20-year contract.
The CHP plant is powered by natural gas transported by FPU through its distribution system and by Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), the Company's wholly-owned Florida intrastate pipeline subsidiary. For the three and six months ended June 30, 2017, Eight Flags and other affiliates of Chesapeake Utilities generated $2.1 million and $4.4 million, respectively, in additional gross margin as a result of these services that began in June 2016. This amount includes gross margin of $43,000 and $535,000 for the three and six months ended June 30, 2017, respectively, attributable to natural gas distribution and transportation services provided to the CHP plant by the Company's regulated affiliates.
Major Projects and Initiatives Currently Underway
Northwest Florida Expansion Project: Peninsula Pipeline and the Company's Florida natural gas division are constructing a pipeline in Escambia County, Florida that will interconnect with Florida Gas Transmission Company's ("FGT") pipeline. The project consists of 33 miles of 12-inch transmission line from the FGT interconnect that will be operated by Peninsula Pipeline and 8 miles of 8-inch lateral distribution lines that will be operated by the Company's Florida natural gas division. The Company has signed agreements to serve two industrial customers. The estimated annual gross margin associated with this project, once in service, is approximately $5.1 million.
2017 Expansion Project: In May 2016, Eastern Shore submitted a request to the FERC to initiate the FERC's pre-filing process for its proposed 2017 expansion project. This project, which will expand Eastern Shore's firm service capacity by 26 percent, will provide 61,162 Dts/d of additional firm natural gas transportation service on Eastern Shore's pipeline system with an additional 52,500 Dts/d of firm transportation service at certain Eastern Shore receipt facilities pursuant to precedent agreements Eastern Shore entered into with seven existing customers including three affiliates of the Company. Facilities required to provide this new service will consist of: (i) approximately 23 miles of pipeline looping in Pennsylvania, Maryland and Delaware; (ii) upgrades to existing metering facilities in Lancaster County, Pennsylvania; (iii) installation of an additional 3,750-horsepower compressor unit at Eastern Shore's existing Daleville compressor station in Chester County, Pennsylvania; and (iv) approximately 17 miles of new mainline extension and two pressure control stations in Sussex County, Delaware. The project will generate approximately $15.8 million of gross margin in the first full year after the new transportation services go into effect. The estimated investment in this expansion project is $98.6 million.
System Reliability Project: In July 2016, the FERC authorized Eastern Shore to construct and operate its proposed System Reliability Project, which will consist of approximately 10.1 miles of 16-inch pipeline looping and auxiliary facilities in New Castle and Kent Counties, Delaware, and a new compressor at its existing Bridgeville compressor station in Sussex County, Delaware. A 2.5 mile looping segment was completed and placed into service in December 2016. The remaining looping and the new compressor were completed and placed in service in the second quarter of 2017. This project was included in Eastern Shore's January 2017 base rate case filing with the FERC. We have assumed recovery of this project's costs beginning in August 2017, coinciding with the proposed effectiveness of new rates, subject to refund pending final resolution of the base rate case. The Company expects to generate approximately $4.5 million in annual gross margin once new rates go into effect.
Other major factors influencing gross margin
Weather and Consumption
Warmer temperatures in 2017 had a negative impact on the Company's earnings. As compared to the prior year, warmer temperatures during 2017 reduced gross margin for the quarter and six months ended June 30, 2017 by $675,000 and $1.4 million, respectively, compared to the same periods in 2016. Warmer than normal temperatures for the quarter and six months ended June 30, 2017, reduced gross margin by $1.1 million and $4.3 million, respectively, compared to the same periods in 2016. The following table summarizes heating degree-day ("HDD") and cooling degree-day ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three and six months ended June 30, 2017 and 2016.
|
HDD and CDD Information |
|||||||||||||||||
|
Three Months Ended |
Six months ended |
||||||||||||||||
|
June 30, |
June 30, |
||||||||||||||||
|
2017 |
2016 |
Variance |
2017 |
2016 |
Variance | ||||||||||||
|
Delmarva |
|||||||||||||||||
|
Actual HDD |
288 |
485 |
(197) |
2,246 |
2,579 |
(333) |
|||||||||||
|
10-Year Average HDD ("Delmarva Normal") |
429 |
452 |
(23) |
2,783 |
2,854 |
(71) |
|||||||||||
|
Variance from Delmarva Normal |
(141) |
33 |
(537) |
(275) |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual HDD |
13 |
9 |
4 |
298 |
514 |
(216) |
|||||||||||
|
10-Year Average HDD ("Florida Normal") |
19 |
19 |
— |
602 |
553 |
49 |
|||||||||||
|
Variance from Florida Normal |
(6) |
(10) |
(304) |
(39) |
|||||||||||||
|
Ohio |
|||||||||||||||||
|
Actual HDD |
508 |
766 |
(258) |
2,992 |
3,557 |
(565) |
|||||||||||
|
10-Year Average HDD ("Ohio Normal") |
637 |
630 |
7 |
3,774 |
3,762 |
12 |
|||||||||||
|
Variance from Ohio Normal |
(129) |
136 |
(782) |
(205) |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual CDD |
935 |
986 |
(51) |
1,080 |
1,113 |
(33) |
|||||||||||
|
10-Year Average CDD ("Florida CDD Normal") |
955 |
948 |
7 |
1,037 |
1,025 |
12 |
|||||||||||
|
Variance from Florida CDD Normal |
(20) |
38 |
43 |
88 |
|||||||||||||
Propane prices
Lower retail propane margins per gallon for the Company's Delmarva and Florida propane distribution operations decreased gross margin by $23,000 and $305,000 for the three and six months ended June 30, 2017, respectively, of which $8,000 and $204,000 is associated with the Company's Delmarva operations. The Company continues to assume normal levels of margins in its long-term financial plans and forecasts.
PESCO
PESCO provides natural gas supply and supply management services to residential, commercial, industrial and wholesale customers. PESCO operates primarily in Florida, on the Delmarva Peninsula, and in Ohio. PESCO competes with regulated utilities and other unregulated third-party marketers to manage natural gas supplies directly to residential, commercial and industrial customers through competitively-priced contracts. PESCO does not currently own or operate any natural gas transmission or distribution assets but sells gas that is delivered to retail or wholesale customers through affiliated and non-affiliated local distribution company systems and transmission pipelines.
In 2017, the Company's Delmarva natural gas distribution operations entered into asset management agreements with PESCO to manage a portion of their natural gas transportation and storage capacity. The asset management agreements were effective April 1, 2017, and each has a three-year term, expiring on March 31, 2020. As a result of these agreements, PESCO manages capacity on regional pipelines as well as third-party storage contracts for the Company's Delmarva natural gas distribution operations in conjunction with PESCO's asset management services.
For the three months ended June 30, 2017 PESCO's gross margin decreased by $450,000, due primarily to the absence of a supplier agreement that expired on March 31, 2017 and was not renewed due to lower margin expectations. For the six months ended June 30, 2017, PESCO generated additional gross margin of $1.7 million, compared to the same period in 2016 as a result of revenues from the supplier agreement as well as additional customers in Florida partially offset by lower margin in the Mid-Atlantic region. Under the supplier agreement, PESCO delivered the highest volumes during the first quarter of 2017, while fixed storage and pipeline fees were paid over the entire twelve-month period from April 1, 2016 to March 31, 2017.
Xeron
As disclosed previously, the Company's management determined that there was no viable strategy to restore Xeron to profitability in the near term and, accordingly, wound down Xeron's operations shortly after the first quarter. The Company recorded $522,000 and $1.1 million in pre-tax losses from Xeron in the three and six months ended June 30 2017, respectively, driven primarily by non-recurring employee severance costs and costs associated with termination of leased office space in Houston, Texas. The Company does not anticipate incurring any additional costs that will have a material impact associated with winding down Xeron's operations. With the wind-down of Xeron, the operating loss generated in the latter half of 2016 will be avoided later this year.
Other Natural Gas Growth - Distribution Operations
In addition to service expansions, the Company's natural gas distribution operations on the Delmarva Peninsula generated $128,000 and $649,000 in additional gross margin for the three and six months ended June 30, 2017, respectively, compared to the same periods in 2016, due to an increase in residential, commercial and industrial customers served. The average number of residential customers on the Delmarva Peninsula increased by 3.6 percent and 3.8 percent, respectively, during the three and six months ended June 30, 2017 compared to the same periods in 2016. The Company's natural gas distribution operations in Florida generated $328,000 and $804,000 in additional gross margin for the three and six months ended June 30, 2017, respectively, compared to the same periods in 2016, due primarily to an increase in commercial and industrial customers in Florida.
Regulatory Proceedings
Delaware Division Rate Case
In December 2016, the Delaware PSC approved a settlement agreement as recommended by the Hearing Examiner's report. The settlement agreement, among other things, provided for an increase in the Company's Delaware division revenue requirement of $2.25 million and a rate of return on common equity of 9.75 percent. The new authorized rates went into effect on January 1, 2017. Any amounts collected through 2016 interim rates in excess of the respective portion of the $2.25 million were refunded to the ratepayers in March 2017.
Eastern Shore Rate Case
In January 2017, Eastern Shore filed a base rate proceeding with the FERC, as required by the terms of its 2012 rate case settlement agreement. Eastern Shore's proposed rates were based on a cost of service of approximately $60 million, resulting in an overall requested revenue increase of approximately $18.9 million and a requested rate of return on common equity of 13.75 percent. The FERC issued a notice of the filing in January 2017, and the comment period ended in February 2017. Fourteen parties intervened in the proceeding, with six of those parties filing protests of some aspect of the rate filing. The FERC issued an order suspending the effectiveness of the proposed tariff rates for the usual five-month period. A settlement conference was held on July 27, 2017, in which the parties reviewed the latest proposals and further discussed their positions. Another settlement conference is scheduled for August 30 and 31, 2017. Eastern Shore has filed the requisite notice with the FERC to implement interim rates effective August 1, 2017.
Investing for Future Growth
To support and continue its growth, the Company has expanded, and will continue to expand, its resources and capabilities. Eastern Shore has expanded, and has announced significant additional expansions to, its transmission system, and is therefore increasing its staffing. We requested recovery of most of Eastern Shore's increased staffing costs in its 2017 rate case. Growth in non-regulated energy businesses, including Aspire Energy, PESCO and Eight Flags, requires additional staff as well as corporate resources to support the increased level of business operations. Finally, to allow the Company to continue to identify and move growth initiatives forward and to assist in developing additional initiatives, resources have been added in the Company's corporate shared services departments. In the three and six months ended June 30, 2017, the Company's staffing and associated costs increased by $976,000 and $4.2 million, or five percent and 12 percent, respectively, compared to the same period in 2016. The Company is prudently managing the pace and magnitude of the investments being made while ensuring that it appropriately expands its human resources and systems capabilities to capitalize on future growth opportunities.
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | |||||||||||||||
|
Three Months Ended |
Six Months Ended | ||||||||||||||
|
June 30, |
June 30, | ||||||||||||||
|
2017 |
2016 |
2017 |
2016 | ||||||||||||
|
Operating Revenues |
|||||||||||||||
|
Regulated Energy |
$ |
70,996 |
$ |
67,395 |
$ |
168,650 |
$ |
156,611 |
|||||||
|
Unregulated Energy and other |
54,088 |
34,947 |
141,594 |
92,027 |
|||||||||||
|
Total Operating Revenues |
125,084 |
102,342 |
310,244 |
248,638 |
|||||||||||
|
Operating Expenses |
|||||||||||||||
|
Regulated Energy cost of sales |
24,167 |
21,635 |
64,411 |
56,540 |
|||||||||||
|
Unregulated Energy and other cost of sales |
40,505 |
22,934 |
101,260 |
56,958 |
|||||||||||
|
Operations |
30,408 |
28,087 |
63,321 |
55,246 |
|||||||||||
|
Maintenance |
3,403 |
2,904 |
6,634 |
5,383 |
|||||||||||
|
Gain from a settlement |
(130) |
(130) |
(130) |
(130) |
|||||||||||
|
Depreciation and amortization |
9,094 |
7,780 |
17,906 |
15,283 |
|||||||||||
|
Other taxes |
3,971 |
3,390 |
8,501 |
7,236 |
|||||||||||
|
Total operating expenses |
111,418 |
86,600 |
261,903 |
196,516 |
|||||||||||
|
Operating Income |
13,666 |
15,742 |
48,341 |
52,122 |
|||||||||||
|
Other expense, net |
(607) |
(8) |
(884) |
(42) |
|||||||||||
|
Interest charges |
3,073 |
2,624 |
5,811 |
5,274 |
|||||||||||
|
Income Before Income Taxes |
9,986 |
13,110 |
41,646 |
46,806 |
|||||||||||
|
Income taxes |
3,940 |
5,081 |
16,456 |
18,410 |
|||||||||||
|
Net Income |
$ |
6,046 |
$ |
8,029 |
$ |
25,190 |
$ |
28,396 |
|||||||
|
Weighted Average Common Shares Outstanding: |
|||||||||||||||
|
Basic |
16,340,665 |
15,315,020 |
16,329,009 |
15,300,931 |
|||||||||||
|
Diluted |
16,382,207 |
15,352,702 |
16,373,038 |
15,342,287 |
|||||||||||
|
Earnings Per Share of Common Stock: |
|||||||||||||||
|
Basic |
$ |
0.37 |
$ |
0.52 |
$ |
1.54 |
$ |
1.86 |
|||||||
|
Diluted |
$ |
0.37 |
$ |
0.52 |
$ |
1.54 |
$ |
1.85 |
|||||||
|
Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Assets |
June 30, 2017 |
December 31, 2016 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Property, Plant and Equipment |
||||||||
|
Regulated Energy |
$ |
1,038,929 |
$ |
957,681 |
||||
|
Unregulated Energy |
202,707 |
196,800 |
||||||
|
Other businesses and eliminations |
25,623 |
21,114 |
||||||
|
Total property, plant and equipment |
1,267,259 |
1,175,595 |
||||||
|
Less: Accumulated depreciation and amortization |
(260,428) |
(245,207) |
||||||
|
Plus: Construction work in progress |
44,556 |
56,276 |
||||||
|
Net property, plant and equipment |
1,051,387 |
986,664 |
||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
2,419 |
4,178 |
||||||
|
Accounts receivable (less allowance for uncollectible accounts of $862 and $909, respectively) |
41,113 |
62,803 |
||||||
|
Accrued revenue |
11,812 |
16,986 |
||||||
|
Propane inventory, at average cost |
4,649 |
6,457 |
||||||
|
Other inventory, at average cost |
9,996 |
4,576 |
||||||
|
Regulatory assets |
7,167 |
7,694 |
||||||
|
Storage gas prepayments |
4,415 |
5,484 |
||||||
|
Income taxes receivable |
14,409 |
22,888 |
||||||
|
Prepaid expenses |
3,939 |
6,792 |
||||||
|
Mark-to-market energy assets |
229 |
823 |
||||||
|
Other current assets |
2,287 |
2,470 |
||||||
|
Total current assets |
102,435 |
141,151 |
||||||
|
Deferred Charges and Other Assets |
||||||||
|
Goodwill |
15,070 |
15,070 |
||||||
|
Other intangible assets, net |
1,664 |
1,843 |
||||||
|
Investments, at fair value |
5,952 |
4,902 |
||||||
|
Regulatory assets |
76,128 |
76,803 |
||||||
|
Receivables and other deferred charges |
4,352 |
2,786 |
||||||
|
Total deferred charges and other assets |
103,166 |
101,404 |
||||||
|
Total Assets |
$ |
1,256,988 |
$ |
1,229,219 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Capitalization and Liabilities |
June 30, 2017 |
December 31, 2016 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Capitalization |
||||||||
|
Stockholders' equity |
||||||||
|
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding |
$ |
— |
$ |
— |
||||
|
Common stock, par value $0.4867 per share (authorized 25,000,000 shares) |
7,955 |
7,935 |
||||||
|
Additional paid-in capital |
252,071 |
250,967 |
||||||
|
Retained earnings |
206,896 |
192,062 |
||||||
|
Accumulated other comprehensive loss |
(5,244) |
(4,878) |
||||||
|
Deferred compensation obligation |
3,336 |
2,416 |
||||||
|
Treasury stock |
(3,336) |
(2,416) |
||||||
|
Total stockholders' equity |
461,678 |
446,086 |
||||||
|
Long-term debt, net of current maturities |
201,590 |
136,954 |
||||||
|
Total capitalization |
663,268 |
583,040 |
||||||
|
Current Liabilities |
||||||||
|
Current portion of long-term debt |
12,124 |
12,099 |
||||||
|
Short-term borrowing |
145,591 |
209,871 |
||||||
|
Accounts payable |
52,101 |
56,935 |
||||||
|
Customer deposits and refunds |
30,725 |
29,238 |
||||||
|
Accrued interest |
1,637 |
1,312 |
||||||
|
Dividends payable |
5,312 |
4,973 |
||||||
|
Accrued compensation |
6,683 |
10,496 |
||||||
|
Regulatory liabilities |
5,609 |
1,291 |
||||||
|
Mark-to-market energy liabilities |
188 |
773 |
||||||
|
Other accrued liabilities |
12,084 |
7,063 |
||||||
|
Total current liabilities |
272,054 |
334,051 |
||||||
|
Deferred Credits and Other Liabilities |
||||||||
|
Deferred income taxes |
234,716 |
222,894 |
||||||
|
Regulatory liabilities |
42,427 |
43,064 |
||||||
|
Environmental liabilities |
8,457 |
8,592 |
||||||
|
Other pension and benefit costs |
31,920 |
32,828 |
||||||
|
Deferred investment tax credits and other liabilities |
4,146 |
4,750 |
||||||
|
Total deferred credits and other liabilities |
321,666 |
312,128 |
||||||
|
Total Capitalization and Liabilities |
$ |
1,256,988 |
$ |
1,229,219 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Three Months Ended June 30, 2017 |
For the Three Months Ended June 30, 2016 | |||||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution |
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution | |||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
11,096 |
$ |
1,365 |
$ |
7,633 |
$ |
10,477 |
$ |
10,480 |
$ |
1,267 |
$ |
6,294 |
$ |
10,418 |
||||||||||||||||
|
Commercial |
6,424 |
1,395 |
7,449 |
10,075 |
5,779 |
1,230 |
6,926 |
10,280 |
||||||||||||||||||||||||
|
Industrial |
1,849 |
1,577 |
4,775 |
733 |
1,658 |
1,590 |
5,041 |
661 |
||||||||||||||||||||||||
|
Other (1) |
(3,136) |
966 |
(1,271) |
(207) |
(1,740) |
840 |
(1,578) |
(1,471) |
||||||||||||||||||||||||
|
Total Operating Revenues |
$ |
16,233 |
$ |
5,303 |
$ |
18,586 |
$ |
21,078 |
$ |
16,177 |
$ |
4,927 |
$ |
16,683 |
$ |
19,888 |
||||||||||||||||
|
Volume (in Dts/MWHs) |
||||||||||||||||||||||||||||||||
|
Residential |
583,108 |
76,365 |
304,669 |
69,298 |
612,620 |
74,658 |
290,174 |
67,872 |
||||||||||||||||||||||||
|
Commercial |
614,311 |
2,710,729 |
459,354 |
74,766 |
670,593 |
1,356,421 |
532,434 |
75,071 |
||||||||||||||||||||||||
|
Industrial |
1,206,698 |
1,501,779 |
1,100,430 |
4,750 |
1,175,665 |
2,797,836 |
1,004,336 |
4,900 |
||||||||||||||||||||||||
|
Other |
20,216 |
— |
(23,024) |
1,874 |
26,581 |
— |
(16,406) |
1,961 |
||||||||||||||||||||||||
|
Total |
2,424,333 |
4,288,873 |
1,841,429 |
150,688 |
2,485,459 |
4,228,915 |
1,810,538 |
149,804 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
68,442 |
15,786 |
54,352 |
24,582 |
66,085 |
15,328 |
53,286 |
24,268 |
||||||||||||||||||||||||
|
Commercial |
6,836 |
1,430 |
4,072 |
7,429 |
6,745 |
1,388 |
4,265 |
7,410 |
||||||||||||||||||||||||
|
Industrial |
144 |
78 |
2,055 |
2 |
122 |
72 |
1,749 |
2 |
||||||||||||||||||||||||
|
Other |
7 |
— |
— |
4 |
— |
— |
||||||||||||||||||||||||||
|
Total |
75,429 |
17,294 |
60,479 |
32,013 |
72,956 |
16,788 |
59,300 |
31,680 |
||||||||||||||||||||||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Six Months Ended June 30, 2017 |
For the Six Months Ended June 30, 2016 | |||||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution |
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution | |||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
36,806 |
$ |
2,917 |
$ |
18,401 |
$ |
19,804 |
$ |
31,747 |
$ |
2,838 |
$ |
15,582 |
$ |
21,725 |
||||||||||||||||
|
Commercial |
17,836 |
2,918 |
17,043 |
19,489 |
15,440 |
2,646 |
15,160 |
19,822 |
||||||||||||||||||||||||
|
Industrial |
3,683 |
3,336 |
10,702 |
1,204 |
3,579 |
3,227 |
10,573 |
1,478 |
||||||||||||||||||||||||
|
Other (1) |
(1,678) |
1,866 |
(4,054) |
(1,796) |
(1,088) |
1,757 |
(3,411) |
(3,604) |
||||||||||||||||||||||||
|
Total Operating Revenues |
$ |
56,647 |
$ |
11,037 |
$ |
42,092 |
$ |
38,701 |
$ |
49,678 |
$ |
10,468 |
$ |
37,904 |
$ |
39,421 |
||||||||||||||||
|
Volume (in Dts/MWHs) |
||||||||||||||||||||||||||||||||
|
Residential |
2,391,008 |
199,640 |
775,480 |
130,624 |
2,318,217 |
213,130 |
797,086 |
141,795 |
||||||||||||||||||||||||
|
Commercial |
1,995,719 |
5,668,445 |
1,060,557 |
140,628 |
2,069,483 |
2,804,168 |
1,224,765 |
143,186 |
||||||||||||||||||||||||
|
Industrial |
2,580,496 |
3,269,209 |
2,289,693 |
7,910 |
2,545,306 |
6,091,648 |
2,130,091 |
11,580 |
||||||||||||||||||||||||
|
Other |
30,754 |
— |
(15,876) |
3,747 |
40,085 |
— |
23,976 |
4,599 |
||||||||||||||||||||||||
|
Total |
6,997,977 |
9,137,294 |
4,109,854 |
282,909 |
6,973,091 |
9,108,946 |
4,175,918 |
301,160 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
68,572 |
15,725 |
54,196 |
24,510 |
66,084 |
15,285 |
53,165 |
24,218 |
||||||||||||||||||||||||
|
Commercial |
6,874 |
1,420 |
4,123 |
7,438 |
6,771 |
1,383 |
4,263 |
7,398 |
||||||||||||||||||||||||
|
Industrial |
143 |
77 |
1,997 |
2 |
121 |
72 |
1,732 |
2 |
||||||||||||||||||||||||
|
Other |
6 |
— |
— |
4 |
— |
— |
||||||||||||||||||||||||||
|
Total |
75,595 |
17,222 |
60,316 |
31,950 |
72,980 |
16,740 |
59,160 |
31,618 |
||||||||||||||||||||||||
(1) Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties and adjustments for pass-through taxes.
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-reports-second-quarter-results-300498778.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/3/2017Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Aug. 2, 2017 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.325 per share on the Company's common stock. The $0.325 per share dividend will be paid on October 5, 2017 to all shareholders of record at the close of business on September 15, 2017.
Chesapeake has paid dividends to its shareholders without interruption for 56 years. During those 56 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-announces-quarterly-dividend-300498657.html
SOURCE Chesapeake Utilities Corporation
Article Date
8/2/20177/26/2017 - Chesapeake Utilities Corporation To Host Conference Call To Review Second Quarter 2017 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review Second Quarter 2017 Financial Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., July 26, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, August 4, 2017, at 10:30 a.m. ET to discuss the Company's financial results for the second quarter ended June 30, 2017. The earnings press release will be issued on Thursday, August 3, 2017, before the market opens.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2017 Second Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
View original content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-to-host-conference-call-to-review-second-quarter-2017-financial-results-300494787.html
SOURCE Chesapeake Utilities Corporation
Article Date
7/26/20177/10/2017 - Eight Flags Energy CHP Plant Honored With 2017 Southeastern Electric Exchange Industry Excellence Award
Eight Flags Energy CHP Plant Honored With 2017 Southeastern Electric Exchange Industry Excellence Award
Source: PR Newswire
DOVER, Del., July 10, 2017 /PRNewswire/ -- The Southeastern Electric Exchange, Inc. (SEE) has recognized the Eight Flags Energy Combined Heat and Power (CHP) Plant as a 2017 Industry Excellence Award winner in the Production category. The CHP plant is a first-of-its-kind for Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) and its subsidiary, Florida Public Utilities Company (FPU). The award was announced during the SEE Annual Conference and Trade Show in Baltimore, Maryland in June. The SEE Industry Excellence Awards recognize utility companies for projects that demonstrate innovation, improvements and technical complexity.
"The Eight Flags Energy CHP Plant is a strategic solution designed to meet the needs of our customers and communities while reducing emissions and providing savings," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "This project is an example of our employees' commitment to developing innovative ways to grow while continuing to deliver increased value to our customers, investors and the communities we serve."
"Florida Public Utilities, a Chesapeake Utilities subsidiary, is one of fifty-four members from across the eastern U.S.," said Scott H. Smith, Director, Southeastern Electric Exchange, Inc. "It was great to see Chesapeake and FPU construct their first production project and be recognized for their significant accomplishment. Not only is the Combined Heat and Power Plant storm hardened, but it provides on-Island generation, which results in less dependence on purchased power and increases reliability for FPU's customers while lowering costs. Congratulations to Chesapeake, FPU and to all of the team members who contributed to this project."
The Eight Flags Energy CHP Plant generates approximately 20 MW of base load power, producing enough electricity to meet on average 50 percent of the Island's demand. The CHP Plant operates on natural gas, one of the cleanest, safest and most efficient energy options. The Plant produces three energy outputs: steam, heated water and electricity, the latter of which is purchased by FPU for distribution to its electric customers. The use of natural gas yields lower-cost, highly reliable electricity for FPU's electric retail customers while recovering waste heat to produce thermal energy to support Rayonier's processes. The Eight Flags CHP Plant was completed and put into commercial operation in June 2016, only 50 weeks after mobilization of construction crews at the site.
"This plant is one of the most energy-efficient cogeneration power plants in the United States, with a target efficiency of 78 percent," added Jeffry M. Householder, President of Florida Public Utilities Company. "I'm proud of the team of employees and partners who worked diligently to bring this project to fruition. It's a resource that makes a meaningful impact, and I look forward to continuing to find additional ways to best serve our customers and the communities we serve."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com.
About Florida Public Utilities Company
Florida Public Utilities Company is a wholly-owned subsidiary of Chesapeake Utilities Corporation. Headquartered in Amelia Island, Florida, FPU distributes natural gas and propane and provides electric services to approximately 124,000 customers in markets throughout Florida. For more information, visit www.fpuc.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Mike Stock
Sr. Director, Corporate Communications
Chesapeake Utilities Corporation
302.736.7808
mstock@chpk.com
View original content with multimedia:http://www.prnewswire.com/news-releases/eight-flags-energy-chp-plant-honored-with-2017-southeastern-electric-exchange-industry-excellence-award-300485281.html
SOURCE Chesapeake Utilities Corporation
Article Date
7/10/2017Chesapeake Utilities Corporation Announces Executive Appointments
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., June 29, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today five executive appointments for team members of the corporate office as well as for the Company's Chesapeake Utilities, Peninsula Energy Services Company (PESCO) and Sharp Energy business units.
"Our Company's growth and powerful energy is made possible through the dedication of our employees," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Each of these employees embody a great commitment to our Company's strategic growth and our values of aspiring and caring. I am very proud to have them on our team, advancing our Company's mission to providing excellent, safe and reliable energy services along with increased value to customers, employees, investors and the communities we serve."
Lou Anatrella has joined the Company as Chief Human Resources Officer. He is responsible for the Company's people strategy and leading the human resources function which includes talent management, leadership development and executive succession planning; employee relations; compensation and benefits; and diversity. Mr. Anatrella has more than 25 years of diverse senior leadership experience across the energy sector. Prior to joining Chesapeake, he served as Senior Vice President of Administration at REC Solar, a Duke Energy Company, where he led the Human Resources, Information Technology and Legal teams. He has served on the National Energy Regulatory Council's Boards of Directors of the Mid-Atlantic Area Council, the Southeastern Electric Reliability Council and the East Central Area Reliability Council. Mr. Anatrella earned a Bachelor of Science in Engineering from the University of Dayton.
Aleida Socarrás has been promoted to Vice President of Chesapeake Utilities. Ms. Socarrás will be responsible for overseeing the day-to-day activities of the Delmarva Natural Gas (DNG) and Sandpiper Energy gas distribution systems on the Delmarva Peninsula. Ms. Socarrás, who was Assistant Vice President, Marketing & Energy Logistics for Florida Public Utilities Company (FPU), a Chesapeake subsidiary, joined the Company in 2010. In this position, she led Florida's Marketing and Sales, Gas Logistics and Transportation Service Administration functions. Prior to that, she was FPU's Director of Marketing and Sales. Prior to joining FPU, she spent 23 years in various roles at TECO Peoples Gas. Ms. Socarrás earned her Master of Arts in Organizational and Industrial Psychology from the University of Texas at El Paso, and her Bachelor of Arts from Florida International University in Miami. She is past Chair of the Southern Gas Association's Growth and Retention Committee and has served in leadership roles on multiple non-profit organizations' boards.
Tom Mahn has been promoted to Vice President of Chesapeake Utilities Corporation and will continue to serve as Treasurer and head of the Finance Department. Mr. Mahn has significantly expanded the capabilities of the Finance Department in order to provide excellent service to customers and increased value to shareholders and potential investors. He has helped grow the Company's investor relations, insurance and credit evaluation and monitoring functions over the last five years and under his leadership, he has recommended and facilitated the Company's first revolver facility for $150 million with five banks for a five-year term and implemented multiple treasury efficiencies. Prior to joining Chesapeake Utilities Corporation, Mr. Mahn was Vice President and Treasurer with Perdue Incorporated. Mr. Mahn earned his MBA in Business Administration from Salisbury University and his Bachelor of Arts in Business Administration & Finance from Iona College.
Al Gallo has been promoted to Assistant Vice President of PESCO, the Company's non-regulated energy marketing business. In his previous role as Managing Director with PESCO, Mr. Gallo was instrumental in growing revenue by 70 percent from 2015 to 2016, establishing trade credit with 100 counterparties and adding transactions with five new local distribution companies and four new interstate pipelines. He helped pioneer the Company's student mentoring program with Junior Achievement and is a past recipient of the organization's Chairman's Award for outstanding service to Junior Achievement of Delaware. Prior to joining PESCO, Mr. Gallo was Senior Gas Trader with Constellation Energy with responsibility for the Northeast supply trading team. Mr. Gallo earned an MBA in Finance and a Bachelor of Arts in History and Business from the University of Delaware.
Andy Hesson has been promoted to Assistant Vice President of Sharp Energy, the Company's non-regulated propane distribution company. Prior to his promotion, as Sharp Energy's Director of Operations, he was successful in building a team and creating a culture of achievement that yielded an increase in gallon sales, growing the customer base to 38,000 and expanding the service territory to two new locations -- the Western Shore of Maryland and Wilmington, Delaware. Mr. Hesson has led the business' support for various community-based programs, including breast cancer awareness programs, the AI DuPont childhood allergies benefit and the Walk for Autism. These functions, along with others, were instrumental in Sharp Energy being honored with Metropolitan Magazine's inaugural "Best of Delmarva" award for the best gas company on the Delmarva Peninsula. Prior to joining Sharp Energy, Mr. Hesson was Ohio Division Vice President with Inergy LLC. Mr. Hesson has a Bachelor of Science from California State University – Chico.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Mike Stock
Sr. Director, Corporate Communications
Chesapeake Utilities Corporation
mstock@chpk.com
302.736.7808
SOURCE Chesapeake Utilities Corporation
Article Date
6/29/2017Chesapeake Utilities Corporation Earns National Safety Award
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., June 14, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) announced today that its subsidiary, Florida Public Utilities Company (FPU), has earned a Safety Achievement Award from the American Gas Association (AGA) for excellence in employee safety. The selection was based on criteria that included professional and personal commitment and dedication to improving the operations and engineering sectors of the natural gas industry through safety, accident prevention and research. The awards for 2016 were presented at the AGA's Operations Conference in Orlando, Florida.
"Safety is our top priority and we are committed to promoting a positive safety culture throughout our Company," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "I'm extremely proud to see our Florida team recognized for maintaining the very highest standards of safety for our workplace, our customers and our communities."
With a long history of providing safe and reliable services, FPU distributes natural gas to approximately 74,000 residential and commercial customers and propane to 16,000 customers across Florida. FPU also earned a 2015 AGA Safety Achievement Award for excellence in employee safety. The AGA's Safety Achievement Award for excellence in employee safety is given to member companies that experienced the lowest DART (Days Away, Restricted and Transferred) incident rate — a mathematical calculation that describes the number of recordable injuries and illnesses per 100 full-time employees that resulted in days away from work or restricted work activity.
"Safety is at the core of the service natural gas utilities provide," said Dave McCurdy, President and Chief Executive Officer of the AGA. "The men and women who operate America's natural gas delivery systems play a critical role in safely delivering this clean energy source to the more than 69 million customers who rely on it each day. We have always stood for these values and an unending commitment to service."
"AGA's recognition of our commitment to safety is a great testament to the work done by our employees every day," said Jeffry M. Householder, President of FPU. "We will continue to implement best practices within the industry in order to maintain safe environments for our employees and customers."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Mike Stock
Sr. Director, Corporate Communications
Chesapeake Utilities Corporation
mstock@chpk.com
302-736-7808
SOURCE Chesapeake Utilities Corporation
Article Date
6/14/2017Chesapeake Utilities Corporation to Host Live Webcast at 2017 AGA Financial Forum
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., May 17, 2017 /PRNewswire/ -- The Company announced today that Michael P. McMasters, President and CEO, and Beth W. Cooper, Senior Vice President and CFO of Chesapeake Utilities Corporation (NYSE: CPK) will be hosting a live webcast at 2:15 pm on Sunday, May 21st at the 2017 AGA Financial Forum taking place in Orlando, Florida. Webcast participants and members of the live audience will learn about the projects the Company currently has underway and other strategic initiatives which position the Company for future growth.
To listen to the live webcast, visit Chesapeake's website at www.chpk.com, click on Investors/Events and Webcasts/Other Events then click on the "Listen to Webcast" link under the 2017 AGA Financial Forum section or just click on the following link: Listen to Webcast. You will be prompted to register for the webcast that will start promptly at 2:15 pm where the live audio and slides of the presentation being given will be available.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
5/17/2017Chesapeake Utilities Corporation Raises Dividend By 6.6 Percent
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., May 3, 2017 /PRNewswire/ -- At their meeting held today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) voted to increase the quarterly cash dividend on the Company's common stock from $0.305 per share to $0.325 per share. The Board's action raises the annualized dividend $0.08 per share from $1.22 per share to $1.30 per share, which represents a 6.6 percent increase. The $0.325 per share dividend will be payable July 5, 2017 to all shareholders of record at the close of business on June 15, 2017.
"The Company celebrated another great year in 2016 as it was our tenth consecutive year of record earnings. As we enter into our 70th year of service, we are energized by the opportunities to grow our businesses looking forward. From cultivating growth in current areas to expanding our footprint into new growth markets -- year over year our employees have proven that their diligence, creativity and unwavering determination is key to delivering results. These ingredients, along with a proven successful growth strategy, have made our Company reach new heights each year," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "With their decision today to increase the dividend by 6.6 percent, the Board demonstrates their confidence in the Company's direction and commitment to shareholder value through dividend growth that is supported by sustainable future earnings growth," Mr. McMasters added.
Chesapeake has paid dividends to its shareholders without interruption for 56 years. During those 56 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
5/3/2017Chesapeake Utilities Corporation Reports First Quarter Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., May 3, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today reported first quarter financial results. The Company's net income for the quarter ended March 31, 2017 was $19.1 million, compared to $20.4 million in the same quarter of 2016. Earnings per share for the quarter ended March 31, 2017 were $1.17 per share, compared to $1.33 for the same quarter of 2016.
Margin growth continued to be strong throughout the Company's businesses, driven primarily by: income generated from the Eight Flags Energy, LLC ("Eight Flags") Combined Heat & Power ("CHP") plant, which initiated service in the second quarter of 2016; higher gross margin from the Company's natural gas marketing operation, Peninsula Energy Services Company, Inc. ("PESCO"); customer growth and service expansions in the Company's natural gas transmission and distribution businesses; and increased gross margin generated by the Florida Gas Reliability Infrastructure Program ("GRIP").
The increased gross margin generated by the Company's successful growth initiatives was offset by the effects of warmer than normal weather and higher operating expenses. The first quarter of 2017 was the third warmest first quarter on the Delmarva Peninsula during the last fifty years. The warmer weather during the quarter reduced EPS by $0.04 per share as compared to the first quarter of 2016. The increase in total quarter-over-quarter operating expenses was partly attributable to expenses incurred to pursue growth initiatives and wind down the operations of Xeron, Inc. ("Xeron"), the Company's former propane and crude oil trading subsidiary, which is more fully discussed in the "Major Projects and Initiatives" section later in this press release, which further reduced EPS by $0.04 per share. Lastly, an increase in outstanding shares as a result of the equity issuance consummated in September of 2016 lowered EPS for the quarter, by approximately $0.07 per share.
"First quarter results reflect both the continuing benefits of our growth strategy and the importance of investing in our systems and expanding our staff to deliver excellent service and maximize our future growth opportunities. Margin growth from both our regulated and unregulated businesses largely offset the first quarter impacts of warmer weather and higher costs from expanding our capacity to serve recent and future growth," stated Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "The investment in our ability to provide our customers with excellent service and expand our capacity to identify and develop future growth opportunities is critical to ensure that we continue to generate the kind of margin growth we delivered in the first quarter, as we seek to extend our ten years of record reported earnings per share in 2017 and beyond. We will continue to execute our growth plan with financial discipline, which includes walking away from opportunities that do not meet our strict guidelines for risk and return, even after incurring due diligence costs to fully vet them, as we did this quarter, or winding down operations after carefully weighing alternatives, as we did in the case of Xeron," added Mr. McMasters.
A more detailed discussion and analysis of the Company's results for each segment is provided in the following pages.
Comparative Results for the Quarters Ended March 31, 2017 and 2016
Operating income for the first quarter decreased by $1.7 million, or 4.7 percent, to $34.7 million compared to the same period in 2016. Gross margin increased by $6.8 million, or 8.8 percent, although other operating expenses increased by $8.5 million, or 20.7 percent. The increase in other operating expenses, in part, reflects higher expenses to support growth of the Company's businesses. Other expense drivers, which were mentioned previously, included costs associated with the wind down of Xeron's operations and costs associated with pursuing additional growth initiatives.
Regulated Energy Segment
Operating income for the Regulated Energy segment decreased by $1.3 million, or 5 percent, compared to the same period in 2016. The decreased operating income resulted from a $4.4 million increase in other operating expenses, offset by a $3.1 million increase in gross margin. Of the total $4.4 million increase in other operating expenses, $2.3 million is associated with recently completed and planned future growth projects of Eastern Shore Natural Gas Company ("Eastern Shore"), the Company's natural gas transmission subsidiary.
The significant components of the gross margin increase included:
The foregoing increases were offset by $527,000 from lower customer consumption of energy for the Company's distribution operations in Florida and on the Delmarva Peninsula due primarily to warmer weather.
The significant components of the increase in other operating expenses included:
Unregulated Energy Segment
Operating income for the Unregulated Energy segment for the three months ended March 31, 2017 was $11.5 million, a decrease of $406,000 compared to the same period in 2016. The decreased operating income was due to an increase in operating expenses of $4.1 million offset by a $3.7 million increase in gross margin.
The significant components of the gross margin increase were as follows:
The above gross margin increases were offset by the following:
The significant components of the increase in other operating expenses included:
Matters discussed 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 2016 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
The discussions of the results use the term "gross margin," a non-Generally Accepted Accounting Principles ("GAAP") financial measure, which management uses to evaluate the performance of the Company's business segments. For an explanation of the calculation of "gross margin," see the footnote to the Financial Summary.
Unless otherwise noted, earnings per share are presented on a diluted basis.
Conference Call
Chesapeake Utilities will host a conference call on Friday, May 5, 2017, at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter ended March 31, 2017. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2017 First Quarter Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audio cast section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary | |||||||
|
Three Months Ended | |||||||
|
March 31, | |||||||
|
2017 |
2016 | ||||||
|
Gross Margin (1) |
|||||||
|
Regulated Energy segment |
$ |
57,410 |
$ |
54,311 |
|||
|
Unregulated Energy segment |
26,819 |
23,101 |
|||||
|
Other businesses and eliminations |
(67) |
(45) |
|||||
|
Total Gross Margin |
$ |
84,162 |
$ |
77,367 |
|||
|
Operating Income |
|||||||
|
Regulated Energy segment |
$ |
23,017 |
$ |
24,319 |
|||
|
Unregulated Energy segment |
11,530 |
11,936 |
|||||
|
Other businesses and eliminations |
129 |
125 |
|||||
|
Total Operating Income |
34,676 |
36,380 |
|||||
|
Other Expense, net |
(277) |
(34) |
|||||
|
Interest Charges |
2,739 |
2,650 |
|||||
|
Pre-tax Income |
31,660 |
33,696 |
|||||
|
Income Taxes |
12,516 |
13,329 |
|||||
|
Net Income |
$ |
19,144 |
$ |
20,367 |
|||
|
Earnings Per Share of Common Stock |
|||||||
|
Basic |
$ |
1.17 |
$ |
1.33 |
|||
|
Diluted |
$ |
1.17 |
$ |
1.33 |
|||
|
(1) "Gross margin" is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. Chesapeake Utilities believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. Chesapeake Utilities' management uses gross margin in measuring its business units' performance. Other companies may calculate gross margin in a different manner. |
|
Financial Summary Highlights | ||||||||||||
|
Key variances between the three months ended March 31, 2016 and 2017 included: | ||||||||||||
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
First Quarter of 2016 Reported Results |
$ |
33,696 |
$ |
20,367 |
$ |
1.33 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
Weather impact |
(1,074) |
(650) |
(0.04) |
|||||||||
|
Impact of winding down of Xeron operations |
(514) |
(311) |
(0.02) |
|||||||||
|
(1,588) |
(961) |
(0.06) |
||||||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Eight Flags' CHP* |
2,295 |
1,388 |
0.09 |
|||||||||
|
Natural gas marketing |
2,154 |
1,302 |
0.08 |
|||||||||
|
Natural gas growth (excluding service expansions) |
831 |
503 |
0.03 |
|||||||||
|
Service expansions* |
759 |
459 |
0.03 |
|||||||||
|
GRIP* |
680 |
411 |
0.03 |
|||||||||
|
Lower retail propane margins |
(581) |
(351) |
(0.02) |
|||||||||
|
Implementation of Delaware Division new rates* |
546 |
330 |
0.02 |
|||||||||
|
Aspire Energy rates and management fees |
526 |
318 |
0.02 |
|||||||||
|
Customer consumption - other |
133 |
81 |
0.01 |
|||||||||
|
7,343 |
4,441 |
0.29 |
||||||||||
|
Increased Other Operating Expenses: |
||||||||||||
|
Higher staffing and associated costs |
(3,220) |
(1,947) |
(0.13) |
|||||||||
|
Higher outside services costs and facility maintenance |
(1,719) |
(1,040) |
(0.07) |
|||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital investments |
(1,359) |
(822) |
(0.05) |
|||||||||
|
Eight Flags' operating expenses |
(1,268) |
(767) |
(0.05) |
|||||||||
|
(7,566) |
(4,576) |
(0.30) |
||||||||||
|
Interest charges |
(88) |
(53) |
— |
|||||||||
|
Change in other expense |
(243) |
(147) |
(0.01) |
|||||||||
|
Net other changes |
106 |
73 |
(0.01) |
|||||||||
|
(225) |
(127) |
(0.02) |
||||||||||
|
EPS impact of increase in outstanding shares due to September 2016 offering |
— |
— |
(0.07) |
|||||||||
|
First Quarter of 2017 Reported Results |
$ |
31,660 |
$ |
19,144 |
$ |
1.17 |
||||||
|
*See the Major Projects and Initiatives table later in this press release. | ||||||||||||
|
Major Projects and Initiatives | |||||||||||||||||||||||||||
|
The following table summarizes gross margin for the Company's major projects and initiatives recently completed and initiatives currently underway, but which will be completed in the future. Gross margin reflects operating revenue less cost of sales, excluding depreciation, amortization and accretion (dollars in thousands): | |||||||||||||||||||||||||||
|
Gross Margin for the Period | |||||||||||||||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||||||||||||||
|
March 31, |
December 31, |
Estimate for | |||||||||||||||||||||||||
|
2017 |
2016 |
Variance |
2016 |
2017 |
2018 |
2019 | |||||||||||||||||||||
|
Existing Major Projects and Initiatives |
|||||||||||||||||||||||||||
|
Capital Investment Projects |
$ |
9,319 |
$ |
5,585 |
$ |
3,734 |
$ |
29,819 |
$ |
34,969 |
$ |
32,125 |
$ |
33,035 |
|||||||||||||
|
Regulatory Proceedings |
546 |
546 |
1,487 |
2,250 |
2,250 |
2,250 |
|||||||||||||||||||||
|
Total Existing Major Projects and Initiatives |
9,865 |
5,585 |
4,280 |
31,306 |
37,219 |
34,375 |
35,285 |
||||||||||||||||||||
|
Future Major Projects and Initiatives |
|||||||||||||||||||||||||||
|
Capital Investment Projects (1) |
— |
— |
— |
— |
386 |
15,551 |
20,899 |
||||||||||||||||||||
|
Regulatory Proceedings (2) |
— |
— |
— |
— |
1,875 |
4,500 |
4,500 |
||||||||||||||||||||
|
Total Future Major Projects and Initiatives |
— |
— |
— |
— |
2,261 |
20,051 |
25,399 |
||||||||||||||||||||
|
Total |
$ |
9,865 |
$ |
5,585 |
$ |
4,280 |
$ |
31,306 |
$ |
39,480 |
$ |
54,426 |
$ |
60,684 |
|||||||||||||
|
(1) This represents gross margin for the 2017 Expansion Project and the Northwest Florida Expansion Project. | |||||||||||||||||||||||||||
|
(2) In January 2017, Eastern Shore, filed a rate case with the Federal Energy Regulatory Commission ("FERC"). The outcome of the rate case is not known at this time. This table assumes recovery in the rate case of the costs of the System Reliability Project. | |||||||||||||||||||||||||||
|
Major Projects and Initiatives Recently Completed | |||||||||||||||||||||||||||
|
The following table summarizes gross margin generated from the Company's major projects and initiatives recently completed (dollars in thousands): | |||||||||||||||||||||||||||
|
Gross Margin for the Period (1) | |||||||||||||||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||||||||||||||
|
March 31, |
December 31, |
Estimate for | |||||||||||||||||||||||||
|
2017 |
2016 |
Variance |
2016 |
2017 |
2018 |
2019 | |||||||||||||||||||||
|
Capital Investment Projects: |
|||||||||||||||||||||||||||
|
Service Expansions: |
|||||||||||||||||||||||||||
|
Short-term contracts (Delaware) |
$ |
2,663 |
$ |
2,543 |
$ |
120 |
$ |
11,454 |
$ |
5,265 |
$ |
1,407 |
$ |
1,407 |
|||||||||||||
|
Long-term contracts (Delaware) |
1,094 |
455 |
639 |
1,815 |
7,611 |
7,605 |
7,583 |
||||||||||||||||||||
|
Total Service Expansions |
3,757 |
2,998 |
759 |
13,269 |
12,876 |
9,012 |
8,990 |
||||||||||||||||||||
|
Florida GRIP |
3,267 |
2,587 |
680 |
11,552 |
13,727 |
14,407 |
15,085 |
||||||||||||||||||||
|
Eight Flags' CHP Plant |
2,295 |
— |
2,295 |
4,998 |
8,366 |
8,706 |
8,960 |
||||||||||||||||||||
|
Total Capital Investment Projects |
9,319 |
5,585 |
3,734 |
29,819 |
34,969 |
32,125 |
33,035 |
||||||||||||||||||||
|
Regulatory Proceedings: |
|||||||||||||||||||||||||||
|
Delaware Division Rate Case |
546 |
— |
546 |
1,487 |
2,250 |
2,250 |
2,250 |
||||||||||||||||||||
|
Total Existing Regulatory Proceedings |
546 |
— |
546 |
1,487 |
2,250 |
2,250 |
2,250 |
||||||||||||||||||||
|
Total Existing Major Projects and Initiatives |
$ |
9,865 |
$ |
5,585 |
$ |
4,280 |
$ |
31,306 |
$ |
37,219 |
$ |
34,375 |
$ |
35,285 |
|||||||||||||
|
(1) Does not include gross margin of $4.6 million and $13.9 million for the quarter ended March 31, 2016 and year ended December 31, 2016, respectively, which consists primarily of gross margin attributable to Aspire Energy for those periods. The acquisition of Aspire Energy was previously disclosed as a major project; however, the gross margin attributable to Aspire Energy is now being excluded from this table. | |||||||||||||||||||||||||||
Service Expansions
In August 2014, Eastern Shore entered into a precedent agreement with an electric power generator in Kent County, Delaware, to provide, upon the satisfaction of certain conditions, a 20-year natural gas transmission service for 45,000 dekatherms per day ("Dts/d") deliverable to the lateral serving the customer's facility. In July 2016, the FERC authorized Eastern Shore to construct and operate the proposed project, which consists of 5.4 miles of 16-inch pipeline looping and new compression capability in Delaware. Eastern Shore provided interim services to this customer pending construction of facilities. Construction of the project is complete, and long-term service commenced on March 1, 2017, pursuant to a 20-year OPT 90 ≤ service agreement we entered into with this customer. This service generated an additional gross margin of $106,000 during the three months ended March 31, 2017 compared to the same period in 2016. This service is expected to generate gross margin of $7.0 million for 2017 and between $5.8 million and $7.8 million annually through the remaining term of the agreement.
In October 2015, Eastern Shore submitted an application to the FERC to make certain meter tube and control valve replacements and related improvements at its Texas Eastern Transmission, LP ("TETLP") interconnect facilities, which would enable Eastern Shore to increase natural gas receipts from TETLP by 53,000 Dts/d, for a total capacity of 160,000 Dts/d. In December 2015, the FERC authorized Eastern Shore to proceed with this project, which was completed and placed in service in March 2016. Approximately 44 percent of the increased capacity has been subscribed on a short-term firm service basis. This service generated an additional gross margin of $678,000 for the three months ended March 31, 2017, compared to the same period in 2016. The remaining capacity is available for firm or interruptible service.
GRIP
GRIP is a natural gas pipe replacement program approved by the Florida Public Service Commission ("PSC"), designed to expedite the replacement of qualifying distribution mains and services (any material other than coated steel or plastic) to enhance the reliability and integrity of the Company's Florida natural gas distribution systems. This program allows recovery, through regulated rates, of capital and other program-related costs, inclusive of a return on investment, associated with the replacement of the mains and services. Since the program's inception in August 2012, the Company has invested $105.7 million to replace 230 miles of qualifying distribution mains, including $2.8 million during the first three months of 2017. The increased investment in GRIP generated additional gross margin of $680,000 for the three months ended March 31, 2017 compared to the same period in 2016.
Eight Flags' CHP plant
In June 2016, Eight Flags completed construction of a CHP plant on Amelia Island, Florida. This CHP plant, which consists of a natural-gas-fired turbine and associated electric generator, produces approximately 20 megawatts of base load power and includes a heat recovery steam generator capable of providing approximately 75,000 pounds per hour of residual steam. In June 2016, Eight Flags began selling power generated from the CHP plant to Florida Public Utilities Company ("FPU"), the Company's wholly-owned subsidiary, pursuant to a 20-year power purchase agreement for distribution to FPU's retail electric customers. In July 2016, it also started selling steam to the industrial customer that owns the property on which Eight Flags' CHP plant is located, pursuant to a separate 20-year contract.
The CHP plant is powered by natural gas transported by FPU through its distribution system and by Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), the Company's wholly-owned Florida intrastate pipeline subsidiary. For the three months ended March 31, 2017, Eight Flags and other affiliates of Chesapeake Utilities generated $2.3 million in additional gross margin as a result of these services that began in June 2016. This amount includes gross margin of $491,000 for the three months ended March 31, 2017, attributable to natural gas distribution and transportation services provided to the CHP plant by the Company's regulated affiliates.
Major Projects and Initiatives Underway
Northwest Florida Expansion Project: Peninsula Pipeline and the Company's Florida natural gas division are constructing a pipeline in Escambia County, Florida that will interconnect with Florida Gas Transmission Company's ("FGT") pipeline. The project consists of 33 miles of 12-inch transmission line from the FGT interconnect that will be operated by Peninsula Pipeline and 8 miles of 8-inch lateral distribution lines that will be operated by the Company's Florida natural gas division. The Company has signed agreements to serve two industrial customers. The estimated annual gross margin associated with this project, once in service, is approximately $5.1 million.
System Reliability Project: In July 2016, the FERC authorized Eastern Shore to construct and operate its proposed System Reliability Project, which will consist of approximately 10.1 miles of 16-inch pipeline looping and auxiliary facilities in New Castle and Kent Counties, Delaware, and a new compressor at its existing Bridgeville compressor station in Sussex County, Delaware. A 2.5 mile looping segment was completed and placed into service in December 2016. The remaining looping and the new compressor are anticipated to be completed by the end of May 2017. This project was included in Eastern Shore's January 2017 base rate case filing with the FERC. The estimated annual gross margin associated with this project, assuming full recovery in the 2017 rate case, is approximately $4.5 million. We have assumed recovery of this project's costs beginning in August 2017, coinciding with the proposed effectiveness of new rates, subject to refund pending final resolution of the base rate case.
2017 Expansion Project: In May 2016, Eastern Shore submitted a request to the FERC to initiate the FERC's pre-filing process for its proposed 2017 Expansion Project. This project, which will expand Eastern Shore's firm service capacity by 26 percent, will provide 61,162 Dts/d of additional firm natural gas transportation service on Eastern Shore's pipeline system with an additional 52,500 Dts/d of firm transportation service at certain Eastern Shore receipt facilities pursuant to precedent agreements Eastern Shore entered into with four existing customers as well as affiliates of Chesapeake Utilities. Facilities required to provide this new service will consist of: (i) approximately 23 miles of pipeline looping in Pennsylvania, Maryland and Delaware; (ii) upgrades to existing metering facilities in Lancaster County, Pennsylvania; (iii) installation of an additional 3,550-horsepower compressor unit at Eastern Shore's existing Daleville compressor station in Chester County, Pennsylvania; and (iv) approximately 17 miles of new mainline extension and two pressure control stations in Sussex County, Delaware. The project will generate approximately $15.8 million of gross margin in the first full year after the new transportation services go into effect. The estimated cost of this Expansion Project is $98.6 million.
In April 2017, Eastern Shore entered into an agreement with an industrial customer to provide 11,000 Dts/d of interim firm transportation service from May 1, 2017 to October 31, 2017 or until the 2017 Expansion project is completed and in-service. Eastern Shore is expected to generate approximately $386,000 of additional gross margin from this interim service in 2017.
Other major factors influencing gross margin
Weather and Consumption
Warmer weather during the three months ended March 31, 2017 compared to temperatures in the same period in 2016, reduced the Company's gross margin by $1.1 million. The first quarter of 2017 was recorded as the third warmest first quarter on the Delmarva Peninsula during the last fifty years. The following table summarizes heating degree-day ("HDD") and cooling degree-day ("CDD") information for the three months ended March 31, 2017 and 2016 resulting from weather fluctuations in those periods.
|
HDD and CDD Information | ||||||||
|
Three Months Ended |
||||||||
|
March 31, |
||||||||
|
2017 |
2016 |
Variance | ||||||
|
Delmarva |
||||||||
|
Actual HDD |
1,958 |
2,094 |
(136) |
|||||
|
10-Year Average HDD ("Delmarva Normal") |
2,403 |
2,400 |
3 |
|||||
|
Variance from Delmarva Normal |
(445) |
(306) |
||||||
|
Florida |
||||||||
|
Actual HDD |
285 |
505 |
(220) |
|||||
|
10-Year Average HDD ("Florida Normal") |
583 |
534 |
49 |
|||||
|
Variance from Florida Normal |
(298) |
(29) |
||||||
|
Ohio |
||||||||
|
Actual HDD |
2,484 |
2,791 |
(307) |
|||||
|
10-Year Average HDD ("Ohio Normal") |
3,137 |
3,131 |
6 |
|||||
|
Variance from Ohio Normal |
(653) |
(340) |
||||||
|
Florida |
||||||||
|
Actual CDD |
145 |
127 |
18 |
|||||
|
10-Year Average CDD ("Florida CDD Normal") |
82 |
77 |
5 |
|||||
|
Variance from Florida CDD Normal |
63 |
50 |
||||||
Propane prices
Lower retail propane margins per gallon for our Delmarva and Florida propane distribution operations decreased gross margin by $581,000 for the three months ended March 31, 2017, of which $495,000 is associated with the larger Delmarva Peninsula propane distribution operation. Margins per retail gallon continued to return to more normal levels, driven principally by higher propane prices and local market conditions. These market conditions, including competition with other propane suppliers as well as the availability and price of alternative energy sources, may fluctuate based on changes in demand, supply and other energy commodity prices. The Company continues to assume more normal levels of margins in our long-term financial plans and forecasts.
PESCO
PESCO provides natural gas supply and supply management services to residential, commercial, industrial and wholesale customers. PESCO operates primarily in Florida, on the Delmarva Peninsula, and in Ohio. PESCO competes with regulated utilities and other unregulated third-party marketers to sell natural gas supplies directly to residential, commercial and industrial customers through competitively-priced contracts. PESCO does not currently own or operate any natural gas transmission or distribution assets but sells gas that is delivered to retail or wholesale customers through affiliated and non-affiliated local distribution company systems and transmission pipelines.
In 2017, the Company's Delaware and Maryland natural gas distribution operations entered into asset management agreements with PESCO to manage a portion of their natural gas transportation and storage capacity. The asset management agreements were effective April 1, 2017, and each has a three-year term, expiring on March 31, 2020. As a result of these agreements, PESCO will manage capacity on regional pipelines as well as third-party storage contracts for the Company's Delaware and Maryland natural gas divisions in an expansion of PESCO's asset management services.
Operating revenues for PESCO were $45.0 million for the three months ended in March 2017 compared to $20.0 million in the same period in 2016. This revenue growth was attributable primarily to growth in customers served and volumes sold in Florida, Ohio and on the Delmarva Peninsula.
PESCO generated additional gross margin of $2.2 million in the first quarter of 2017, compared to the same period in 2016, as a result of revenues associated with providing natural gas under a supplier agreement to service approximately 40,000 end users on behalf of another utility as well as increased customer contracts in Florida. Under the supplier agreement, PESCO delivered the highest volumes during the first quarter of 2017, while fixed storage and pipeline fees were paid over the entire twelve-month period from April 1, 2016 to March 31, 2017. This supplier agreement ended March 31, 2017 and was not renewed.
Operating income for PESCO was $2.5 million for the three months ended March 31, 2017, compared to $803,000 for the same period in 2016. PESCO incurred higher operating expenses of $479,000 in the first quarter of 2017 to support the growth of the business.
Xeron
After a thorough review of Xeron's performance and careful evaluation of alternative strategies, our management determined that there was no viable strategy to restore Xeron to profitability in the near term and accordingly, decided to wind down Xeron's operations. The Company recorded $606,000 in pre-tax losses from Xeron in the first quarter of 2017, driven primarily by the costs associated with non-recurring employee severance costs and quarter-to-date Xeron operating losses. The Company may record additional losses in the future associated with the termination of the leased office space in Houston, Texas, if the Company incurs lease termination costs or is unable to sublease the office space at a rental rate sufficient to offset the Company's rental and expense obligation under the lease.
Other Natural Gas Growth - Distribution Operations
In addition to service expansions, the Company's Delmarva natural gas distribution operations generated $520,000 in additional gross margin for the three months ended March 31, 2017, compared to the same period in 2016, due to an increase in residential, commercial and industrial customers served. The average number of residential customers on the Delmarva Peninsula increased by four percent during the three months ended March 31, 2017 compared to the same period in 2016. The Company's natural gas distribution operations in Florida generated $440,000 in additional gross margin for the three months ended March 31, 2017, compared to the same period in 2016, due primarily to an increase in commercial and industrial customers in Florida.
Regulatory Proceedings
Delaware division rate case
In December 2016, the Delaware PSC approved a settlement agreement as recommended by the Hearing Examiner's report. The settlement agreement, among other things, provided for an increase in the Company's Delaware division revenue requirement of $2.25 million and a rate of return on common equity of 9.75 percent. The new authorized rates went into effect on January 1, 2017. Any amounts collected through 2016 interim rates in excess of the respective portion of the $2.25 million were refunded to the ratepayers in March 2017.
Eastern Shore Rate Case
In January 2017, Eastern Shore filed a base rate proceeding with the FERC, as required by the terms of its 2012 rate case settlement agreement. Eastern Shore's proposed rates are based on a cost of service of approximately $60 million, resulting in an overall requested revenue increase of approximately $18.9 million and a requested rate of return on common equity of 13.75 percent. The FERC issued a notice of the filing in January 2017, and the comment period ended in February 2017. Fourteen parties intervened in the proceeding, with six of those parties filing protests of some aspect of the rate filing. The FERC issued an order suspending the effectiveness of the proposed tariff rates for the usual five-month period. Accordingly, the new rates are to become effective, subject to refund, on August 1, 2017.
Investing for Future Growth
To support and continue its growth, the Company has expanded, and will continue to expand, its resources and capabilities. Eastern Shore has expanded, and has announced significant additional expansions to, its transmission system, and is therefore increasing its staffing. We requested recovery of most of Eastern Shore's increased staffing costs in its 2017 rate case. Growth in non-regulated energy businesses, including Aspire Energy, PESCO and Eight Flags, requires additional staff as well as corporate resources to support the increased level of activity. Finally, to allow the Company to continue to identify and move growth initiatives forward and to assist in developing additional strategic initiatives for sustained future growth, resources have been added in the Company's corporate shared services departments. In the first quarter of 2017, the Company's staffing and associated costs increased by $3.2 million or 18 percent, compared to the same period in 2016. The Company expects to make additional investments in human resources and systems, as needed, to further develop its capability to capitalize on future growth opportunities.
The Company pursued several strategic growth opportunities during the quarter which ultimately did not materialize. In connection with such efforts, the Company incurred costs of approximately $600,000. The Company intends to continue to seek new opportunities in the future, and will incur costs in pursuing them, whether opportunities come to fruition or not.
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | |||||||
|
Three Months Ended | |||||||
|
March 31, | |||||||
|
2017 |
2016 | ||||||
|
Operating Revenues |
|||||||
|
Regulated Energy |
$ |
97,654 |
$ |
89,216 |
|||
|
Unregulated Energy and other |
87,506 |
57,080 |
|||||
|
Total Operating Revenues |
185,160 |
146,296 |
|||||
|
Operating Expenses |
|||||||
|
Regulated Energy cost of sales |
40,244 |
34,905 |
|||||
|
Unregulated Energy and other cost of sales |
60,754 |
34,024 |
|||||
|
Operations |
32,913 |
27,159 |
|||||
|
Maintenance |
3,231 |
2,479 |
|||||
|
Depreciation and amortization |
8,812 |
7,503 |
|||||
|
Other taxes |
4,530 |
3,846 |
|||||
|
Total operating expenses |
150,484 |
109,916 |
|||||
|
Operating Income |
34,676 |
36,380 |
|||||
|
Other expense, net |
(277) |
(34) |
|||||
|
Interest charges |
2,739 |
2,650 |
|||||
|
Income Before Income Taxes |
31,660 |
33,696 |
|||||
|
Income taxes |
12,516 |
13,329 |
|||||
|
Net Income |
$ |
19,144 |
$ |
20,367 |
|||
|
Weighted Average Common Shares Outstanding: |
|||||||
|
Basic |
16,317,224 |
15,286,842 |
|||||
|
Diluted |
16,363,796 |
15,331,912 |
|||||
|
Earnings Per Share of Common Stock: |
|||||||
|
Basic |
$ |
1.17 |
$ |
1.33 |
|||
|
Diluted |
$ |
1.17 |
$ |
1.33 |
|||
|
Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Assets |
March 31, 2017 |
December 31, 2016 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Property, Plant and Equipment |
||||||||
|
Regulated Energy |
$ |
985,832 |
$ |
957,681 |
||||
|
Unregulated Energy |
199,211 |
196,800 |
||||||
|
Other businesses and eliminations |
21,486 |
21,114 |
||||||
|
Total property, plant and equipment |
1,206,529 |
1,175,595 |
||||||
|
Less: Accumulated depreciation and amortization |
(250,574) |
(245,207) |
||||||
|
Plus: Construction work in progress |
62,362 |
56,276 |
||||||
|
Net property, plant and equipment |
1,018,317 |
986,664 |
||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
5,700 |
4,178 |
||||||
|
Accounts receivable (less allowance for uncollectible accounts of $815 and $909, respectively) |
58,375 |
62,803 |
||||||
|
Accrued revenue |
16,317 |
16,986 |
||||||
|
Propane inventory, at average cost |
5,437 |
6,457 |
||||||
|
Other inventory, at average cost |
3,657 |
4,576 |
||||||
|
Regulatory assets |
7,527 |
7,694 |
||||||
|
Storage gas prepayments |
735 |
5,484 |
||||||
|
Income taxes receivable |
13,388 |
22,888 |
||||||
|
Prepaid expenses |
4,534 |
6,792 |
||||||
|
Mark-to-market energy assets |
1,339 |
823 |
||||||
|
Other current assets |
1,804 |
2,470 |
||||||
|
Total current assets |
118,813 |
141,151 |
||||||
|
Deferred Charges and Other Assets |
||||||||
|
Goodwill |
15,070 |
15,070 |
||||||
|
Other intangible assets, net |
1,752 |
1,843 |
||||||
|
Investments, at fair value |
5,212 |
4,902 |
||||||
|
Regulatory assets |
76,218 |
76,803 |
||||||
|
Receivables and other deferred charges |
2,929 |
2,786 |
||||||
|
Total deferred charges and other assets |
101,181 |
101,404 |
||||||
|
Total Assets |
$ |
1,238,311 |
$ |
1,229,219 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Capitalization and Liabilities |
March 31, 2017 |
December 31, 2016 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Capitalization |
||||||||
|
Stockholders' equity |
||||||||
|
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding |
$ |
— |
$ |
— |
||||
|
Common stock, par value $0.4867 per share (authorized 25,000,000 shares) |
7,949 |
7,935 |
||||||
|
Additional paid-in capital |
251,144 |
250,967 |
||||||
|
Retained earnings |
206,194 |
192,062 |
||||||
|
Accumulated other comprehensive loss |
(4,458) |
(4,878) |
||||||
|
Deferred compensation obligation |
3,100 |
2,416 |
||||||
|
Treasury stock |
(3,100) |
(2,416) |
||||||
|
Total stockholders' equity |
460,829 |
446,086 |
||||||
|
Long-term debt, net of current maturities |
136,537 |
136,954 |
||||||
|
Total capitalization |
597,366 |
583,040 |
||||||
|
Current Liabilities |
||||||||
|
Current portion of long-term debt |
12,111 |
12,099 |
||||||
|
Short-term borrowing |
199,333 |
209,871 |
||||||
|
Accounts payable |
49,500 |
56,935 |
||||||
|
Customer deposits and refunds |
29,638 |
29,238 |
||||||
|
Accrued interest |
2,868 |
1,312 |
||||||
|
Dividends payable |
4,981 |
4,973 |
||||||
|
Accrued compensation |
5,560 |
10,496 |
||||||
|
Regulatory liabilities |
7,275 |
1,291 |
||||||
|
Mark-to-market energy liabilities |
189 |
773 |
||||||
|
Other accrued liabilities |
9,278 |
7,063 |
||||||
|
Total current liabilities |
320,733 |
334,051 |
||||||
|
Deferred Credits and Other Liabilities |
||||||||
|
Deferred income taxes |
231,004 |
222,894 |
||||||
|
Regulatory liabilities |
42,861 |
43,064 |
||||||
|
Environmental liabilities |
8,535 |
8,592 |
||||||
|
Other pension and benefit costs |
33,082 |
32,828 |
||||||
|
Deferred investment tax credits and other liabilities |
4,730 |
4,750 |
||||||
|
Total deferred credits and other liabilities |
320,212 |
312,128 |
||||||
|
Total Capitalization and Liabilities |
$ |
1,238,311 |
$ |
1,229,219 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Three Months Ended March 31, 2017 |
For the Three Months Ended March 31, 2016 | |||||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution |
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution | |||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
25,710 |
$ |
1,552 |
$ |
10,768 |
$ |
9,327 |
$ |
21,267 |
$ |
1,571 |
$ |
9,287 |
$ |
11,307 |
||||||||||||||||
|
Commercial |
11,412 |
1,523 |
9,594 |
9,414 |
9,661 |
1,416 |
8,234 |
9,542 |
||||||||||||||||||||||||
|
Industrial |
1,834 |
1,759 |
5,927 |
471 |
1,920 |
1,637 |
5,533 |
817 |
||||||||||||||||||||||||
|
Other (1) |
1,458 |
900 |
(2,785) |
(1,589) |
653 |
917 |
(1,833) |
(2,133) |
||||||||||||||||||||||||
|
Total Operating Revenues |
$ |
40,414 |
$ |
5,734 |
$ |
23,504 |
$ |
17,623 |
$ |
33,501 |
$ |
5,541 |
$ |
21,221 |
$ |
19,533 |
||||||||||||||||
|
Volume (in Dts/MWHs) |
||||||||||||||||||||||||||||||||
|
Residential |
1,807,900 |
123,275 |
470,811 |
61,326 |
1,705,597 |
138,472 |
506,912 |
73,923 |
||||||||||||||||||||||||
|
Commercial |
1,381,408 |
2,957,716 |
707,349 |
65,862 |
1,398,890 |
1,447,747 |
692,331 |
68,115 |
||||||||||||||||||||||||
|
Industrial |
1,373,798 |
1,767,430 |
1,189,325 |
3,160 |
1,369,641 |
3,293,812 |
1,125,755 |
6,680 |
||||||||||||||||||||||||
|
Other |
10,538 |
— |
7,148 |
1,873 |
13,504 |
— |
40,382 |
2,637 |
||||||||||||||||||||||||
|
Total |
4,573,644 |
4,848,421 |
2,374,633 |
132,221 |
4,487,632 |
4,880,031 |
2,365,380 |
151,355 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
68,701 |
15,664 |
54,041 |
24,437 |
66,083 |
15,242 |
53,044 |
24,167 |
||||||||||||||||||||||||
|
Commercial |
6,910 |
1,409 |
4,892 |
7,446 |
6,795 |
1,378 |
4,261 |
7,386 |
||||||||||||||||||||||||
|
Industrial |
142 |
75 |
1,109 |
2 |
122 |
72 |
1,716 |
2 |
||||||||||||||||||||||||
|
Other |
5 |
— |
— |
— |
4 |
— |
— |
— |
||||||||||||||||||||||||
|
Total |
75,758 |
17,148 |
60,042 |
31,885 |
73,004 |
16,692 |
59,021 |
31,555 |
||||||||||||||||||||||||
|
(1) Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties and adjustments for pass-through taxes. | ||||||||||||||||||||||||||||||||
SOURCE Chesapeake Utilities Corporation
Article Date
5/3/2017Baltimore Fleet Vehicles Can Save Money, Reduce Emissions With Sharp Energy's New AutoGas Fueling Station Located Near BWI Airport
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., April 26, 2017 /PRNewswire/ -- Sharp Energy, Inc., the largest propane retailer on the Delmarva Peninsula and a subsidiary of Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities), announced today that it has constructed and placed into service an AutoGas propane fueling station for fleet vehicles located near the Baltimore/Washington International (BWI) Airport. Airport shuttles, school bus companies, and commercial fleets can use this new fueling station to power their fleets with propane, a preferred alternative fuel option that reduces emissions and yields savings.
"We're excited to add this propane fueling station to the Company's growing network of clean, reliable and affordable energy options," said Elaine B. Bittner, Chief Operating Officer of Sharp Energy, Inc. "Our AutoGas stations support Chesapeake Utilities' environmental initiatives in supplying propane, a clean burning alternative fuel, to the rapidly growing number of fleet vehicles in the area."
MBG Enterprise, a Baltimore area school bus company that has already begun using the new AutoGas station to power ten school buses, will be displacing more than 30,000 gallons of diesel a year. The company has recently added eight additional propane AutoGas-fueled buses for the start of the 2017-2018 school year.
"My family and I have been in the transportation industry for decades and we are always looking for innovative ways to make our business better," said Mitch Gunther, owner of MBG Enterprise. "We decided to make the switch to propane-powered buses last year and we could not be happier. The simplicity of fueling and the expertise Sharp Energy has in their infrastructure is fantastic; their customer support is second to none, another reason we decided to procure more propane buses this year. I look forward to working with Sharp Energy for years to come as we transition our school bus fleet."
Propane reduces carbon monoxide emissions up to 60 percent compared to diesel on a life-cycle basis while reducing smog-producing hydrocarbons by an estimated 80 percent. Substantial economic savings are achieved through fuel and maintenance cost savings. Historically, customers that have converted vehicles to propane AutoGas have saved $1.00 or more on each gallon of propane as compared to gasoline.
Sharp Energy has a dozen AutoGas stations operating in Delaware, Maryland, and Pennsylvania. "Propane AutoGas is the highest grade of commercial propane, and is the most widely used alternative to gasoline and diesel fuel in the world because of its clean, domestic and economic benefits," stated S. Robert Zola, President of Sharp Energy, Inc.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
About Sharp Energy
Sharp Energy, headquartered in Georgetown, Delaware, distributes propane to approximately 38,000 residential, commercial and industrial customers in Maryland, Delaware, Virginia and Pennsylvania. With four rail facilities and over 2,500,000 gallons of propane storage, Sharp Energy has established a solid supply portfolio. Sharp Energy is a proud partner of Alliance AutoGas, a national network of companies that have joined together to deliver a comprehensive alternative fueling solution including EPA-certified propane AutoGas vehicle conversions, on-site fueling infrastructure, fuel supply, safety and operational training, and ongoing technical support. To learn more about Sharp Energy, visit www.sharpenergy.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Mike Stock
Senior Director, Corporate Communications
Chesapeake Utilities Corporation
302.736.7808
mstock@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
4/26/20174/12/2017 - Chesapeake Utilities Corporation To Host Conference Call To Review First Quarter 2017 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review First Quarter 2017 Financial Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., April 12, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, May 5, 2017, at 10:30 a.m. ET to discuss the Company's financial results for the first quarter ended March 31, 2017. The earnings press release will be issued on Wednesday, May 3, 2017, before the market opens.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2017 First Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
4/12/2017Chesapeake Utilities Corporation Promotes James F. Moriarty To Senior Vice President
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., March 14, 2017 /PRNewswire/ -- Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) announced that the Company's Board of Directors recently promoted James F. Moriarty from the position of Vice President to Senior Vice President of Chesapeake Utilities Corporation and its subsidiaries.
Mr. Moriarty, who also serves as Chesapeake Utilities' General Counsel and Corporate Secretary, joined the Company in 2015. Mr. Moriarty is responsible for overseeing the Company's legal affairs. In addition, Mr. Moriarty leads Chesapeake Utilities' Security Council and Risk Management committees.
"Mr. Moriarty is a trusted leader who has earned the respect and confidence of our team, our business partners and stakeholders throughout our service territories," said Mr. McMasters. "His energy experience, legal expertise and professional relationships, coupled with his business judgement and strategic thinking, will continue to contribute to the work underway to position our Company for future opportunities and growth."
Mr. Moriarty has over 25 years of experience representing leading companies on diverse energy projects. Previously, Mr. Moriarty was a Partner at Locke Lord LLP and Fulbright & Jaworski, LLP, both international law firms with offices in Washington, D.C.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Mike Stock
Sr. Director, Corporate Communications
Chesapeake Utilities Corporation
302-736-7808
mstock@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
3/14/20173/10/2017 - Chesapeake Utilities Corporation To Participate In The Seaport Global Transports & Industrials Conference
Chesapeake Utilities Corporation To Participate In The Seaport Global Transports & Industrials Conference
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., March 10, 2017 /PRNewswire/ -- The Company announced today that members of its Senior Management team will be participating in the Seaport Global Transports & Industrials Conference in Coral Gables, Florida, on March 22 – 23, 2017. At the conference, potential investors will have the opportunity to meet one-on-one with Company representatives to learn more about the Company's recent financial results and strategic growth initiatives.
Chesapeake Utilities Corporation (NYSE: CPK) is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; propane and crude oil wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
3/10/20172/28/2017 - Chesapeake Utilities' Strong 2016 Performance Marks Tenth Straight Year Of Record Earnings
Chesapeake Utilities' Strong 2016 Performance Marks Tenth Straight Year Of Record Earnings
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Feb. 27, 2017 /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, 2016. The Company's net income for the year ended December 31, 2016 was $44.7 million, or $2.86 per share, an increase of $3.5 million, or $0.14 per share, compared to 2015. The growth in net income and earnings per share in 2016 occurred despite the negative impact of warmer temperatures in 2016, primarily during the first quarter, and trading losses from Xeron. The higher earnings resulted from growth in the Company's natural gas transmission and distribution businesses, increased earnings from Aspire Energy of Ohio, LLC ("Aspire Energy"), income generated from the Combined Heat & Power ("CHP") plant and increased gross margin generated by additional investments in the Florida Gas Reliability Infrastructure Program ("GRIP").
For the fourth quarter of 2016, the Company reported net income of $11.9 million, or $0.73 per share, an increase of $3.2 million, or $0.17 per share, compared to the same quarter in 2015. This increase was driven by the same factors that drove higher earnings for the year as well as higher propane gas sales in the Company's Delmarva Peninsula propane distribution business.
"Our performance during 2016 was exceptional as our earnings per share set a record for the tenth consecutive year, surpassing 2015 by 5.1 percent, despite the warmer winter weather in the first quarter," stated Michael P. McMasters, President and Chief Executive Officer. "This accomplishment flows from the strategic investments we have made to propel diversified growth in our energy businesses. Our employees' creative energy has produced this powerful growth; their hard work, service ethic and financial discipline have driven our ten years of success. We remain committed to the execution of our strategy in 2017," added Mr. McMasters.
A more detailed discussion and analysis of the Company's results for each segment is provided in the following pages.
Operating Results for the Years Ended December 31, 2016 and 2015
Operating income increased by $6.3 million to $84.1 million for 2016. This increase was driven by a $21.6 million, or 9.0 percent, increase in gross margin, which was partially offset by a $15.3 million increase in operating expenses. Excluding the net non-recurring gain associated with a customer billing system settlement recognized in 2015, operating income increased by $7.7 million, or 10.1 percent, in 2016.
Regulated Energy
Operating income for the Regulated Energy segment increased by $8.9 million in 2016 compared to 2015. This increase was driven by a higher gross margin of $17.0 million, which was partially offset by an increase of $8.1 million in operating expenses. The significant components of the gross margin increase included:
The significant drivers of the $8.1 million increase in operating expenses included:
Unregulated Energy
Operating income for the Unregulated Energy segment decreased by $2.5 million in 2016 compared to 2015. This decrease resulted from lower gross margin due primarily to warmer than normal weather during the first quarter of 2016, as well as lower propane retail margins per gallon throughout 2016 as margins returned to more normal levels. Despite these impacts, gross margin for the Unregulated Energy segment increased $4.6 million in 2016, compared to 2015, driven by growth from Aspire Energy, the Eight Flags' CHP plant, and the Company's natural gas marketing subsidiary, Peninsula Energy Services Company, Inc. ("PESCO"). The higher gross margin was more than offset by increased operating expenses of $7.1 million, which reflects the significant growth the Company experienced in 2016.
Gross margin increased $4.6 million, largely as a result of the following:
The above increases were offset by the following:
The significant components of the $7.1 million increase in operating expenses included:
Operating Results for the Quarters Ended December 31, 2016 and 2015
The Company's operating income for the fourth quarter of 2016 was $21.8 million, an increase of $5.6 million, compared to the same quarter in 2015. The increased operating income was due to growth in both the Regulated Energy and Unregulated Energy segments.
Regulated Energy Segment
Operating income for the Regulated Energy segment increased by $3.8 million to $17.2 million in the fourth quarter of 2016, compared to the same quarter in 2015. The increased operating income resulted from a $5.6 million increase in gross margin, partially offset by a $1.8 million increase in operating expenses. The significant components of the gross margin increase included:
The significant components of the $1.8 million increase in operating expenses included:
Unregulated Energy Segment
Operating income for the Unregulated Energy segment for the fourth quarter of 2016 was $4.6 million, an increase of $1.9 million compared to operating income for the same quarter in 2015. The increased operating income resulted from a $5.2 million increase in gross margin, offset by a $3.3 million increase in operating expenses. The significant components of the gross margin increase included:
The significant components of the $3.3 million increase in operating expenses included:
Matters discussed 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 2016 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
The discussions of the results use the term "gross margin," a non-Generally Accepted Accounting Principles ("GAAP") financial measure, which management uses to evaluate the performance of the Company's business segments. For an explanation of the calculation of "gross margin," see the footnote to the Financial Summary.
Unless otherwise noted, earnings per share information is presented on a diluted basis.
Conference Call
Chesapeake Utilities Corporation will host a conference call on March 1, 2017 at 10:30 a.m. Eastern Time to discuss the Company's financial results for the year and quarter ended December 31, 2016. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2016 Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audiocast section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; propane and crude oil wholesale marketing; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary (in thousands, except per-share data) | |||||||||||
|
Year Ended |
Fourth Quarter | ||||||||||
|
For the Periods Ended December 31, |
2016 |
2015 |
2016 |
2015 | |||||||
|
Gross Margin (1) |
|||||||||||
|
Regulated Energy |
$ |
196,080 |
$ |
179,088 |
$ |
50,633 |
$ |
45,064 | |||
|
Unregulated Energy |
64,962 |
60,317 |
19,582 |
14,388 | |||||||
|
Other businesses and eliminations |
(225) |
(203) |
(58) |
(46) | |||||||
|
Total Gross Margin |
$ |
260,817 |
$ |
239,202 |
$ |
70,157 |
$ |
59,406 | |||
|
Operating Income |
|||||||||||
|
Regulated Energy |
$ |
69,851 |
$ |
60,985 |
$ |
17,191 |
$ |
13,369 | |||
|
Unregulated Energy |
13,844 |
16,355 |
4,577 |
2,689 | |||||||
|
Other businesses and eliminations |
401 |
418 |
51 |
113 | |||||||
|
Total Operating Income |
$ |
84,096 |
$ |
77,758 |
$ |
21,819 |
$ |
16,171 | |||
|
Other (expense) income |
(441) |
293 |
(372) |
297 | |||||||
|
Interest charges |
10,639 |
10,006 |
2,643 |
2,582 | |||||||
|
Income taxes |
28,341 |
26,905 |
6,941 |
5,267 | |||||||
|
Net Income |
$ |
44,675 |
$ |
41,140 |
$ |
11,863 |
$ |
8,619 | |||
|
Earnings Per Share of Common Stock |
|||||||||||
|
Basic |
$ |
2.87 |
$ |
2.73 |
$ |
0.73 |
$ |
0.56 | |||
|
Diluted |
$ |
2.86 |
$ |
2.72 |
$ |
0.73 |
$ |
0.56 | |||
|
(1) "Gross margin" is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. Chesapeake Utilities believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. Chesapeake Utilities' management uses gross margin in measuring its business units' performance. Other companies may calculate gross margin in a different manner. | |||||||||||
|
Financial Summary Highlights | ||||||||
|
Key variances for the year ended December 31, 2016 included: | ||||||||
|
(in thousands, except per share) |
Pre-tax Income |
Net Income |
Earnings Per Share | |||||
|
Year ended December 31, 2015 Reported Results |
$ |
68,045 |
$ |
41,140 |
$ |
2.72 | ||
|
Adjusting for unusual items: |
||||||||
|
Weather impact, primarily in the first quarter |
(3,595) |
(2,200) |
(0.15) | |||||
|
Net gain from settlement agreement associated with customer billing |
(1,370) |
(838) |
(0.06) | |||||
|
(4,965) |
(3,038) |
(0.21) | ||||||
|
Increased (Decreased) Gross Margins: |
||||||||
|
Service expansions* |
7,192 |
4,400 |
0.30 | |||||
|
Eight Flags' CHP* |
4,998 |
3,058 |
0.21 | |||||
|
GRIP* |
4,044 |
2,474 |
0.17 | |||||
|
Natural Gas Growth (excluding service expansions) |
2,734 |
1,673 |
0.11 | |||||
|
Lower retail propane margins |
(2,770) |
(1,695) |
(0.11) | |||||
|
Higher customer consumption - other |
1,899 |
1,162 |
0.08 | |||||
|
Implementation of Delaware Division new rates* |
1,487 |
910 |
0.06 | |||||
|
Natural gas marketing |
1,043 |
638 |
0.04 | |||||
|
Xeron trading losses |
(847) |
(518) |
(0.04) | |||||
|
Sandpiper margins associated with conversions |
736 |
450 |
0.03 | |||||
|
Sharp energy-related services |
(512) |
(313) |
(0.02) | |||||
|
20,004 |
12,239 |
0.83 | ||||||
|
Increased Other Operating Expenses: |
||||||||
|
Higher staffing and associated costs |
(4,443) |
(2,718) |
(0.18) | |||||
|
Higher depreciation, asset removal and property tax costs |
(2,952) |
(1,806) |
(0.12) | |||||
|
Eight Flags' operating expenses |
(2,432) |
(1,488) |
(0.10) | |||||
|
Higher outside service and facility maintenance costs |
(974) |
(596) |
(0.04) | |||||
|
(10,801) |
(6,608) |
(0.44) | ||||||
|
Net contribution from Aspire Energy |
3,130 |
1,915 |
0.09 | |||||
|
Impact of common stock issuance |
— |
— |
(0.05) | |||||
|
Interest charges |
(633) |
(387) |
(0.03) | |||||
|
Change in other income (expense) |
(734) |
(449) |
(0.03) | |||||
|
Tax rate changes |
— |
530 |
0.04 | |||||
|
Net other changes |
(1,030) |
(667) |
(0.06) | |||||
|
Year ended December 31, 2016 Reported Results |
$ |
73,016 |
$ |
44,675 |
$ |
2.86 | ||
|
* See the Major Projects and Initiatives table later in this press release. | ||||||||
|
Key variances for the quarter ended December 31, 2016 included: | ||||||||
|
(in thousands, except per share) |
Pre-tax |
Net |
Earnings | |||||
|
Fourth Quarter of 2015 Reported Results |
$ |
13,886 |
$ |
8,619 |
$ |
0.56 | ||
|
Adjusting for unusual items: |
||||||||
|
Weather impact |
3,408 |
2,150 |
0.14 | |||||
|
3,408 |
2,150 |
0.14 | ||||||
|
Increased (Decreased) Gross Margins: |
||||||||
|
Eight Flags' CHP* |
2,416 |
1,525 |
0.10 | |||||
|
Service expansions* |
1,676 |
1,057 |
0.07 | |||||
|
GRIP* |
975 |
615 |
0.04 | |||||
|
Higher customer consumption - other |
755 |
476 |
0.03 | |||||
|
Natural gas growth (excluding service expansions) |
490 |
309 |
0.02 | |||||
|
Xeron trading losses |
(427) |
(269) |
(0.02) | |||||
|
Lower retail propane margins |
(345) |
(218) |
(0.01) | |||||
|
Wholesale propane margins |
173 |
109 |
0.01 | |||||
|
Implementation of Delaware Division new rates* |
140 |
88 |
0.01 | |||||
|
5,853 |
3,692 |
0.25 | ||||||
|
(Increased) Decreased Other Operating Expenses: |
||||||||
|
Higher staffing and associated costs |
(1,945) |
(1,227) |
(0.08) | |||||
|
Eight Flags' operating expenses |
(1,297) |
(818) |
(0.05) | |||||
|
Higher depreciation, asset removal and property tax costs |
(1,175) |
(741) |
(0.05) | |||||
|
Lower outside services and facility maintenance costs |
741 |
468 |
0.03 | |||||
|
(3,676) |
(2,318) |
(0.15) | ||||||
|
Net contribution from Aspire Energy |
1,060 |
669 |
0.04 | |||||
|
Impact of common stock issuance |
— |
— |
(0.05) | |||||
|
Interest charges |
(61) |
(39) |
— | |||||
|
Change in income (expense) |
(669) |
(422) |
(0.03) | |||||
|
Net other changes |
(997) |
(488) |
(0.03) | |||||
|
Fourth Quarter of 2016 Reported Results |
$ |
18,804 |
$ |
11,863 |
$ |
0.73 | ||
|
* See the Major Projects and Initiatives table later in this press release. | ||||||||
The following information highlights certain key factors contributing to the Company's results for the year and quarter ended December 31, 2016:
|
Major Projects and Initiatives | |||||||||||||||||||||||
|
The following table summarizes gross margin for the Company's existing and future major projects and initiatives. Gross margin reflects operating revenue less cost of sales, excluding depreciation, amortization and accretion (dollars in thousands): | |||||||||||||||||||||||
|
Gross Margin for the Period | |||||||||||||||||||||||
|
Year Ended |
Three Months Ended |
||||||||||||||||||||||
|
December 31, |
December 31, |
Estimate | |||||||||||||||||||||
|
2016 |
2015 |
Variance |
2016 |
2015 |
Variance |
2017 |
2018 | ||||||||||||||||
|
Existing Major Projects and |
|||||||||||||||||||||||
|
Capital Investment Projects |
$ |
43,717 |
$ |
21,536 |
$ |
22,181 |
$ |
13,693 |
$ |
7,220 |
$ |
6,473 |
$ |
48,185 |
$ |
47,107 | |||||||
|
Regulatory Proceedings |
1,487 |
— |
1,487 |
140 |
— |
140 |
2,250 |
2,250 | |||||||||||||||
|
Total Existing Major Projects and |
$ |
45,204 |
$ |
21,536 |
$ |
23,668 |
$ |
13,833 |
$ |
7,220 |
$ |
6,613 |
$ |
50,435 |
$ |
49,357 | |||||||
|
Future Major Projects and |
|||||||||||||||||||||||
|
Capital Investment Projects (1) |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
2,250 |
$ |
20,238 | |||||||
|
Regulatory Proceedings (2), (3) |
— |
— |
— |
— |
— |
— |
— |
— | |||||||||||||||
|
Total Future Major Projects and |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
2,250 |
$ |
20,238 | |||||||
|
Total |
$ |
45,204 |
$ |
21,536 |
$ |
23,668 |
$ |
13,833 |
$ |
7,220 |
$ |
6,613 |
$ |
52,685 |
$ |
69,595 | |||||||
|
(1) This represents gross margin for the System Reliability and 2017 Expansion projects. | |||||||||||||||||||||||
|
(2) In January 2017, Eastern Shore filed a rate case with the Federal Energy Regulatory Commission ("FERC"). The outcome of the rate case is not known at this time. | |||||||||||||||||||||||
|
(3) In February 2017, FPU's electric division filed a petition with the Florida Public Service Commission ("PSC") requesting a temporary surcharge mechanism to recover the costs, inclusive of an appropriate return on investment, associated with essential reliability and modernization projects on its electric distribution system. The gross margin impact related with this action is not known at this time. | |||||||||||||||||||||||
|
Existing Major Projects and Initiatives | |||||||||||||||||||||||
|
The following summarizes the Company's major projects and initiatives commenced since 2014 and 2015. (dollars in thousands): | |||||||||||||||||||||||
|
Gross Margin for the Period | |||||||||||||||||||||||
|
(in thousands) |
Year Ended |
Three Months Ended |
|||||||||||||||||||||
|
December 31, |
December 31, |
Estimate for | |||||||||||||||||||||
|
2016 |
2015 |
Variance |
2016 |
2015 |
Variance |
2017 |
2018 | ||||||||||||||||
|
Capital Investment Projects: |
|||||||||||||||||||||||
|
Acquisition: |
|||||||||||||||||||||||
|
Aspire Energy |
$ |
12,271 |
$ |
6,324 |
$ |
5,947 |
$ |
4,068 |
$ |
2,663 |
$ |
1,405 |
$ |
13,376 |
$ |
14,302 | |||||||
|
Service Expansions: |
|||||||||||||||||||||||
|
Short-term contracts |
|||||||||||||||||||||||
|
Delaware |
$ |
11,454 |
$ |
4,952 |
$ |
6,502 |
$ |
3,184 |
$ |
1,501 |
$ |
1,683 |
$ |
4,339 |
$ |
714 | |||||||
|
Total short-term contracts |
$ |
11,454 |
$ |
4,952 |
$ |
6,502 |
$ |
3,184 |
$ |
1,501 |
$ |
1,683 |
$ |
4,339 |
$ |
714 | |||||||
|
Long-term Contracts |
|||||||||||||||||||||||
|
Delaware |
$ |
1,815 |
$ |
1,844 |
$ |
(29) |
$ |
449 |
$ |
455 |
$ |
(6) |
$ |
6,965 |
$ |
7,605 | |||||||
|
Florida |
1,627 |
908 |
719 |
407 |
407 |
— |
1,622 |
1,622 | |||||||||||||||
|
Total long-term contracts |
$ |
3,442 |
$ |
2,752 |
$ |
690 |
$ |
856 |
$ |
862 |
$ |
(6) |
$ |
8,587 |
$ |
9,227 | |||||||
|
Total Service Expansions |
$ |
14,896 |
$ |
7,704 |
$ |
7,192 |
$ |
4,040 |
$ |
2,363 |
$ |
1,677 |
$ |
12,926 |
$ |
9,941 | |||||||
|
Florida GRIP |
$ |
11,552 |
$ |
7,508 |
$ |
4,044 |
$ |
3,169 |
$ |
2,194 |
$ |
975 |
$ |
13,727 |
$ |
14,407 | |||||||
|
Eight Flags' CHP Plant |
$ |
4,998 |
$ |
— |
$ |
4,998 |
$ |
2,416 |
$ |
— |
$ |
2,416 |
$ |
8,156 |
$ |
8,457 | |||||||
|
Total Capital Investment Projects |
$ |
43,717 |
$ |
21,536 |
$ |
22,181 |
$ |
13,693 |
$ |
7,220 |
$ |
6,473 |
$ |
48,185 |
$ |
47,107 | |||||||
|
Existing Regulatory Proceedings: |
|||||||||||||||||||||||
|
Delaware Division Rate Case |
$ |
1,487 |
$ |
— |
$ |
1,487 |
$ |
140 |
$ |
— |
$ |
140 |
$ |
2,250 |
$ |
2,250 | |||||||
|
Total Existing Regulatory Proceedings |
$ |
1,487 |
$ |
— |
$ |
1,487 |
$ |
140 |
$ |
— |
$ |
140 |
$ |
2,250 |
$ |
2,250 | |||||||
|
Total Existing Major Projects and |
$ |
45,204 |
$ |
21,536 |
$ |
23,668 |
$ |
13,833 |
$ |
7,220 |
$ |
6,613 |
$ |
50,435 |
$ |
49,357 | |||||||
Aspire Energy
Aspire Energy generated $5.9 million and $1.4 million in additional gross margin for the year and quarter ended December 31, 2016, respectively, compared to the same periods in 2015. Of the $5.9 million of 2016 gross margin, $4.2 million of gross margin was generated in the first quarter of 2016. Aspire Energy's gross margin for the year ended December 31, 2015 was lower due in part to the fact that the period included only nine months of results commencing on April 1, 2015. Aspire Energy also generated additional gross margin in 2016 from pricing amendments to long-term gas sales agreements, additional management fees and higher volumes of natural gas delivered to or on behalf of certain of its customers.
Service Expansions
In January 2015, the Florida PSC approved a firm transportation agreement between Peninsula Pipeline and our Florida natural gas distribution division. Pursuant to this agreement, Peninsula Pipeline provides natural gas transmission service to support our expansion of natural gas distribution service in Polk County, Florida. Peninsula Pipeline began the initial phase of its service to Chesapeake Utilities' Florida natural gas distribution division in March 2015. This new service generated $719,000 of additional gross margin for the year ended December 31, 2016 and produced approximately the same gross margin in the fourth quarters of 2015 and 2016.
In April 2015, Eastern Shore commenced interruptible service to an electric power generator in Kent County, Delaware. The interruptible service concluded in December 2015 and was replaced by a short-term OPT ≤ 90 service, which generated additional gross margin of $5.4 million and $1.0 million for the year and quarter ended December 31, 2016, respectively, compared to the same periods in 2015. The Company has executed a 20-year long-term OPT 90 ≤ service agreement with this customer to be effective March 1, 2017, and has filed an agreement with FERC requesting: (i) the service to be effective March 1, 2017; and (ii) a waiver of the 30 day notice requirement in order to have it become effective March 1, 2017.
In October 2015, Eastern Shore submitted an application to the FERC to make certain measurement and related improvements at its Texas Eastern Transmission, LP ("TETLP") interconnect facilities to enable Eastern Shore to increase natural gas receipts from TETLP by 53,000 Dts/d for a total capacity of 160,000 Dts/d. In December 2015, the FERC authorized Eastern Shore to proceed with this project, which was completed and placed in service in March 2016. Approximately 60 percent of the increased capacity has been subscribed on a short-term firm service basis. This service generated an additional gross margin of $1.4 million and $646,000 for the year and quarter ended December 31, 2016, respectively, compared to the same periods in 2015. The remaining capacity is available for firm or interruptible service.
GRIP
GRIP is a natural gas pipe replacement program approved by the Florida PSC. Since the inception of the program in August 2012, the Company has invested $102.8 million and replaced 214 miles of qualifying distribution mains, $26.0 million of which was invested during 2016. The increased investment in GRIP generated additional gross margin of $4.0 million and $975,000 for the year and quarter ended December 31, 2016, respectively, compared to the same periods in 2015.
Eight Flags' CHP plant
In June 2016, Eight Flags, completed construction of a CHP plant on Amelia Island, Florida, and began selling power generated from the CHP plant to FPU, pursuant to a 20-year power purchase agreement, for distribution to its retail electric customers. In July 2016, it also started selling steam to Rayonier pursuant to a separate 20-year contract.
The CHP plant is powered by natural gas transported by FPU through its distribution system and Peninsula Pipeline, through its intrastate pipeline. Eight Flags and other affiliates of Chesapeake Utilities generated $5.0 million and $2.4 million in additional gross margin for the year and quarter ended December 31, 2016, respectively. These amounts include gross margin of $1.4 million and $477,000 for the year and quarter ended December 31, 2016, respectively, from natural gas distribution and transportation services provided by the Company's affiliates.
Future Major Projects and Initiatives
White Oak Mainline Expansion Project: In August 2014, Eastern Shore entered into a precedent agreement with an electric power generator in Kent County, Delaware, to provide a 20-year natural gas transmission service for 45,000 Dts/d for the customer's facility, upon the satisfaction of certain conditions. This new service will be provided as a long-term OPT ≤ 90 service and is expected to generate at least $5.8 million in annual gross margin. In November 2014, Eastern Shore requested authorization by the FERC to construct 5.4 miles of 16-inch pipeline looping and 3,550 horsepower of new compression in Delaware to provide this service. As previously discussed, during the year ended December 31, 2016, compared to the year ended December 31, 2015, the Company generated $5.4 million, respectively, in additional gross margin by providing short-term OPT ≤ 90 service to this customer. In July 2016, the FERC authorized Eastern Shore to construct and operate the proposed White Oak Mainline Project. Construction of the project is underway. Long-term service is expected to commence on March 1, 2017.
System Reliability Project: In July 2016, the FERC authorized Eastern Shore to construct and operate approximately 10.1 miles of 16-inch pipeline looping and auxiliary facilities in New Castle and Kent Counties, Delaware, and a new compressor at its existing Bridgeville compressor station in Sussex County, Delaware. Construction of the project is underway and is expected to be completed in April 2017. Since the project is intended to improve system reliability, Eastern Shore requested a predetermination of rolled-in rate treatment for the costs of the project and an order granting the requested authorization. This project was included in Eastern Shore's January 2017 rate case filing. The estimated annual gross margin associated with this project, assuming recovery in the 2017 rate case, is approximately $4.5 million.
2017 Expansion Project: In May 2016, Eastern Shore submitted a request to the FERC to initiate the FERC's pre-filing procedures for its proposed 2017 Expansion Project. The 2017 Expansion Project will provide 61,162 Dts/d of additional firm natural gas transportation service pursuant to precedent agreements Eastern Shore entered into with four existing customers as well as the Company's affiliates. Facilities required to provide this new service will consist of: (i) approximately 23 miles of pipeline looping in Pennsylvania, Maryland and Delaware; (ii) upgrades to existing metering facilities in Lancaster County, Pennsylvania; (iii) installation of an additional 3,550 horsepower compressor unit at Eastern Shore's existing Daleville compressor station in Chester County, Pennsylvania; and (iv) approximately 17 miles of new mainline extension and two pressure control stations in Sussex County, Delaware.
In December 2016, Eastern Shore filed its certificate of public convenience and necessity application, requesting that the FERC approve the project in May, 2017. Assuming approval is obtained at that time, the Company anticipates service commencing by the end of the year. The project will generate approximately $15.7 million of gross margin in the first full year after the new transportation services go into effect. The estimated cost of this expansion project is $98.6 million.
Weather and Consumption
Warmer temperatures in 2016, particularly during the first quarter of the year when the demand for natural gas and propane is normally higher, reduced consumption and, therefore, reduced gross margin for the year ended December 31, 2016, by $3.6 million, compared to 2015. The following table summarizes the heating degree-days ('HDD") and cooling degree-days ("CDD") information for the years and quarters ended December 31, 2016 and 2015 and shows variances between actual and "Normal" (10-year average) HDD and CDD for those periods.
|
HDD and CDD Information | |||||||||||
|
For the Periods Ended December 31, |
2016 |
2015 |
Variance |
Q4 2016 |
Q4 2015 |
Variance | |||||
|
Delmarva |
|||||||||||
|
Actual HDD |
3,979 |
4,363 |
(384) |
1,389 |
1,114 |
275 | |||||
|
10-Year Average HDD ("Normal") |
4,453 |
4,496 |
(43) |
1,533 |
1,588 |
(55) | |||||
|
Variance from Normal |
(474) |
(133) |
(144) |
(474) |
|||||||
|
Florida |
|||||||||||
|
Actual HDD |
672 |
569 |
103 |
158 |
68 |
90 | |||||
|
10-Year Average HDD ("Normal") |
828 |
859 |
(31) |
275 |
302 |
(27) | |||||
|
Variance from Normal |
(156) |
(290) |
(117) |
(234) |
|||||||
|
Ohio |
|||||||||||
|
Actual HDD |
5,818 |
2,404 |
N/A(1) |
2,071 |
1,693 |
378 | |||||
|
10-Year Average HDD ("Normal") |
6,078 |
2,903 |
N/A(1) |
2,099 |
2,100 |
(1) | |||||
|
Variance from Normal |
(260) |
(499) |
(28) |
(407) |
|||||||
|
Florida |
|||||||||||
|
Actual CDD |
3,152 |
3,338 |
(186) |
360 |
511 |
(151) | |||||
|
10-Year Average CDD ("Normal") |
2,820 |
2,760 |
60 |
272 |
254 |
18 | |||||
|
Variance from Normal |
332 |
578 |
88 |
257 |
|||||||
|
(1) HDD for Ohio for 2015 is presented from April 1, 2015 through December 31, 2015, since Aspire Energy commenced operations on April 1, 2015. | |||||||||||
Propane Margins
A return to more normal retail propane margins per gallon for our Delmarva and Florida propane distribution operations decreased gross margin by $2.8 million in 2016, of which $2.4 million is associated with the larger Delmarva Peninsula propane distribution operation. As expected, the level of retail margins per gallon generated during 2015 were not sustained. The Company continues to assume more normal levels of margins in its long-term financial plans and forecasts.
PESCO
PESCO provides natural gas supply and services to residential, commercial, industrial and wholesale customers. PESCO operates primarily in Florida, on the Delmarva Peninsula, and in Ohio, competing with regulated utilities and other unregulated third-party marketers to sell natural gas supplies directly to commercial and industrial customers through competitively-priced contracts. PESCO, which does not currently own or operate any natural gas transmission or distribution assets, sells gas that is delivered to retail or wholesale customers through affiliated and non-affiliated local distribution company systems and transmission pipelines.
In October 2016, the Delaware PSC approved PESCO as Asset Manager for the Company's Delaware natural gas distribution division under a three-year agreement, which goes into effect on April 1, 2017, to provide gas supply and capacity on regional pipelines and in storage facilities.
Operating revenues for PESCO were $95.4 million and $32.2 million for the year and quarter ended December 31, 2016, respectively, compared to $56.2 million and $14.9 million for the year and quarter ended December 31, 2015. The majority of this revenue growth was attributable to growth in customers served and volumes sold in Florida, on the Delmarva Peninsula and in Ohio.
Gross margin for PESCO was $4.6 million and $642,000 for the year and quarter ended December 31, 2016, respectively, compared to $3.6 million and $660,000 for the year and quarter ended December 31, 2015, respectively. Favorable results in 2016 from increased customer contracts in Florida and on the Delmarva Peninsula were offset by a $1.5 million loss associated with a supplier agreement entered into by PESCO to service approximately 40,000 end users on behalf of a customer, where revenue from transported volumes was insufficient to cover PESCO's fixed storage and pipeline fees, given the seasonality of volumes as well as warmer temperatures. Under the contract, PESCO pays fixed storage and pipeline fees over the entire twelve-month period, although the projected volumes are expected to be highest in the first quarter of 2017 followed by the fourth quarter of 2016 (contract period of April 1, 2016 - March 31, 2017).
Operating income (loss) for PESCO was $1.9 million and $(341,000) for the year and quarter ended December 31, 2016, respectively, compared to $1.9 million and $183,000 for the year and quarter ended December 31, 2015, respectively. PESCO experienced $1.0 million of increased operating expenses in 2016 due to higher costs related to additional staffing.
Xeron
Xeron trades in short-term natural gas liquids and crude oil forward and futures contracts on the InterContinentalExchange, Inc. Xeron settles its purchases and sales financially, without taking physical delivery of the propane or crude oil. The level and profitability of the propane and crude oil wholesale marketing trading activity is affected by both propane and crude oil wholesale price volatility and liquidity in the wholesale market.
Gross margin for Xeron was ($546,000) and ($590,000) for the year and quarter ended December 31, 2016, respectively, compared to gross margin of $301,000 and gross margin loss ($163,000) for the year and quarter ended December 31, 2015, respectively. Xeron's operating loss was ($1.6 million) and ($855,000) for the year and quarter ended December 31, 2016, respectively, compared to an operating loss of ($765,000) and ($405,000) for the year and quarter ended December 31, 2015, respectively. Results in both years were impacted by unfavorable crude oil and propane futures trading. At December 31, 2016, Xeron did not have any open futures or forward contracts.
Other Natural Gas Growth - Distribution Operations
The natural gas distribution operations on the Delmarva Peninsula generated $1.5 million and $376,000 in additional gross margin for the year and quarter ended December 31, 2016, respectively, compared to the same periods in 2015, due to an increase in residential, commercial and industrial customers served over and above the growth from service expansions. The average number of residential customers on the Delmarva Peninsula increased by 3.6 percent in 2016 compared to 2015. The natural gas distribution operations in Florida generated $1.2 million and $418,000 in additional gross margin for the year and quarter ended December 31, 2016, respectively, compared to the same periods in 2015, due primarily to an increase in commercial and industrial customers in Florida.
Regulatory Proceedings
Delaware division rate case
In December 2016, the Delaware PSC approved a settlement agreement related to the Company's Delaware division rate case filing, as recommended by the Hearing Examiner's report. The settlement agreement, among other things, provided for an increase in the Company's Delaware division annual revenue requirement of $2.25 million and a rate of return on common equity of 9.75 percent. The new rates are effective for all services rendered on or after January 1, 2017. Amounts collected through interim rates in excess of the current portion of the $2.25 million settlement were accrued for refund as of December 31, 2016 and will be distributed to ratepayers beginning in the first quarter of 2017. The accrued refund had no material effect on results for the year ended December 31, 2016.
Eastern Shore Rate Case
In January 2017, Eastern Shore filed a base rate proceeding with the FERC, as required by the terms of its 2012 rate case settlement agreement. Eastern Shore's proposed rates are based on the mainline cost of service of approximately $60 million, resulting in an overall revenue increase of approximately $18.9 million and a rate of return on common equity of 13.75 percent. The FERC issued a notice of the filing in January 2017, and the comment period ended on February 8, 2017. Fourteen parties intervened in the proceeding with six of those parties filing protests. New rates are proposed to be effective on March 1, 2017. However, the FERC typically suspends the rates for a period of five months. At the end of the suspension period, Eastern Shore will file a motion to implement new rates effective August 1, 2017. Eastern Shore will respond to any comments filed.
Electric System Transformation and Reliability program
In February, 2017, FPU's electric division filed a petition with the Florida PSC, requesting a temporary surcharge mechanism to recover costs, inclusive of an appropriate return on investment, associated with an essential reliability and modernization project on its electric distribution system. The Company is seeking approval to invest approximately $59.8 million, over a five-year period associated with this project. In February, 2017, the Office of Public Counsel intervened in this petition. The outcome of the Company's petition is not known at this time.
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) For the Periods Ended December 31, 2016 and 2015 (in thousands, except shares and per share data) | ||||||||
|
Year Ended |
Fourth Quarter | |||||||
|
2016 |
2015 |
2016 |
2015 | |||||
|
Operating Revenues |
||||||||
|
Regulated Energy |
$ |
305,689 |
$ |
301,902 |
$ |
79,059 |
$ |
66,464 |
|
Unregulated Energy |
203,778 |
162,108 |
67,417 |
38,944 | ||||
|
Other businesses and eliminations |
(10,607) |
(4,766) |
(4,602) |
(841) | ||||
|
Total Operating Revenues |
498,860 |
459,244 |
141,874 |
104,567 | ||||
|
Operating Expenses |
||||||||
|
Regulated energy cost of sales |
109,609 |
122,814 |
28,425 |
21,399 | ||||
|
Unregulated energy and other cost of sales |
128,434 |
97,228 |
43,291 |
23,762 | ||||
|
Operations |
117,571 |
107,562 |
32,200 |
28,042 | ||||
|
Maintenance |
12,391 |
11,803 |
3,466 |
3,769 | ||||
|
(Gain from a settlement) |
(130) |
(1,500) |
— |
— | ||||
|
Depreciation and amortization |
32,159 |
29,972 |
8,667 |
7,817 | ||||
|
Other taxes |
14,730 |
13,607 |
4,006 |
3,607 | ||||
|
Total operating expenses |
414,764 |
381,486 |
120,055 |
88,396 | ||||
|
Operating Income |
84,096 |
77,758 |
21,819 |
16,171 | ||||
|
Other income (expense) |
(441) |
293 |
(372) |
297 | ||||
|
Interest charges |
10,639 |
10,006 |
2,643 |
2,582 | ||||
|
Income Before Income Taxes |
73,016 |
68,045 |
18,804 |
13,886 | ||||
|
Income taxes |
28,341 |
26,905 |
6,941 |
5,267 | ||||
|
Net Income |
$ |
44,675 |
$ |
41,140 |
$ |
11,863 |
$ |
8,619 |
|
Weighted Average Common Shares Outstanding: |
||||||||
|
Basic |
15,570,539 |
15,094,423 |
16,302,021 |
15,269,068 | ||||
|
Diluted |
15,613,091 |
15,143,373 |
16,349,110 |
15,320,587 | ||||
|
Earnings Per Share of Common Stock: |
||||||||
|
Basic |
$ |
2.87 |
$ |
2.73 |
$ |
0.73 |
$ |
0.56 |
|
Diluted |
$ |
2.86 |
$ |
2.72 |
$ |
0.73 |
$ |
0.56 |
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited) | ||||
|
As of December 31, | ||||
|
Assets |
2016 |
2015 | ||
|
(in thousands, except shares and per share data) |
||||
|
Property, Plant and Equipment |
||||
|
Regulated energy |
$ |
957,681 |
$ |
842,756 |
|
Unregulated energy |
196,800 |
145,734 | ||
|
Other |
21,114 |
18,999 | ||
|
Total property, plant and equipment |
1,175,595 |
1,007,489 | ||
|
Less: Accumulated depreciation and amortization |
(245,207) |
(215,313) | ||
|
Plus: Construction work in progress |
56,276 |
62,774 | ||
|
Net property, plant and equipment |
986,664 |
854,950 | ||
|
Current Assets |
||||
|
Cash and cash equivalents |
4,178 |
2,855 | ||
|
Accounts receivable (less allowance for uncollectible accounts of $909 for 2016 and |
62,803 |
41,007 | ||
|
Accrued revenue |
16,986 |
12,452 | ||
|
Propane inventory, at average cost |
6,457 |
6,619 | ||
|
Other inventory, at average cost |
4,576 |
3,803 | ||
|
Regulatory assets |
7,694 |
8,268 | ||
|
Storage gas prepayments |
5,484 |
3,410 | ||
|
Income taxes receivable |
22,888 |
24,950 | ||
|
Prepaid expenses |
6,792 |
7,146 | ||
|
Mark-to-market energy assets |
823 |
153 | ||
|
Other current assets |
2,470 |
1,044 | ||
|
Total current assets |
141,151 |
111,707 | ||
|
Deferred Charges and Other Assets |
||||
|
Goodwill |
15,070 |
14,548 | ||
|
Other intangible assets, net |
1,843 |
2,222 | ||
|
Investments, at fair value |
4,902 |
3,644 | ||
|
Regulatory assets |
76,803 |
77,519 | ||
|
Receivables and other deferred charges |
2,786 |
2,831 | ||
|
Total deferred charges and other assets |
101,404 |
100,764 | ||
|
Total Assets |
$ |
1,229,219 |
$ |
1,067,421 |
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited) | ||||
|
As of December 31, | ||||
|
Capitalization and Liabilities |
2016 |
2015 | ||
|
(in thousands, except shares and per share data) |
||||
|
Capitalization |
||||
|
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares |
$ |
— |
$ |
— |
|
Common stock, par value $0.4867 per share (authorized 25,000,000 shares) |
7,935 |
7,432 | ||
|
Additional paid-in capital |
250,967 |
190,311 | ||
|
Retained earnings |
192,062 |
166,235 | ||
|
Accumulated other comprehensive loss |
(4,878) |
(5,840) | ||
|
Deferred compensation obligation |
2,416 |
1,883 | ||
|
Treasury stock |
(2,416) |
(1,883) | ||
|
Total stockholders' equity |
446,086 |
358,138 | ||
|
Long-term debt, net of current maturities |
136,954 |
149,006 | ||
|
Total capitalization |
583,040 |
507,144 | ||
|
Current Liabilities |
||||
|
Current portion of long-term debt |
12,099 |
9,151 | ||
|
Short-term borrowing |
209,871 |
173,397 | ||
|
Accounts payable |
56,935 |
39,300 | ||
|
Customer deposits and refunds |
29,238 |
27,173 | ||
|
Accrued interest |
1,312 |
1,311 | ||
|
Dividends payable |
4,973 |
4,390 | ||
|
Accrued compensation |
10,496 |
10,014 | ||
|
Regulatory liabilities |
1,291 |
7,365 | ||
|
Mark-to-market energy liabilities |
773 |
433 | ||
|
Other accrued liabilities |
7,063 |
7,059 | ||
|
Total current liabilities |
334,051 |
279,593 | ||
|
Deferred Credits and Other Liabilities |
||||
|
Deferred income taxes |
222,894 |
192,600 | ||
|
Regulatory liabilities |
43,064 |
43,064 | ||
|
Environmental liabilities |
8,592 |
8,942 | ||
|
Other pension and benefit costs |
32,828 |
33,481 | ||
|
Deferred investment tax credits and Other liabilities |
4,750 |
2,597 | ||
|
Total deferred credits and other liabilities |
312,128 |
280,684 | ||
|
Total Capitalization and Liabilities |
$ |
1,229,219 |
$ |
1,067,421 |
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||
|
For the Three Months Ended December 31, 2016 |
For the Three Months Ended December 31, 2015 | |||||||||||||||||||||||
|
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric |
Delmarva |
Chesapeake |
FPU NG |
FPU Electric | |||||||||||||||||
|
Operating Revenues |
||||||||||||||||||||||||
|
Residential |
$ |
12,767 |
$ |
1,312 |
$ |
7,442 |
$ |
9,548 |
$ |
10,406 |
$ |
1,212 |
$ |
5,299 |
$ |
9,192 | ||||||||
|
Commercial |
6,697 |
1,323 |
7,657 |
9,890 |
5,826 |
1,201 |
5,870 |
10,061 | ||||||||||||||||
|
Industrial |
2,146 |
1,666 |
5,185 |
1,343 |
1,835 |
1,444 |
4,051 |
749 | ||||||||||||||||
|
Other (1) |
2,574 |
1,040 |
348 |
(2,095) |
2,291 |
940 |
1,740 |
(3,975) | ||||||||||||||||
|
Total Operating Revenues |
$ |
24,184 |
$ |
5,341 |
$ |
20,632 |
$ |
18,686 |
$ |
20,358 |
$ |
4,797 |
$ |
16,960 |
$ |
16,027 | ||||||||
|
Volumes (in Dts for natural gas and MWHs for electric) |
||||||||||||||||||||||||
|
Residential |
732,491 |
82,560 |
314,989 |
61,963 |
606,758 |
71,945 |
277,250 |
59,298 | ||||||||||||||||
|
Commercial |
867,780 |
1,942,337 |
499,922 |
71,258 |
741,866 |
1,347,148 |
531,743 |
74,124 | ||||||||||||||||
|
Industrial |
1,352,489 |
2,600,411 |
1,106,017 |
12,230 |
1,244,862 |
2,815,222 |
952,282 |
4,660 | ||||||||||||||||
|
Other |
24,514 |
— |
521 |
1,906 |
25,647 |
— |
66,868 |
(5,815) | ||||||||||||||||
|
Total |
2,977,274 |
4,625,308 |
1,921,449 |
147,357 |
2,619,133 |
4,234,315 |
1,828,143 |
132,267 | ||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||
|
Residential |
66,867 |
15,453 |
53,555 |
24,351 |
64,503 |
14,999 |
52,462 |
24,092 | ||||||||||||||||
|
Commercial |
6,746 |
1,399 |
4,200 |
7,420 |
6,636 |
1,388 |
4,220 |
7,385 | ||||||||||||||||
|
Industrial |
131 |
73 |
1,864 |
2 |
122 |
74 |
1,713 |
2 | ||||||||||||||||
|
Other |
6 |
— |
— |
— |
4 |
— |
— |
— | ||||||||||||||||
|
Total |
73,750 |
16,925 |
59,619 |
31,773 |
71,265 |
16,461 |
58,395 |
31,479 | ||||||||||||||||
|
For the Year Ended December 31, 2016 |
For the Year Ended December 31, 2015 | |||||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake |
FPU NG |
FPU Electric |
Delmarva |
Chesapeake |
FPU NG |
FPU Electric | |||||||||||||||||||||||||
|
Operating Revenues |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
49,841 |
$ |
5,289 |
$ |
28,040 |
$ |
46,459 |
$ |
63,745 |
$ |
5,000 |
$ |
22,945 |
$ |
46,686 |
||||||||||||||||
|
Commercial |
27,274 |
5,171 |
28,569 |
41,704 |
33,776 |
4,811 |
26,305 |
42,585 |
||||||||||||||||||||||||
|
Industrial |
7,420 |
6,474 |
20,583 |
3,497 |
7,214 |
5,981 |
16,007 |
3,111 |
||||||||||||||||||||||||
|
Other (1) |
1,409 |
3,704 |
(2,266) |
(7,505) |
(1,175) |
3,215 |
2,297 |
(12,954) |
||||||||||||||||||||||||
|
Total Operating Revenues |
$ |
85,944 |
$ |
20,638 |
$ |
74,926 |
$ |
84,155 |
$ |
103,560 |
$ |
19,007 |
$ |
67,554 |
$ |
79,428 |
||||||||||||||||
|
Volumes (in Dts for natural gas and MWHs for electric) |
||||||||||||||||||||||||||||||||
|
Residential |
3,227,594 |
342,964 |
1,308,906 |
303,654 |
3,734,888 |
327,218 |
1,247,820 |
303,642 |
||||||||||||||||||||||||
|
Commercial |
3,407,184 |
6,060,468 |
2,133,842 |
304,458 |
3,696,839 |
5,416,714 |
2,417,819 |
313,757 |
||||||||||||||||||||||||
|
Industrial |
5,032,872 |
11,005,835 |
4,290,371 |
29,700 |
4,617,183 |
11,002,944 |
3,987,899 |
18,880 |
||||||||||||||||||||||||
|
Other |
92,807 |
— |
— |
8,484 |
82,655 |
— |
(84,763) |
(1,740) |
||||||||||||||||||||||||
|
Total |
11,760,457 |
17,409,267 |
7,733,119 |
646,296 |
12,131,565 |
16,746,876 |
7,568,775 |
634,539 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
66,175 |
15,340 |
53,300 |
24,289 |
63,901 |
14,854 |
52,046 |
24,039 |
||||||||||||||||||||||||
|
Commercial |
6,746 |
1,393 |
4,236 |
7,404 |
6,637 |
1,360 |
4,249 |
7,389 |
||||||||||||||||||||||||
|
Industrial |
125 |
73 |
1,786 |
2 |
118 |
69 |
1,633 |
2 |
||||||||||||||||||||||||
|
Other |
5 |
— |
— |
— |
5 |
— |
— |
— |
||||||||||||||||||||||||
|
Total |
73,051 |
16,806 |
59,322 |
31,695 |
70,661 |
16,283 |
57,928 |
31,430 |
||||||||||||||||||||||||
|
(1) Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for | ||||||||||||||||||||||||||||||||
SOURCE Chesapeake Utilities Corporation
Article Date
2/28/2017Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Feb. 24, 2017 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.305 per share on the Company's common stock. The $0.305 per share dividend will be paid on April 5, 2017 to all shareholders of record at the close of business on March 15, 2017.
Chesapeake has paid dividends to its shareholders without interruption for 56 years. During those 56 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; propane and crude oil wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
2/24/2017Chesapeake Utilities Corporation Initiates Natural Gas Service in Ocean City, Maryland
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Feb. 23, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities") announced today that Sandpiper Energy ("Sandpiper" or "the Company"), a wholly-owned subsidiary, is now delivering natural gas to the Town of Ocean City, Maryland. The Company expects to make more than 250 conversions to natural gas for residents and business owners through the end of May, before the start of the tourism season. The upcoming Ocean City conversions are part of the Company's ongoing initiative to increase the energy options for residents.
"Our team is excited to have made progress in its commitment to providing natural gas to residents and businesses in Ocean City and Worcester County, Maryland," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "This extension of our service means more people will enjoy the numerous benefits of natural gas as we continue to provide excellent value to this region and service to our customers, community members and shareholders."
The Sandpiper Energy team has converted more than 4,000 homes and businesses in Worcester County since the project was initiated in 2013. When the Ocean City system is fully converted to natural gas, the net effect will be a reduction in CO2 emissions by over 3,000 tons, the equivalent of taking over 500 cars off the road. With more than 3,500 accounts in Ocean City to convert and taking into consideration the tourism season, the process will take several years to complete.
"We are excited to bring natural gas service to Ocean City, Maryland," said Jim Moore, Vice President, Chesapeake Utilities. "We have a long-standing history in meeting the energy needs of the Delmarva Peninsula and our employees look forward to serving the Worcester County community."
About Sandpiper Energy
Sandpiper Energy distributes natural gas and propane to approximately 11,000 residential commercial and industrial customers in Worcester County, Maryland. In the last two years, over 2,400 Berlin and West Ocean City customers have converted their homes and businesses to natural gas.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; propane and crude oil wholesale marketing; steam generation; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Mike Stock
Senior Director, Corporate Communications
Chesapeake Utilities Corporation
302.736.7808
mstock@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
2/23/20171/24/2017 - Chesapeake Utilities Corporation To Host Conference Call To Review 2016 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review 2016 Financial Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Jan. 24, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Wednesday, March 1, 2017, at 10:30 a.m. ET to discuss the Company's financial results for the fourth quarter and year ended December 31, 2016. The earnings press release will be issued on Tuesday, February 28, 2017, before the market opens.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2016 Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
1/24/201712/21/2016 - Chesapeake Utilities Corporation's Combined Heat And Power (CHP) Plant Named "Best CHP Project Of The Year"
Chesapeake Utilities Corporation's Combined Heat And Power (CHP) Plant Named "Best CHP Project Of The Year"
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Dec. 21, 2016 /PRNewswire/ -- Power Engineering magazine has named the Chesapeake Utilities Corporation (NYSE: CPK) Eight Flags Energy Combined Heat and Power (CHP) Plant "Best CHP Project of the Year." The award was announced during the POWER-GEN International exposition in Orlando, Florida on December 13.
"This award is meant to recognize innovative and creative power projects that play a unique role in meeting local and regional demand for power," said Power Engineering Editor-in-Chief Russell Ray. "The Eight Flags Energy CHP Plant goes above and beyond in meeting these standards."
"The Eight Flags Energy CHP Plant is a strategic solution designed to meet the needs of our customers and communities while reducing emissions and providing savings," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "This project, the first-of-its-kind for the Company, is an example of our employees' commitment to developing effective ways to grow while continuing to deliver value to our customers, investors and the communities we serve."
The Eight Flags Energy CHP plant is powered by natural gas, highly-regarded as one of the cleanest, safest and most efficient energy options. The plant operates on natural gas provided by Florida Public Utilities Company (FPU) and Peninsula Pipeline Company, two subsidiaries of Chesapeake Utilities Corporation, and produces three energy outputs: electricity, steam and heated water. Rayonier Advanced Materials purchases the steam and heated water for use in its cellulose specialties production facility. FPU purchases the electricity for distribution to its electric retail customers in the area which yields cost-savings and increased reliability. The Eight Flags Energy CHP Plant, located on the Rayonier Advanced Materials plant in Amelia Island, Nassau County, Florida, generates approximately 20 MW of base load power, producing enough electricity to meet 50 percent of the Island's demand.
"This plant is one of the most energy-efficient cogeneration power plants in the United States, with a target efficiency of 78 percent," added Jeffry M. Householder, President of Florida Public Utilities Company. "I'm proud of the team of employees and partners who worked diligently to bring this project to fruition. It's a resource that makes a meaningful impact, and I look forward to continuing to find ways to best serve our customers and the community."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Mike Stock
Senior Director, Corporate Communications
Chesapeake Utilities Corporation
mstock@chpk.com
302.736.7808
SOURCE Chesapeake Utilities Corporation
Article Date
12/21/2016Elaine Bittner, Chesapeake Utilities Corporation, Receives Top International Honor As Female Executive Of The Year At 2016 Stevie® Awards For Women In Business
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Dec. 5, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) Senior Vice President of Strategic Development Elaine Bittner was named "Female Executive of the Year." Ms. Bittner accepted the Gold Stevie Award during the 13th annual Stevie Awards for Women in Business, held in New York City on November 18, 2016.
"Congratulations to Elaine and the other leaders for achieving international recognition for truly exceptional performance in business," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "In her more than 20 years with Chesapeake, Elaine has tackled some of the Company's toughest challenges and driven smart, strategic change. In leading the Company's strategic planning and corporate business development, she is the architect of the operational and cultural alignment that fuels our Company's success. In addition, in her strategic planning role she has dramatically improved our strategic planning processes, making significant contributions to our achieving top ranking among our peers and record earnings. We are delighted that Elaine has been recognized for this award, and honored that she is on our team."
In the last year, Ms. Bittner led the acquisition of Gatherco, Inc. and its successful integration into Aspire Energy; led the Company's strategic plan; assumed the role of Chief Operating Officer for four business units; and continued to direct the communications and human resources strategies leading to Top Workplace recognition for the fifth consecutive year. She also served as Chair of "Go Red for Women" of Southern Delaware, a program of the American Heart Association, where she led a team to achieve record-breaking results.
More than 1,400 nominations from organizations of all sizes and in virtually every industry were submitted this year for consideration for a 2016 Stevie Award for Women in Business.
The Stevie Awards for Women in Business are the world's top honors for female entrepreneurs, executives, employees and the organizations they run. All individuals and organizations worldwide are eligible to submit nominations – public and private, for-profit and non-profit, large and small. The 2016 awards received entries from 31 nations and territories.
Nicknamed the Stevies for the Greek word for "crowned," the awards were presented to winners November 18 during a dinner event attended by more than 500 people at the Marriott Marquis Hotel in New York City. The event was broadcast on Livestream.
Stevie Award winners were selected by more than 160 professionals worldwide who participated in the judging process this year.
"Each year we think the quality of achievements portrayed in Stevie-winning nominations couldn't possibly get any better, and each year the amazing women who are recognized in this program prove us wrong," said Michael Gallagher, Stevie Awards founder and president. "We are thrilled and humbled to be able to recognize so many outstanding women in the Stevie Awards for Women in Business, and to share the stories of their achievement with the world."
Details about the Stevie Awards for Women in Business and the list of Stevie Award winners are available at www.StevieAwards.com/Women.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com.
About The Stevie Awards
Stevie Awards are conferred in seven programs: the Asia-Pacific Stevie Awards, the German Stevie Awards, The American Business Awards, The International Business Awards, the Stevie Awards for Great Employers, the Stevie Awards for Women in Business and the Stevie Awards for Sales & Customer Service. Stevie Awards competitions receive more than 10,000 entries each year from organizations in more than 60 nations. Honoring organizations of all types and sizes and the people behind them, the Stevies recognize outstanding performances in the workplace worldwide. Learn more about the Stevie Awards at http://www.StevieAwards.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
|
For more information, contact: |
Mike Stock |
|
Senior Director of Corporate Communications | |
|
Chesapeake Utilities Corporation | |
|
302.736.7808 | |
Logo - http://photos.prnewswire.com/prnh/20161205/445511
SOURCE Chesapeake Utilities Corporation
Article Date
12/5/2016Chesapeake Utilities Corporation Employees Partner with Local Organizations to Supply Families with Thanksgiving Meals
Source: PR Newswire
DOVER, Del., Nov. 23, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (Chesapeake Utilities) (NYSE: CPK) employees from Delaware, Florida, Ohio and Maryland spent the weeks leading up to Thanksgiving working with local community organizations to pack and distribute meals for families in need through the Company's annual Thanksgiving for All program. In total, employees packaged and delivered more than 1,300 meals.
Since the program began five years ago, the Company donated more than $125,000 to provide over 5,000 meals.
"Our employees value the opportunity to help those in need throughout the communities we serve and the Thanksgiving for All program is an initiative that's close to all of our hearts," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "I'm grateful for the partnerships of organizations like the local food banks and I look forward to what we accomplish together in 2017."
In Delaware, home of the Company's headquarters, more than 225 employees from the Company's Chesapeake Utilities, Eastern Shore Natural Gas Company, Sandpiper Energy, PESCO and Sharp Energy business units, as well as the corporate office, partnered with the Food Bank of Delaware to package and distribute 1,000 meals at six sites in Kent County and Sussex County. Each box was filled with the makings of a festive holiday meal, including stuffing and mashed potato mixes, milk, cranberry sauce and more, and then topped with a frozen turkey.
Employees of the Company's Florida Public Utilities business unit worked with local organizations to collect and distribute canned goods throughout the state of Florida in partnership with several local food banks. Ohio employees from the Aspire Energy business unit partnered with People to People Ministries for the second year in a row to package 300 holiday meals. Maryland employees will work with the Food Bank of Maryland – Eastern Shore later this month to continue the holiday giving.
"The Thanksgiving for All program started five years ago in Delaware, and the passion and drive of our employees has resulted in a companywide effort to help families in need enjoy a healthy and warm Thanksgiving dinner," said Elaine B. Bittner, Senior Vice President of Strategic Development for Chesapeake Utilities Corporation. "It's important that we give back to the communities in which we live and work and I'm proud of the team for their commitment to making a meaningful impact during this Thanksgiving holiday."
Chesapeake Utilities also supports the Delmarva community through the Company's Chesapeake Emergency Energy Recipient Program (CHEERP), also known as Chesapeake Sharing, which ensures that the elderly, ill and those facing financial hardship are not forgotten during the cold winter months when energy bills are at their peak. Over the last ten years, Chesapeake Sharing distributed more than 2,100 grants totaling more than $475,000 to Delmarva families in need of financial assistance. For more information about SHARING and to make a tax-deductible donation visit: www.chesapeakesharing.com
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Mike Stock
Senior Director, Corporate Communications
Chesapeake Utilities Corporation
mstock@chpk.com
302.736.7808
Photo - http://photos.prnewswire.com/prnh/20161123/442517
SOURCE Chesapeake Utilities Corporation
Article Date
11/23/201611/16/2016 - Sandpiper Energy Agrees to a Multi-Year Rate Reduction for Customers, New Service Offerings
Sandpiper Energy Agrees to a Multi-Year Rate Reduction for Customers, New Service Offerings
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Nov. 16, 2016 /PRNewswire/ -- Sandpiper Energy, Inc., a wholly owned subsidiary of Chesapeake Utilities Corporation, announced today that the Public Service Commission of Maryland has approved a settlement agreement associated with its 2015 base rate case filing, which will result in a reduction in its delivery service rates over the next six years. The agreement also includes an introduction of several new service offerings, including a natural gas compression service for commercial customers and a program to support the use of propane or natural gas in multi-family housing.
"Sandpiper Energy began conversions to natural gas for the majority of its customers in mid-2013. Since that time we have converted more than 3,700 customers, bringing safe, clean and affordable natural gas to many families and businesses in Worcester County," said Jim Moore, Vice President of Chesapeake Utilities Corporation and Sandpiper Energy. "I'm proud that we are able to provide this preferred energy source to the region while reducing rates and introducing new service offerings. We will continue to execute our strategy to bring natural gas to these areas as efficiently and economically as we can, and we look forward to building upon a tradition of reliable service for all our customers."
The settlement that was just approved includes acceptance of:
In addition, the approved settlement maintains Sandpiper Energy's use of a system improvement rate ("SIR"), which is adjusted annually to recover the cost of bare steel replacement and the cost of converting customers to natural gas service.
Sandpiper Energy encourages customers to go to www.sandpiper-energy.com for information on saving energy and money in their home or business. The Company offers a budget payment plan to its customers that will spread out payments on winter heating bills. In addition, customers with financial needs can learn how to receive assistance with their winter heating costs from Sandpiper's Sharing program or from other Maryland public assistance programs. Customers can also make contributions to support the Sharing program by visiting www.chesapeakesharing.com.
Sandpiper Energy
Sandpiper Energy, Inc., a wholly-owned subsidiary of Chesapeake Utilities, provides propane and natural gas through underground distribution mains to approximately 11,000 residential, commercial and industrial customers in Worcester, County, Maryland.
Chesapeake Utilities Corporation
Chesapeake Utilities Corporation (NYSE: CPK) is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. In total, the Company currently serves approximately 230,000 customers with natural gas, propane or electricity. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Jim Moore
Vice President, Chesapeake Utilities and Sandpiper Energy
302.734.6797 ext. 7650
jmoore@chpk.com
Logo - http://photos.prnewswire.com/prnh/20161116/440412LOGO
SOURCE Chesapeake Utilities Corporation
Article Date
11/16/201611/15/2016 - Chesapeake Utilities Corporation Joins Utility Industry to Protect Customers from Scammers
Chesapeake Utilities Corporation Joins Utility Industry to Protect Customers from Scammers
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Nov. 15, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake), and its business units Chesapeake Utilities, Sandpiper Energy, Florida Public Utilities Company and Sharp Energy, are joining other utility companies across the United States and Canada to increase public awareness about long-running scam activities that target customers of utility service providers.
The Utilities United Against Scams collaboration, supported by the American Gas Association and other utility companies, has designated November 16 as "Utilities United Against Scams Day." This day will be supported by a week-long informational campaign focused on exposing the tricks that scammers use to steal money from customers, and how customers can protect themselves.
"The safety of our customers and their private data is a top priority for Chesapeake," said Michael P. McMasters, Chesapeake Utilities Corporation President and Chief Executive Officer. "We have a team of dedicated and knowledgeable employees who are committed to keeping customer data private and helping customers protect themselves against situations involving scams or fraudulent activity. I encourage any customer with a concern about suspicious activity to call our Customer Care team."
"Chesapeake's Customer Care team is dedicated to the safety and well-being of our customers," said Nicole T. Carter, Assistant Vice President of Customer Care for Chesapeake Utilities Corporation. "We believe the Utilities United Against Scams campaign is critical in helping to build public awareness about potential scams targeting utility customers. Through our team of customer care representatives and up-to-date information made available on our websites, we're committed to working together with customers to continuously ensure their privacy and safety."
Indications for popular scam activity include:
How to protect yourself:
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Mike Stock
Senior Director, Corporate Communications
Chesapeake Utilities Corporation
302.736.7808
mstock@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
11/15/2016Chesapeake Utilities Corporation Reports Third Quarter Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Nov. 3, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today reported third quarter financial results. The Company's net income for the quarter ended September 30, 2016 was $4.4 million, compared to $5.1 million in the same quarter of 2015. The decrease was principally due to fixed pipeline and storage costs associated with natural gas supply contracts where a significant portion of the sales volume will occur during the winter months; increased deliveries and imbalance positions that favorably impacted Aspire Energy in 2015, which are non-recurring; and lower retail propane margins per gallon on the Delmarva Peninsula, as expected. Earnings per share for the quarter ended September 30, 2016 were $0.29 per share, compared to $0.33 for the same quarter of 2015.
For the nine months ended September 30, 2016, the Company reported net income of $32.8 million, an increase of $291,000 over the first nine months of 2015. Earnings per share were $2.14 for the first nine months of 2016, compared to $2.16 per share for the same period in 2015. Year-to-date, higher earnings from growth in the Company's natural gas transmission and distribution businesses, Aspire Energy of Ohio, LLC ("Aspire Energy") and the Combined Heat & Power ("CHP") plant constructed by the Company's subsidiary, Eight Flags Energy, LLC ("Eight Flags"), offset the negative effect of warmer weather largely during the first quarter of 2016. The warmer weather reduced year-to-date earnings per share by $0.31 compared to the same period in 2015.
"Third quarter results of operations met our expectations and demonstrate the success of our employees in cultivating growth in the areas we serve. The Eight Flags Energy project is now fully operational and contributed more than $2.0 million in new margin during the quarter." stated Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "We also completed an equity offering which provides us with the capital we need while maintaining our strong financial position. Looking forward we are positioned to continue executing on our projects and delivering value to our customers and shareholders," Mr. McMasters added.
A more detailed discussion and analysis of the Company's results for each segment is provided in the following pages.
Comparative Results for the Quarters Ended September 30, 2016 and 2015
Operating income for the third quarter decreased by $753,000, or 6.9 percent, to $10.2 million compared to the same period in 2015. Gross margin increased by $4.7 million, although other operating expenses increased by $5.5 million. The increase in other operating expenses, in part, reflects the fact that higher expenses to support growth of the Company's businesses are largely recognized equally across the year, while the margin from growth is more concentrated in the heating season during the fourth and first quarters.
Regulated Energy Segment
The Regulated Energy segment operating income grew by $1.3 million compared to the same period in 2015. The increased operating income resulted from a $4.7 million increase in gross margin, partially offset by a $3.4 million increase in other operating expenses. The significant components of the gross margin increase included:
Other operating expenses increased by $3.4 million. The significant components of the increase in other operating expenses included:
Unregulated Energy Segment
The Unregulated Energy segment reported an operating loss of $3.1 million in the third quarter of 2016 compared to a loss of $1.0 million in the same period for 2015. The Unregulated Energy segment typically reports an operating loss in the third quarter due to the seasonal nature of a large portion of the businesses included in this segment. As shown below, gross margin was largely unchanged from period to period as a result of the gross margin added by the Eight Flags CHP plant; results were impacted by the following:
Other operating expenses increased by $2.1 million. The significant components of the increase in other operating expenses included:
Comparative Results for the Nine Months Ended September 30, 2016 and 2015
Operating income for the nine months ended September 30, 2016 increased by $690,000 to $62.3 million for the nine months ended September 30, 2016, compared to $61.6 million for the same period in 2015. The increase in operating income was driven by a $10.9 million increase in gross margin, which was partially offset by a $10.2 million increase in other operating expenses. Excluding the net non-recurring gain associated with the billing system settlement recognized during the first nine months of 2015, operating income increased by $2.1 million for the nine months ended September 30, 2016.
Regulated Energy Segment
Operating income for the Regulated Energy segment for the nine months ended September 30, 2016 increased by $5.0 million. The increase in operating income was driven by an increase in gross margin of $11.4 million, which was partially offset by an increase of $6.4 million in other operating expenses. The significant components of the gross margin increase included:
The above increases were partially offset by $2.1 million in lower gross margin due to reduced consumption of natural gas and electricity, largely as a result of warmer weather during the first quarter of 2016, compared to the same period in 2015.
Other operating expenses increased by $6.4 million. The significant components of the increase in other operating expenses included:
Unregulated Energy Segment
The Unregulated Energy segment reported operating income of $9.3 million for the nine months ended September 30, 2016, compared to operating income of $13.7 million for the same period in 2015. The $4.4 million decrease in operating income resulted from a $549,000 decrease in gross margin and a $3.9 million increase in other operating expenses. Income generated from ongoing execution of the Company's growth strategy through Aspire Energy, the Eight Flags CHP plant and customer growth generated by PESCO, offset the negative effect of warmer weather experienced primarily in the first quarter and retail margins per gallon on the Delmarva Peninsula returning to more normal levels.
Gross margin increased as a result of the following:
Gross margin decreases offsetting the above increases included the following:
Other operating expenses increased by $3.9 million. The significant components of the increase in other operating expenses included:
Matters discussed 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 2015 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
The discussions of the results use the term "gross margin," a non-Generally Accepted Accounting Principles ("GAAP") financial measure, which management uses to evaluate the performance of the Company's business segments. For an explanation of the calculation of "gross margin," see the footnote to the Financial Summary.
Unless otherwise noted, earnings per share is presented on a diluted basis.
Conference Call
Chesapeake Utilities will host a conference call on Friday, November 4, 2016, at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter and nine months ended September 30, 2016. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2016 Third Quarter Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audio cast section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary | |||||||||||||||
|
(in thousands, except per share data) | |||||||||||||||
|
Three Months Ended |
Nine Months Ended | ||||||||||||||
|
September 30, |
September 30, | ||||||||||||||
|
2016 |
2015 |
2016 |
2015 | ||||||||||||
|
Gross Margin (1) |
|||||||||||||||
|
Regulated Energy segment |
$ |
45,375 |
$ |
40,635 |
$ |
145,446 |
$ |
134,024 |
|||||||
|
Unregulated Energy segment |
10,202 |
10,207 |
45,380 |
45,929 |
|||||||||||
|
Other businesses and eliminations |
(57) |
(49) |
(166) |
(157) |
|||||||||||
|
Total Gross Margin |
$ |
55,520 |
$ |
50,793 |
$ |
190,660 |
$ |
179,796 |
|||||||
|
Operating Income |
|||||||||||||||
|
Regulated Energy segment |
$ |
13,115 |
$ |
11,828 |
$ |
52,660 |
$ |
47,616 |
|||||||
|
Unregulated Energy segment |
(3,080) |
(1,022) |
9,267 |
13,666 |
|||||||||||
|
Other businesses and eliminations |
121 |
103 |
350 |
305 |
|||||||||||
|
Total Operating Income |
10,156 |
10,909 |
62,277 |
61,587 |
|||||||||||
|
Other (Expense) Income, net |
(28) |
36 |
(68) |
(3) |
|||||||||||
|
Interest Charges |
2,722 |
2,492 |
7,996 |
7,425 |
|||||||||||
|
Pre-tax Income |
7,406 |
8,453 |
54,213 |
54,159 |
|||||||||||
|
Income Taxes |
2,990 |
3,334 |
21,401 |
21,638 |
|||||||||||
|
Net Income |
$ |
4,416 |
$ |
5,119 |
$ |
32,812 |
$ |
32,521 |
|||||||
|
Earnings Per Share of Common Stock |
|||||||||||||||
|
Basic |
$ |
0.29 |
$ |
0.34 |
$ |
2.14 |
$ |
2.16 |
|||||||
|
Diluted |
$ |
0.29 |
$ |
0.33 |
$ |
2.14 |
$ |
2.16 |
|||||||
|
(1) "Gross margin" is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane and the cost of labor spent on direct revenue-producing activities. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. Chesapeake Utilities believes that gross margin, although a non-GAAP measure, is meaningful in the Company's regulated operations because the cost of natural gas and electricity are passed through and changes in commodity prices can cause revenue to go up and down in ways that are not indicative of volumes sold or tied to profitability. Gross margin provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. Chesapeake Utilities' management uses gross margin in measuring its business units' performance and has historically analyzed and reported gross margin information publicly. Other companies may calculate gross margin in a different manner. | |||||||||||||||
|
Financial Summary Highlights | ||||||||||||
|
Key variances for the three months ended September 30, 2016 included: | ||||||||||||
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Third Quarter of 2015 Reported Results |
$ |
8,453 |
$ |
5,119 |
$ |
0.33 |
||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Eight Flags* |
2,033 |
1,212 |
0.08 |
|||||||||
|
Service expansions* |
1,577 |
940 |
0.06 |
|||||||||
|
Natural gas growth (excluding service expansions) |
943 |
562 |
0.04 |
|||||||||
|
GRIP* |
920 |
549 |
0.04 |
|||||||||
|
Implementation of Delaware Division interim rates* |
469 |
280 |
0.02 |
|||||||||
|
Lower retail propane margins |
(414) |
(247) |
(0.02) |
|||||||||
|
Lower margins for Xeron |
(413) |
(246) |
(0.02) |
|||||||||
|
Aspire Energy* |
(407) |
(243) |
(0.02) |
|||||||||
|
4,708 |
2,807 |
0.18 |
||||||||||
|
Decreased (Increased) Other Operating Expenses: |
||||||||||||
|
Higher payroll and benefits costs |
(1,830) |
(1,091) |
(0.07) |
|||||||||
|
Eight Flags operating expenses |
(1,065) |
(635) |
(0.04) |
|||||||||
|
Higher outside services costs |
(928) |
(553) |
(0.04) |
|||||||||
|
Higher facility maintenance |
(601) |
(358) |
(0.02) |
|||||||||
|
Higher depreciation, asset removal and property tax costs |
(466) |
(278) |
(0.02) |
|||||||||
|
(4,890) |
(2,915) |
(0.19) |
||||||||||
|
Interest charges |
(230) |
(137) |
(0.01) |
|||||||||
|
Net Other Changes |
(635) |
(458) |
(0.02) |
|||||||||
|
Third Quarter of 2016 Reported Results |
$ |
7,406 |
$ |
4,416 |
$ |
0.29 |
||||||
|
*See the Major Projects and Initiatives table later in this press release. | ||||||||||||
|
Key variances for the nine months ended September 30, 2016 included: | ||||||||||||
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Nine months ended September 30, 2015 Reported Results |
$ |
54,159 |
$ |
32,521 |
$ |
2.16 |
||||||
|
Adjusting for Unusual Items: |
||||||||||||
|
Weather impact, primarily in the first quarter |
(7,548) |
(4,533) |
(0.31) |
|||||||||
|
Net gain from settlement agreement associated with customer billing system |
(1,367) |
(821) |
(0.06) |
|||||||||
|
(8,915) |
(5,354) |
(0.37) |
||||||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Service expansions* |
5,516 |
3,312 |
0.22 |
|||||||||
|
GRIP* |
3,069 |
1,843 |
0.12 |
|||||||||
|
Natural gas growth (excluding service expansions) |
2,630 |
1,579 |
0.11 |
|||||||||
|
Eight Flags* |
2,581 |
1,550 |
0.10 |
|||||||||
|
Lower retail propane margins |
(2,204) |
(1,324) |
(0.09) |
|||||||||
|
Implementation of Delaware Division interim rates* |
1,350 |
811 |
0.05 |
|||||||||
|
Natural gas marketing |
1,062 |
638 |
0.04 |
|||||||||
|
Sandpiper SIR |
618 |
371 |
0.03 |
|||||||||
|
14,622 |
8,780 |
0.58 |
||||||||||
|
Decreased (Increased) Other Operating Expenses: |
||||||||||||
|
Higher payroll and benefits costs |
(2,144) |
(1,287) |
(0.09) |
|||||||||
|
Higher depreciation, asset removal and property tax costs |
(1,705) |
(1,024) |
(0.07) |
|||||||||
|
Eight Flags operating expenses |
(1,136) |
(682) |
(0.05) |
|||||||||
|
Higher outside services costs |
(1,100) |
(661) |
(0.04) |
|||||||||
|
Higher facility maintenance |
(787) |
(473) |
(0.03) |
|||||||||
|
Lower bad debt, sales and advertising |
427 |
256 |
0.02 |
|||||||||
|
(6,445) |
(3,871) |
(0.26) |
||||||||||
|
Net contribution from Aspire Energy, including impact of shares issued* |
2,069 |
1,274 |
0.08 |
|||||||||
|
Interest Charges |
(571) |
(343) |
(0.02) |
|||||||||
|
Net Other Changes |
(706) |
(195) |
(0.03) |
|||||||||
|
Nine months ended September 30, 2016 Reported Results |
$ |
54,213 |
$ |
32,812 |
$ |
2.14 |
||||||
|
*See the Major Projects and Initiatives table later in this press release. | ||||||||||||
|
Major Projects and Initiatives | |||||||||||||||||||||||||||||||
|
The following table summarizes gross margin for the Company's major projects and initiatives completed since 2014 and major projects and initiatives currently underway, but which will be completed in the future. Gross margin reflects operating revenue less cost of sales, excluding depreciation, amortization and accretion (dollars in thousands): | |||||||||||||||||||||||||||||||
|
Gross Margin for the Period | |||||||||||||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
Total |
|||||||||||||||||||||||||||||
|
September 30, |
September 30, |
2015 |
Estimate for | ||||||||||||||||||||||||||||
|
2016 |
2015 |
2016 |
2015 |
Margin |
2016 |
2017 |
2018 | ||||||||||||||||||||||||
|
Major projects and initiatives completed since 2014 |
$ |
12,083 |
$ |
7,490 |
$ |
34,086 |
$ |
17,030 |
$ |
25,270 |
$ |
47,603 |
$ |
54,258 |
$ |
54,727 |
|||||||||||||||
|
Major projects and |
— |
— |
— |
— |
— |
— |
5,255 |
20,238 |
|||||||||||||||||||||||
|
$ |
12,083 |
$ |
7,490 |
$ |
34,086 |
$ |
17,030 |
$ |
25,270 |
$ |
47,603 |
$ |
59,513 |
$ |
74,965 |
||||||||||||||||
|
(1) This represents gross margin for the System Reliability and the 2017 Expansion projects. | |||||||||||||||||||||||||||||||
|
Major Projects and Initiatives Completed since 2014 | |||||||||||||||||||||||||||||||||||||||
|
The following table summarizes gross margin generated from the Company's major projects and initiatives completed since 2014 (dollars in thousands): | |||||||||||||||||||||||||||||||||||||||
|
Gross Margin for the Period | |||||||||||||||||||||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
Total |
|||||||||||||||||||||||||||||||||||||
|
September 30, |
September 30, |
2015 |
Estimate for | ||||||||||||||||||||||||||||||||||||
|
2016 |
2015 |
Variance |
2016 |
2015 |
Variance |
Margin |
2016 |
2017 |
2018 | ||||||||||||||||||||||||||||||
|
Acquisition: |
|||||||||||||||||||||||||||||||||||||||
|
Aspire Energy |
$ |
1,630 |
$ |
2,037 |
$ |
(407) |
$ |
8,203 |
$ |
3,661 |
$ |
4,542 |
$ |
6,324 |
$ |
12,674 |
$ |
13,376 |
$ |
14,302 |
|||||||||||||||||||
|
Natural Gas Transmission Expansions and Contracts: |
|||||||||||||||||||||||||||||||||||||||
|
Short-term contracts |
|||||||||||||||||||||||||||||||||||||||
|
New Castle County, Delaware |
664 |
507 |
157 |
2,040 |
1,998 |
42 |
2,682 |
2,910 |
2,275 |
714 |
|||||||||||||||||||||||||||||
|
Kent County, Delaware |
2,416 |
1,055 |
1,361 |
6,231 |
1,453 |
4,778 |
2,270 |
7,982 |
1,377 |
— |
|||||||||||||||||||||||||||||
|
Total short-term contracts |
$ |
3,080 |
$ |
1,562 |
$ |
1,518 |
$ |
8,271 |
$ |
3,451 |
$ |
4,820 |
$ |
4,952 |
$ |
10,892 |
$ |
3,652 |
$ |
714 |
|||||||||||||||||||
|
Long-term contracts |
|||||||||||||||||||||||||||||||||||||||
|
Kent County, Delaware |
455 |
463 |
(8) |
1,366 |
1,389 |
(23) |
1,844 |
1,815 |
7,629 |
7,605 |
|||||||||||||||||||||||||||||
|
Polk County, Florida |
407 |
340 |
67 |
1,221 |
501 |
720 |
908 |
1,627 |
1,627 |
1,627 |
|||||||||||||||||||||||||||||
|
Total long-term contracts |
$ |
862 |
$ |
803 |
$ |
59 |
$ |
2,587 |
$ |
1,890 |
$ |
697 |
$ |
2,752 |
$ |
3,442 |
$ |
9,256 |
$ |
9,232 |
|||||||||||||||||||
|
Total Expansions & Contracts |
$ |
3,942 |
$ |
2,365 |
$ |
1,577 |
$ |
10,858 |
$ |
5,341 |
$ |
5,517 |
$ |
7,704 |
$ |
14,334 |
$ |
12,908 |
$ |
9,946 |
|||||||||||||||||||
|
Florida GRIP |
$ |
2,987 |
$ |
2,067 |
$ |
920 |
$ |
8,383 |
$ |
5,314 |
$ |
3,069 |
$ |
7,508 |
$ |
11,405 |
$ |
13,756 |
$ |
15,960 |
|||||||||||||||||||
|
Florida Electric Rate Case |
$ |
1,021 |
$ |
1,021 |
$ |
— |
$ |
2,714 |
$ |
2,714 |
$ |
— |
$ |
3,734 |
$ |
3,562 |
$ |
3,562 |
$ |
3,562 |
|||||||||||||||||||
|
Delaware Division Rate Case |
$ |
469 |
$ |
— |
$ |
469 |
$ |
1,347 |
$ |
— |
$ |
1,347 |
$ |
— |
$ |
2,164 |
$ |
2,500 |
$ |
2,500 |
|||||||||||||||||||
|
Eight Flags CHP Plant |
$ |
2,034 |
$ |
— |
$ |
2,034 |
$ |
2,581 |
$ |
— |
$ |
2,581 |
$ |
— |
$ |
3,464 |
$ |
8,156 |
$ |
8,457 |
|||||||||||||||||||
|
Total Completed Major Projects and Initiatives |
$ |
12,083 |
$ |
7,490 |
$ |
4,593 |
$ |
34,086 |
$ |
17,030 |
$ |
17,056 |
$ |
25,270 |
$ |
47,603 |
$ |
54,258 |
$ |
54,727 |
|||||||||||||||||||
Aspire Energy
Aspire Energy's gross margin decreased by $407,000 for the three months ended September 30, 2016, partly due to increased deliveries and imbalance positions that favorably impacted Aspire Energy in the third quarter of 2015, which are non-recurring. Lower margin associated with system volumes and imbalance positions in third quarter of 2016, also contributed to the decrease.
For the nine months ended September 30, 2016, Aspire Energy generated $4.5 million in additional gross margin compared to the same period in 2015. Aspire Energy's gross margin for the same period in 2015 was lower due in part to the fact that the period included only six months of results. Aspire Energy also generated additional gross margin primarily as a result of pricing amendments to long-term gas sales agreements, additional management fees and the optimization of gathering system receipts and deliveries. As projected, this merger was accretive to earnings per share in the first full year of operations.
Service Expansions
On January 16, 2015, the Florida PSC approved a firm transportation agreement between Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), the Company's wholly-owned Florida intrastate pipeline subsidiary, and Chesapeake Utilities' Florida natural gas distribution division. Pursuant to this agreement, Peninsula Pipeline provides natural gas transmission service to support the Company's expansion of natural gas distribution service in Polk County, Florida. Peninsula Pipeline began the initial phase of its service to Chesapeake Utilities' Florida natural gas distribution division in March 2015. This new service generated $67,000 and $720,000 of additional gross margin for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015. When all phases of this service are complete, this expansion will generate an estimated annual gross margin of $1.6 million.
In April 2015, Eastern Shore commenced interruptible service to an electric power generator in Kent County, Delaware. The interruptible service concluded in December 2015 and was replaced by a short-term OPT ≤ 90 Service, which generated additional gross margin of $901,000 and $4.3 million during the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015. The short-term OPT ≤ 90 Service is expected to be replaced by a 20-year contract for OPT ≤ 90 Service in the first quarter of 2017.
On October 13, 2015, Eastern Shore submitted an application to the Federal Energy Regulatory Commission ("FERC") to make certain measurement and related improvements at its Texas Eastern Transmission, LP ("TETLP") interconnect facilities, which would enable Eastern Shore to increase natural gas receipts from TETLP by 53,000 dekatherms per day ("Dts/d"), for a total capacity of 160,000 Dts/d. In December 2015, the FERC authorized Eastern Shore to proceed with this project, which was completed and placed in service in March 2016. Approximately 85 percent of the increased capacity has been subscribed on a short-term firm service basis. This service generated an additional gross margin of $617,000 and $744,000 for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015, and is expected to generate approximately $1.4 million in additional gross margin for the year. The remaining capacity is available for firm or interruptible service.
GRIP
GRIP is a natural gas pipe replacement program approved by the Florida PSC, designed to expedite the replacement of qualifying distribution mains and services (any material other than coated steel or plastic) to enhance reliability and integrity of the Company's Florida natural gas distribution systems. This program allows recovery, through regulated rates, of capital and other program-related costs, inclusive of a return on investment, associated with the replacement of the mains and services. Since the program's inception in August 2012, the Company has invested $97.3 million to replace 209 miles of qualifying distribution mains, including $20.4 million during the first nine months of 2016. The Company expects to invest an additional $650,000 in this program during the remainder of 2016. The increased investment in GRIP generated additional gross margin of $920,000 and $3.1 million for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015.
Eight Flags
In June 2016, Eight Flags, completed construction of a CHP plant on Amelia Island, Florida. This CHP plant, which consists of a natural-gas-fired turbine and associated electric generator, produces approximately 20 megawatts of base load power and includes a heat recovery steam generator capable of providing approximately 75,000 pounds per hour of residual steam. On June 13, 2016, Eight Flags began selling power generated from the CHP plant to Florida Public Utilities ("FPU"), the Company's wholly-owned subsidiary, pursuant to a 20-year power purchase agreement for distribution to FPU's retail electric customers. On July 1, 2016, it also started selling steam to an industrial customer pursuant to a separate 20-year contract. The CHP plant is powered by natural gas transported by FPU through its distribution system. Eight Flags and other affiliates of Chesapeake Utilities generated $2.0 million and $2.6 million in additional gross margin as a result of these new services, for the three and nine months ended September 30, 2016 in which the CHP was operational. This amount includes gross margin of $464,000 and $892,000, for the three and nine months ended September 30, 2016, attributed to natural gas distribution and transportation services provided by our affiliates. On a consolidated basis, this project is expected to generate approximately $8.2 million in annual gross margin, which could fluctuate based upon various factors, including, but not limited to, the quantity of steam delivered and the CHP plant's hours of operations.
Major Projects and Initiatives Underway
White Oak Mainline Expansion Project: In August 2014, Eastern Shore entered into a precedent agreement with an electric power generator in Kent County, Delaware, to provide a 20-year natural gas transmission service for 45,000 Dts/d for the customer's facility, upon the satisfaction of certain conditions. This new service will be provided as long-term OPT ≤ 90 Service and is expected to generate at least $5.8 million in annual gross margin. In November 2014, Eastern Shore requested authorization by the FERC to construct 5.4 miles of 16-inch pipeline looping and 3,550 horsepower of new compression in Delaware to provide this service. As previously discussed, during the three and nine months ended September 30, 2016, the Company generated $901,000 and $4.3 million, respectively, in additional gross margin by providing interruptible service and short-term OPT ≤ 90 Service to this customer. On July 21, 2016, the FERC issued a certificate of public convenience and necessity authorizing Eastern Shore to construct and operate the proposed White Oak Mainline Project. Construction of the project is underway.
System Reliability Project: On May 22, 2015, Eastern Shore submitted an application to the FERC, seeking authorization to construct, own and operate approximately 10.1 miles of 16-inch pipeline looping and auxiliary facilities in New Castle and Kent Counties, Delaware and a new compressor at its existing Bridgeville compressor station in Sussex County, Delaware. Eastern Shore further proposes to reinforce critical points on its pipeline system. The total project will benefit all of Eastern Shore's customers by modifying the pipeline system to respond to severe operational conditions experienced during actual winter peak days. Since the project is intended to improve system reliability, Eastern Shore requested a predetermination of rolled-in rate treatment for the costs of the project and an order granting the requested authorization. This project will be included in Eastern Shore's upcoming 2017 rate case filing. The estimated annual gross margin associated with this project, assuming recovery in the 2017 rate case, is approximately $4.5 million. On July 21, 2016, the FERC issued a certificate of public convenience and necessity authorizing Eastern Shore to construct and operate the proposed System Reliability Project. Construction of the project is underway.
2017 Expansion Project: On May 12, 2016, Eastern Shore submitted a request to the FERC to initiate the FERC's pre-filing procedures for its proposed 2017 Expansion Project. Since the time the pre-filing was initiated, Eastern Shore has finalized market participation for the project. Seven of Eastern Shore's existing customers have signed Precedent Agreements. As a result, the project will provide 61,162 Dts/d of additional firm natural gas transportation deliverability on Eastern Shore's pipeline system. To provide this additional capacity, the project's final facilities will consist of approximately 23 miles of pipeline looping in Pennsylvania, Maryland and Delaware; upgrades to existing metering facilities in Lancaster County, Pennsylvania; installation of an additional 3,550 horsepower compressor unit at Eastern Shore's existing Daleville compressor station in Chester County, Pennsylvania; and approximately 17 miles of new mainline extension and two pressure control stations in Sussex County, Delaware. The project will generate approximately $15.7 million of gross margin in the first full year after the new transportation services go into effect.
Other factors influencing gross margin
Weather and Consumption
Although weather was not a significant factor in the second and third quarters, warmer temperatures during the first three months of the year, compared to temperatures in 2015, had a significant impact on the Company's earnings. Lower customer consumption, directly attributable to warmer temperatures during the nine months ended September 30, 2016, reduced gross margin by $7.5 million compared to the same period in 2015.
The following tables summarize the heating degree-day ("HDD") and cooling degree-day ("CDD") information for the three and nine months ended September 30, 2016 and 2015 resulting from weather fluctuations in those periods.
|
HDD and CDD Information | |||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
||||||||||||||||
|
September 30, |
September 30, |
||||||||||||||||
|
2016 |
2015 |
Variance |
2016 |
2015 |
Variance | ||||||||||||
|
Delmarva |
|||||||||||||||||
|
Actual HDD |
11 |
41 |
(30) |
2,590 |
3,249 |
(659) |
|||||||||||
|
10-Year Average HDD ("Delmarva Normal") |
65 |
65 |
— |
2,919 |
2,908 |
11 |
|||||||||||
|
Variance from Delmarva Normal |
(54) |
(24) |
(329) |
341 |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual HDD |
— |
— |
— |
646 |
501 |
145 |
|||||||||||
|
10-Year Average HDD ("Florida Normal") |
— |
— |
— |
553 |
557 |
(4) |
|||||||||||
|
Variance from Florida Normal |
— |
— |
93 |
(56) |
|||||||||||||
|
Ohio (1) |
|||||||||||||||||
|
Actual HDD |
65 |
78 |
(13) |
3,747 |
710 |
3,037 |
|||||||||||
|
10-Year Average HDD ("Ohio Normal") |
137 |
143 |
(6) |
3,979 |
811 |
3,168 |
|||||||||||
|
Variance from Ohio Normal |
(72) |
(65) |
(232) |
(101) |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual CDD |
1,523 |
1,591 |
(68) |
2,737 |
2,827 |
(90) |
|||||||||||
|
10-Year Average CDD ("Florida CDD Normal") |
1,523 |
1,524 |
(1) |
2,548 |
2,506 |
42 |
|||||||||||
|
Variance from Florida CDD Normal |
— |
67 |
189 |
321 |
|||||||||||||
|
(1) HDD for Ohio is presented from April 1, 2015 through September 30, 2015. | |||||||||||||||||
Propane prices
Lower retail propane margins per gallon on the Delmarva Peninsula decreased gross margin by $344,000 and $2.2 million, for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015. Margins per retail gallon returned to more normal levels, driven principally by lower propane prices and local market conditions. The level of retail margins per gallon generated during 2015 were not expected to be sustained over the long term; accordingly, the Company has continued to assume more normal levels of margins in its long-term financial plans and forecasts.
In Florida, retail propane margins per gallon, generated $70,000 of lower margin and $61,000 of additional gross margin for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015.These market conditions, which are influenced by competition with other propane suppliers as well as the availability and price of alternative energy sources, may fluctuate based on changes in demand, supply and other energy commodity prices.
Other Natural Gas Growth - Distribution Operations
In addition to service expansions, the Company's natural gas distribution operations on the Delmarva Peninsula generated $253,000 and $1.1 million in additional gross margin for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015, due to an increase in residential, commercial and industrial customers served. The average number of residential customers on the Delmarva Peninsula during the three and nine months ended September 30, 2016 increased by 4.2 percent and 3.5 percent, respectively, compared to the same periods in 2015. The natural gas distribution operations in Florida generated $350,000 and $1.1 million in additional gross margin for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015, due primarily to an increase in commercial and industrial customers in Florida.
Delaware division rate case
On December 21, 2015, the Company's Delaware natural gas distribution division filed an application with the Delaware PSC for a base rate increase and certain other changes to its tariff. The Company proposed an increase of approximately $4.7 million, or nearly ten percent, in its revenue requirement based on the test period ending March 31, 2016. The Company also proposed new service offerings to promote growth and a revenue normalization mechanism for residential and small commercial customers. The Company expects a decision on the application during the first quarter of 2017. Pending the decision, the Company's Delaware natural gas distribution division increased rates on an interim basis based on the $2.5 million annualized interim rates approved by the Delaware PSC, effective February 19, 2016 ("Phase I"). The Company recognized incremental revenue of approximately $469,000 ($280,000 net of tax) and $1.4 million ($817,000 net of tax) for the three and nine months ended September 30, 2016, respectively.
In addition, the Company's Delaware natural gas distribution division requested and received approval on July 26, 2016 from the Delaware PSC to implement revised interim rates totaling $4.7 million (equal to the initial rate increase in its application) annualized for usage on and after August 1, 2016 ("Phase II"). These revised interim rates represent a five percent increase over Phase I rates. Revenue associated with these rates collected prior to a final Delaware PSC decision is subject to refund and, although the final decision is expected during the first quarter of 2017, the Company cannot predict the revenue requirement the Delaware PSC will ultimately authorize or forecast the timing of a final decision. Consequently, the Company will not recognize the impact of the potential additional revenue related to the Phase II rate increase until the Delaware PSC issues its approval in a final ruling.
Capital Expenditures
The Company's capital expenditures for the nine months ended September 30, 2016 were $106.3 million. The Company currently projects aggregate capital expenditures between $150.0 and $170.0 million for this year. The 2016 forecast includes expenditures for the following projects: Eight Flags' CHP plant; anticipated new facilities to serve an electric power generator in Kent County, Delaware under the OPT ≤ 90 Service; Eastern Shore's system reliability project; additional expansions of the Company's natural gas distribution and transmission systems; continued natural gas infrastructure improvement activities; continued replacement of facilities under the Florida GRIP; replacement of other facilities and information technology systems; and other strategic initiatives and investments. The timing of capital expenditures can vary based on securing environmental approvals and other permits.
In order to fund the 2016 capital expenditures, the Company may further increase the level of borrowings during 2016 to supplement cash provided by operating activities.
|
Chesapeake Utilities Corporation and Subsidiaries | |||||||||||||||
|
Three Months Ended |
Nine Months Ended | ||||||||||||||
|
September 30, |
September 30, | ||||||||||||||
|
2016 |
2015 |
2016 |
2015 | ||||||||||||
|
Operating Revenues |
|||||||||||||||
|
Regulated Energy |
$ |
70,019 |
$ |
63,796 |
$ |
226,630 |
$ |
235,438 |
|||||||
|
Unregulated Energy and other |
38,329 |
28,117 |
130,356 |
119,238 |
|||||||||||
|
Total Operating Revenues |
108,348 |
91,913 |
356,986 |
354,676 |
|||||||||||
|
Operating Expenses |
|||||||||||||||
|
Regulated Energy cost of sales |
24,644 |
23,161 |
81,184 |
101,414 |
|||||||||||
|
Unregulated Energy and other cost of sales |
28,183 |
17,959 |
85,142 |
73,465 |
|||||||||||
|
Operations |
30,126 |
26,388 |
85,370 |
79,522 |
|||||||||||
|
Maintenance |
3,542 |
2,603 |
8,925 |
8,033 |
|||||||||||
|
Gain from a settlement |
— |
— |
(130) |
(1,500) |
|||||||||||
|
Depreciation and amortization |
8,209 |
7,636 |
23,493 |
22,155 |
|||||||||||
|
Other taxes |
3,488 |
3,257 |
10,725 |
10,000 |
|||||||||||
|
Total operating expenses |
98,192 |
81,004 |
294,709 |
293,089 |
|||||||||||
|
Operating Income |
10,156 |
10,909 |
62,277 |
61,587 |
|||||||||||
|
Other (expense) income, net |
(28) |
36 |
(68) |
(3) |
|||||||||||
|
Interest charges |
2,722 |
2,492 |
7,996 |
7,425 |
|||||||||||
|
Income Before Income Taxes |
7,406 |
8,453 |
54,213 |
54,159 |
|||||||||||
|
Income taxes |
2,990 |
3,334 |
21,401 |
21,638 |
|||||||||||
|
Net Income |
$ |
4,416 |
$ |
5,119 |
$ |
32,812 |
$ |
32,521 |
|||||||
|
Weighted Average Common Shares Outstanding: |
|||||||||||||||
|
Basic |
15,372,413 |
15,258,819 |
15,324,932 |
15,035,569 |
|||||||||||
|
Diluted |
15,412,783 |
15,306,843 |
15,365,955 |
15,083,641 |
|||||||||||
|
Earnings Per Share of Common Stock: |
|||||||||||||||
|
Basic |
$ |
0.29 |
$ |
0.34 |
$ |
2.14 |
$ |
2.16 |
|||||||
|
Diluted |
$ |
0.29 |
$ |
0.33 |
$ |
2.14 |
$ |
2.16 |
|||||||
|
Chesapeake Utilities Corporation and Subsidiaries | ||||||||
|
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Assets |
September 30, 2016 |
December 31, 2015 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Property, Plant and Equipment |
||||||||
|
Regulated Energy |
$ |
908,822 |
$ |
842,756 |
||||
|
Unregulated Energy |
194,743 |
145,734 |
||||||
|
Other businesses and eliminations |
20,835 |
18,999 |
||||||
|
Total property, plant and equipment |
1,124,400 |
1,007,489 |
||||||
|
Less: Accumulated depreciation and amortization |
(237,434) |
(215,313) |
||||||
|
Plus: Construction work in progress |
49,082 |
62,774 |
||||||
|
Net property, plant and equipment |
936,048 |
854,950 |
||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
1,536 |
2,855 |
||||||
|
Accounts receivable (less allowance for uncollectible accounts of $792 and $909, respectively) |
47,103 |
41,007 |
||||||
|
Accrued revenue |
9,506 |
12,452 |
||||||
|
Propane inventory, at average cost |
4,106 |
6,619 |
||||||
|
Other inventory, at average cost |
3,867 |
3,803 |
||||||
|
Regulatory assets |
6,045 |
8,268 |
||||||
|
Storage gas prepayments |
8,192 |
3,410 |
||||||
|
Income taxes receivable |
13,178 |
24,950 |
||||||
|
Prepaid expenses |
7,603 |
7,146 |
||||||
|
Mark-to-market energy assets |
477 |
153 |
||||||
|
Other current assets |
543 |
1,044 |
||||||
|
Total current assets |
102,156 |
111,707 |
||||||
|
Deferred Charges and Other Assets |
||||||||
|
Goodwill |
15,070 |
14,548 |
||||||
|
Other intangible assets, net |
1,938 |
2,222 |
||||||
|
Investments, at fair value |
4,630 |
3,644 |
||||||
|
Regulatory assets |
76,343 |
77,519 |
||||||
|
Receivables and other deferred charges |
4,325 |
2,831 |
||||||
|
Total deferred charges and other assets |
102,306 |
100,764 |
||||||
|
Total Assets |
$ |
1,140,510 |
$ |
1,067,421 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries | ||||||||
|
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Capitalization and Liabilities |
September 30, 2016 |
December 31, 2015 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Capitalization |
||||||||
|
Stockholders' equity |
||||||||
|
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding |
$ |
— |
$ |
— |
||||
|
Common stock, par value $0.4867 per share (authorized 25,000,000 shares) |
7,932 |
7,432 |
||||||
|
Additional paid-in capital |
250,202 |
190,311 |
||||||
|
Retained earnings |
185,195 |
166,235 |
||||||
|
Accumulated other comprehensive loss |
(5,029) |
(5,840) |
||||||
|
Deferred compensation obligation |
2,476 |
1,883 |
||||||
|
Treasury stock |
(2,476) |
(1,883) |
||||||
|
Total stockholders' equity |
438,300 |
358,138 |
||||||
|
Long-term debt, net of current maturities |
143,525 |
149,006 |
||||||
|
Total capitalization |
581,825 |
507,144 |
||||||
|
Current Liabilities |
||||||||
|
Current portion of long-term debt |
12,087 |
9,151 |
||||||
|
Short-term borrowing |
154,490 |
173,397 |
||||||
|
Accounts payable |
41,297 |
39,300 |
||||||
|
Customer deposits and refunds |
26,858 |
27,173 |
||||||
|
Accrued interest |
3,119 |
1,311 |
||||||
|
Dividends payable |
4,678 |
4,390 |
||||||
|
Accrued compensation |
7,823 |
10,014 |
||||||
|
Regulatory liabilities |
2,412 |
7,365 |
||||||
|
Mark-to-market energy liabilities |
29 |
433 |
||||||
|
Other accrued liabilities |
10,260 |
7,059 |
||||||
|
Total current liabilities |
263,053 |
279,593 |
||||||
|
Deferred Credits and Other Liabilities |
||||||||
|
Deferred income taxes |
205,562 |
192,600 |
||||||
|
Regulatory liabilities |
43,354 |
43,064 |
||||||
|
Environmental liabilities |
8,682 |
8,942 |
||||||
|
Other pension and benefit costs |
32,501 |
33,481 |
||||||
|
Deferred investment tax credits and other liabilities |
5,533 |
2,597 |
||||||
|
Total deferred credits and other liabilities |
295,632 |
280,684 |
||||||
|
Total Capitalization and Liabilities |
$ |
1,140,510 |
$ |
1,067,421 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries | ||||||||||||||||||||||||||||||
|
For the Three Months Ended September 30, 2016 |
For the Three Months Ended September 30, 2015 | |||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution |
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution | |||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||
|
Residential |
$ |
5,327 |
$ |
1,139 |
$ |
5,016 |
$ |
15,186 |
$ |
5,133 |
$ |
1,103 |
$ |
4,076 |
$ |
14,821 |
||||||||||||||
|
Commercial |
5,136 |
1,201 |
5,752 |
11,991 |
4,967 |
1,117 |
4,891 |
12,585 |
||||||||||||||||||||||
|
Industrial |
1,695 |
1,581 |
4,825 |
676 |
1,611 |
1,478 |
3,469 |
812 |
||||||||||||||||||||||
|
Other (1) |
(76) |
908 |
797 |
(1,805) |
263 |
744 |
2,073 |
(4,021) |
||||||||||||||||||||||
|
Total Operating Revenues |
$ |
12,082 |
$ |
4,829 |
$ |
16,390 |
$ |
26,048 |
$ |
11,974 |
$ |
4,442 |
$ |
14,509 |
$ |
24,197 |
||||||||||||||
|
Volume (in Dts/MWHs) |
||||||||||||||||||||||||||||||
|
Residential |
176,886 |
47,274 |
196,831 |
99,896 |
176,715 |
48,481 |
197,177 |
96,857 |
||||||||||||||||||||||
|
Commercial |
469,921 |
1,313,963 |
409,155 |
90,013 |
461,219 |
1,305,028 |
469,011 |
95,059 |
||||||||||||||||||||||
|
Industrial |
1,135,077 |
2,313,776 |
1,029,165 |
5,890 |
1,041,864 |
2,503,874 |
881,556 |
4,570 |
||||||||||||||||||||||
|
Other |
28,208 |
— |
601 |
1,979 |
28,552 |
— |
(42,998) |
(1,274) |
||||||||||||||||||||||
|
Total |
1,810,092 |
3,675,013 |
1,635,752 |
197,778 |
1,708,350 |
3,857,383 |
1,504,746 |
195,212 |
||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||
|
Residential |
65,663 |
15,337 |
53,314 |
24,367 |
62,989 |
14,789 |
52,100 |
24,103 |
||||||||||||||||||||||
|
Commercial |
6,695 |
1,408 |
4,216 |
4,388 |
6,571 |
1,355 |
4,223 |
7,412 |
||||||||||||||||||||||
|
Industrial |
125 |
74 |
1,814 |
3,015 |
120 |
69 |
1,663 |
2 |
||||||||||||||||||||||
|
Other |
6 |
— |
— |
— |
4 |
— |
— |
— |
||||||||||||||||||||||
|
Total |
72,489 |
16,819 |
59,344 |
31,770 |
69,684 |
16,213 |
57,986 |
31,517 |
||||||||||||||||||||||
|
Chesapeake Utilities Corporation and Subsidiaries | |||||||||||||||||||||||||||||||
|
For the Nine Months Ended September 30, 2016 |
For the Nine Months Ended September 30, 2015 | ||||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution |
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution | ||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
|||||||||||||||||||||||||||||||
|
Residential |
$ |
37,074 |
$ |
3,977 |
$ |
20,597 |
$ |
36,911 |
$ |
53,339 |
$ |
3,788 |
$ |
17,646 |
$ |
37,495 |
|||||||||||||||
|
Commercial |
20,576 |
3,847 |
20,912 |
31,814 |
27,950 |
3,610 |
20,435 |
32,524 |
|||||||||||||||||||||||
|
Industrial |
5,274 |
4,808 |
15,399 |
2,154 |
5,379 |
4,536 |
11,955 |
2,361 |
|||||||||||||||||||||||
|
Other (1) |
(1,164) |
2,665 |
(2,615) |
(5,410) |
(3,466) |
2,275 |
557 |
(8,979) |
|||||||||||||||||||||||
|
Total Operating Revenues |
$ |
61,760 |
$ |
15,297 |
$ |
54,293 |
$ |
65,469 |
$ |
83,202 |
$ |
14,209 |
$ |
50,593 |
$ |
63,401 |
|||||||||||||||
|
Volume (in Dts/MWHs) |
|||||||||||||||||||||||||||||||
|
Residential |
2,495,103 |
260,404 |
993,917 |
241,691 |
3,128,130 |
255,273 |
970,570 |
244,344 |
|||||||||||||||||||||||
|
Commercial |
2,539,404 |
4,118,131 |
1,633,920 |
233,199 |
2,954,973 |
4,069,566 |
1,886,076 |
239,633 |
|||||||||||||||||||||||
|
Industrial |
3,680,383 |
8,405,424 |
3,188,556 |
17,470 |
3,372,321 |
8,187,722 |
3,035,617 |
14,220 |
|||||||||||||||||||||||
|
Other |
68,293 |
— |
(4,723) |
6,577 |
57,008 |
— |
(151,631) |
4,074 |
|||||||||||||||||||||||
|
Total |
8,783,183 |
12,783,959 |
5,811,670 |
498,937 |
9,512,432 |
12,512,561 |
5,740,632 |
502,271 |
|||||||||||||||||||||||
|
Average Customers |
|||||||||||||||||||||||||||||||
|
Residential |
65,943 |
15,303 |
53,215 |
24,268 |
63,700 |
14,805 |
51,907 |
24,022 |
|||||||||||||||||||||||
|
Commercial |
6,745 |
1,391 |
4,247 |
4,398 |
6,637 |
1,351 |
4,258 |
7,390 |
|||||||||||||||||||||||
|
Industrial |
123 |
72 |
1,760 |
3,003 |
117 |
68 |
1,606 |
2 |
|||||||||||||||||||||||
|
Other |
5 |
— |
— |
— |
5 |
— |
— |
— |
|||||||||||||||||||||||
|
Total |
72,816 |
16,766 |
59,222 |
31,669 |
70,459 |
16,224 |
57,771 |
31,414 |
|||||||||||||||||||||||
|
(1) Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties and adjustments for pass-through taxes. | |||||||||||||||||||||||||||||||
SOURCE Chesapeake Utilities Corporation
Article Date
11/3/2016Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Nov. 2, 2016 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.305 per share on the Company's common stock. The $0.305 per share dividend will be paid on January 5, 2017 to all shareholders of record at the close of business on December 15, 2016.
Chesapeake has paid dividends to its shareholders without interruption for 56 years. During those 56 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
11/2/201611/2/2016 - Chesapeake Utilities Corporation Announces Largest Natural Gas Pipeline Expansion In Company History
Chesapeake Utilities Corporation Announces Largest Natural Gas Pipeline Expansion In Company History
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Nov. 2, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) announced today that Eastern Shore Natural Gas Company (ESNG), Chesapeake Utilities' interstate natural gas transmission subsidiary, finalized precedent agreements with customers for its 2017 Expansion Project that will add significant firm transportation pipeline capacity in the region.
"This project is the single largest expansion in Eastern Shore Natural Gas' long history of providing safe, clean, domestic and affordable natural gas," said Michael P. McMasters, Chesapeake Utilities Corporation President and Chief Executive Officer. "Our company continues to invest in energy infrastructure throughout the Mid-Atlantic area. This project will increase the firm transportation deliverability to our region by approximately 25 percent, supporting economic growth in the region."
Precedent agreements have been signed by seven of ESNG's existing customers who have requested new firm transportation services. As a result of this expansion, this project will provide more than 60,000 dekatherms per day of additional firm natural gas transportation deliverability on the pipeline.
"This expansion of firm natural gas transportation capacity is a result of our ongoing commitment to providing new service and supply options for our customers," said Stephen C. Thompson, President of Eastern Shore Natural Gas Company. "The firm transportation capacity added will position us to meet growing market demand for reliable energy in the region, as evidenced by the record number of customers participating in the project."
The 2017 Expansion Project consists of approximately 23 miles of pipeline looping in Pennsylvania, Maryland and Delaware; upgrades to existing metering facilities; installation of an additional 3,550 horsepower compressor unit at the existing Daleville Compressor Station in Chester County, Pennsylvania; and approximately 17 miles of new mainline extension and the addition of two pressure control stations in Sussex County, Delaware. These new facilities are estimated to cost about $99 million. ESNG estimates that it will generate gross margin of approximately $15.7 million in the first full year after the new transportation services go into effect.
ESNG intends to file its formal certificate application for the 2017 Expansion Project with the Federal Energy Regulatory Commission (FERC) in the fourth quarter of 2016, pending the completion of its ongoing pre-filing regulatory process at the FERC. Subject to the timing of FERC approval, ESNG intends to commence construction of the expansion project in the second quarter of 2017 and place the facilities in service during the latter part of the fourth quarter of 2017.
More information about the project and its progress can be found at www.esng.com/project/2017-system-expansion.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
About Eastern Shore Natural Gas Company
Eastern Shore Natural Gas Company, a subsidiary of Chesapeake Utilities Corporation, owns and operates a 442-mile interstate pipeline that transports natural gas from various points in Pennsylvania to customers in Delaware, Maryland and Pennsylvania. For more information, visit www.esng.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Jeffrey Tietbohl
Vice President
Eastern Shore Natural Gas Company
302.734.6742
jtietbohl@esng.com
SOURCE Chesapeake Utilities Corporation
Article Date
11/2/201610/11/2016 - Chesapeake Utilities Corporation To Host Conference Call To Review Third Quarter 2016 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review Third Quarter 2016 Financial Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Oct. 11, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, November 4, 2016, at 10:30 a.m. ET to discuss the Company's financial results for the third quarter ended September 30, 2016. The conference call will be hosted at the Student Center on the Delaware State University campus in Dover, Delaware. The earnings press release will be issued on Thursday, November 3, 2016, before the market opens.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2016 Third Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through the Company's IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
10/11/2016Chesapeake Utilities Corporation Prices Public Offering of Common Stock
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Sept. 22, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today announced the pricing of an underwritten public offering of 835,207 shares of its common stock, at a price to the public of $62.26 per share. In connection with the offering, Chesapeake granted the underwriters involved in the offering with a 30-day option to purchase up to an additional 125,281 shares of its common stock. The offering is expected to close on September 27, 2016, subject to customary closing conditions.
The net proceeds from the equity offering will be used to pay down a portion of the Company's short-term revolving debt, which has increased as a result of capital investments to support growth.
Wells Fargo Securities and RBC Capital Markets are acting as joint book-running managers. Janney Montgomery Scott and Baird are acting as senior co-managers. J.J.B. Hilliard, W.L. Lyons, LLC, Ladenburg Thalmann, U.S. Capital Advisors and BB&T Capital Markets are acting as co-managers of the offering.
This offering is being made under an effective shelf registration statement filed with the U.S. Securities and Exchange Commission, and only by means of a prospectus supplement for this offering and a related base prospectus. Copies of the prospectus supplement and related base prospectus may be obtained by contacting:
|
Wells Fargo Securities |
RBC Capital Markets |
|
Attention: Equity Syndicate Department |
Attn: Equity Syndicate |
|
375 Park Avenue |
200 Vesey Street, 8th Floor |
|
New York, NY 10152 |
New York, NY 10281-8098 |
|
Email: equityprospectus@rbccm.com | |
|
Telephone: (800) 326-5897 |
Telephone: (877) 822-4089 |
This press release does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Chesapeake Utilities Corporation common stock, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The offering will be made only by means of prospectus supplement and accompanying prospectus, each of which is part of an effective shelf registration statement filed by Chesapeake Utilities Corporation with the Securities and Exchange Commission.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing; and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other related services.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Forward Looking Statements
The prospectus supplement may include forward-looking statements. All statements, other than historical facts included or incorporated her that address activities, events or developments that we expect of anticipate will or may occur in the future, including such things as the completion, timing, size proceeds and the use of proceeds for the proposed offering, are forward-looking statements. All forward-looking statements speak only as of the date of the prospectus supplement. Although we believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6022
Thomas E. Mahn
Treasurer
302.736.7656
SOURCE Chesapeake Utilities Corporation
Article Date
9/22/2016Chesapeake Utilities Corporation Announces Common Stock Offering
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Sept. 21, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today the commencement of an underwritten public offering of its common stock, with an aggregate value not to exceed $52 million. In conjunction with this offering, the Company intends to grant the underwriters a 30-day option to purchase additional shares up to an additional $7.8 million in aggregate value.
The net proceeds from the offering will be used to pay down a portion of the Company's short-term revolving debt, which has increased as a result of capital investments to support growth.
Wells Fargo Securities and RBC Capital Markets are acting as joint book-running managers. Janney Montgomery Scott and Baird are acting as senior co-managers. J.J.B. Hilliard, W.L.Lyons, LLC, Ladenburg Thalmann, U.S. Capital Advisors and BB&T Capital Markets are acting as co-managers of the offering.
This offering is being made under an effective shelf registration statement filed with the U.S. Securities and Exchange Commission, and only by means of a prospectus supplement for this offering and a related base prospectus. Copies of the prospectus supplement and related base prospectus may be obtained by contacting:
|
Wells Fargo Securities |
RBC Capital Markets |
|
Attention: Equity Syndicate Department |
Attn: Equity Syndicate |
|
375 Park Avenue |
200 Vesey Street, 8th Floor |
|
New York, NY 10152 |
New York, NY 10281-8098 |
|
Email: equityprospectus@rbccm.com | |
|
Telephone: (800) 326-5897 |
Telephone: (877) 822-4089 |
This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities, in any state or jurisdiction in which it is unlawful to make such an offer, solicitation or sale.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing; and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other related services.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Forward Looking Statements
This press release contains forward-looking statements regarding our planned offer and sale of common stock and the use of the net proceeds from any such sale. We cannot be sure that we will complete the offering or, if we do, on what terms we will complete it. Forward-looking statements are based on current beliefs and expectations and are subject to inherent risks and uncertainties, including those discussed under the caption "Risk Factors" in the prospectus and prospectus supplement. In addition, Chesapeake management retains broad discretion with respect to the allocation of the net proceeds of this offering. The forward-looking statements speak only as of the date of this release, and Chesapeake is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6022
Thomas E. Mahn
Treasurer
302.736.7656
SOURCE Chesapeake Utilities Corporation
Article Date
9/21/2016Chesapeake Utilities Corporation to Celebrate Commencement of First Combined Heat and Power Plant Operation
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Sept. 1, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) will celebrate the commencement of operations of its first combined heat and power (CHP) plant, Eight Flags Energy, on September 6 in Fernandina Beach, Florida with a scheduled commissioning event at the plant.
During the commissioning event, officials representing the Florida Environmental Protection (FDEP), the State of Florida, Nassau County, the City of Fernandina Beach and the Public Service Commission will join the Company's leadership and partners who helped construct the plant. The CHP plant will yield significant cost-savings for customers on Amelia Island, while reducing the risk of electric grid disruption on the island. The CHP plant also provides environmental benefits, including reduced greenhouse gas emissions, and dramatically lower water use than conventional utility power plants.
According to the EPA and Center for Clean Air Policy, CHP systems are a critical tool needed to reduce carbon emissions and save energy users nationwide significant costs, approximately $10 billion a year.
"We're excited to launch the Company's first CHP plant as we continue to expand our footprint and develop smart energy offerings, further diversifying our business," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "This clean, highly-efficient, forward-thinking project is an example of our employees' commitment to developing effective ways to grow strategically while continuing to deliver value to our employees, customers, investors and the communities we serve."
The CHP plant is powered by natural gas, highly regarded as one of the cleanest, safest, and most efficient energy options. The natural gas provided by Florida Public Utilities Company (FPU) and Peninsula Pipeline Company, two subsidiaries of Chesapeake Utilities Corporation, will produce three energy sources: electricity, steam and heated water. Rayonier Advanced Materials will purchase the steam and heated water for use in its cellulose specialties production facility. FPU will purchase the electricity for distribution to its retail customers in the area which will yield cost-savings and increased reliability.
The Eight Flags Energy CHP Plant generates approximately 20 MW of base load power, producing enough electricity to meet 50 percent of Amelia Island's average demand.
"The Eight Flags Energy CHP system is a welcome addition to the Fernandina plant, improving our reliability and the robustness of our operations," said Rayonier Advanced Materials plant manager C.A. McDonald.
"This plant is one of the most energy-efficient cogeneration power plants in the United States, with a target efficiency of 78 percent," added Jeffry M. Householder, President of Florida Public Utilities Company. "We're continually looking for new ways to increase efficiencies, provide cost savings and add value to our customers and the communities we serve. I believe it's that commitment to Rayonier and all our customers that has resulted in the development of this state-of-the-art CHP plant."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, marketing, gathering and processing; electricity distribution and generation; propane gas distribution and wholesale marketing; and other related services. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com.
About Florida Public Utilities Company
Florida Public Utilities Company is a wholly-owned subsidiary of Chesapeake Utilities Corporation. Headquartered in West Palm Beach, Florida, FPU distributes natural gas and propane and provides electric services to approximately 121,000 customers in markets throughout Florida. For more information, visit www.fpuc.com.
About Rayonier Advanced Materials, Inc.
Rayonier Advanced Materials, Inc. is the leading global supplier of high-purity, cellulose specialties products, a natural polymer for the chemical industry. Working closely with its customers, the company engineers natural polymeric chemical chains to create dozens of customized high-purity performance fibers at its plants in Florida and Georgia. Rayonier Advanced Materials is consistently ranked among the nation's top 50 exporters and delivers products to 79 ports around the world, serving customers in 20 countries across five continents. For more information, visit www.RayonierAM.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future e vents, changes in assumptions or otherwise.
For more information, contact:
Mike Stock
Senior Director, Corporate Communications
Chesapeake Utilities Corporation
302.736.7808
mstock@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
9/1/2016Eastern Shore Natural Gas Receives FERC Approval to Provide Firm Natural Gas Transportation Service to Calpine's Garrison Energy Center
Source: PR Newswire
DOVER, Del., Aug. 11, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities") announced today that the Federal Energy Regulatory Commission ("FERC") approved on July 21 the application by Eastern Shore Natural Gas ("ESNG"), Chesapeake Utilities' interstate natural gas transmission subsidiary, to expand firm natural gas transportation service to Calpine Energy Services' Garrison Energy Center in Dover, Delaware. ESNG will transport 45,000 dekatherms per day ("dt/d") of natural gas to service Calpine's 309 MW electric generation plant.
"This project is an example of our ability to provide clean natural gas thereby generating long-term value for our customers, investors, employees and our communities," said Michael P. McMasters, Chesapeake Utilities Corporation President and Chief Executive Officer. "We are proud to be an integral part of providing access to natural gas, improving our environment and reducing energy costs."
The transportation service will be provided under ESNG's Off Peak ≤90 Firm Transportation ("OPT") Rate Schedule. The OPT is a firm service that was designed to provide customers with an additional service offering that better matched the specific load requirements of the customer. Calpine's Garrison Energy Center has dual fuel capability to help mitigate the effects of any potential gas interruption.
"This agreement with Calpine exemplifies our continued efforts to meet the energy needs of the region as demand for economic and environmentally friendly natural gas increases," said Steve Thompson, President of Eastern Shore Natural Gas. "Through our pipeline facilities, we're dedicated to transporting this domestic fuel source safely, reliably, and responsibly."
ESNG plans to expand its facilities with the installation of 5.4 miles of 16-inch pipeline looping and 3,550 horsepower of new compression in Delaware. These new facilities are estimated to cost approximately $38 million. ESNG estimates that it will generate at least $5.8 million of revenue annually from providing the OPT service to Calpine. Since Calpine's electric generation plant initiated operations in the second quarter of 2015, ESNG has been providing Calpine with a limited mix of short-term service solutions until the facilities associated with this project are completed.
Completion of the facilities are anticipated during the first quarter of 2017.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
About Eastern Shore Natural Gas Company
Eastern Shore Natural Gas Company, a subsidiary of Chesapeake Utilities Corporation, owns and operates a 442-mile interstate pipeline that transports natural gas from various points in Pennsylvania to customers in Delaware, Maryland and Pennsylvania. For more information, visit www.esng.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Jeffrey Tietbohl
Vice President
Eastern Shore Natural Gas
302.734.6742
jtietbohl@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
8/11/2016Eastern Shore Natural Gas Receives FERC Approval To Construct And Operate New Facilities In Delaware To Sustain System Reliability
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Aug. 5, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities") announced today that the Federal Energy Regulatory Commission ("FERC") has approved plans by Eastern Shore Natural Gas ("ESNG"), Chesapeake Utilities' interstate natural gas transmission subsidiary, to construct pipeline and compression facilities to preserve the reliability and flexibility of its interstate pipeline system. The project is estimated to cost approximately $36 million.
"The investment we are making in this project is part of our ongoing commitment to the reliability of our natural gas transmission infrastructure, benefiting energy consumers throughout our service territories," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation.
The project will include 10.1 miles of pipeline, including 2.5 miles of 16-inch pipeline looping in New Castle County, Delaware and 7.6 miles of 16-inch pipeline looping in Kent County, Delaware and adding 1,775 horsepower of additional compression at ESNG's existing Bridgeville Compressor Station in Sussex County, Delaware. Completion of the facilities are anticipated by the end of the first quarter of 2017.
"Since the company's inception in 1955, ESNG has proven that reliable and safe service go hand-in-hand," said Steve Thompson, President of Eastern Shore Natural Gas. "Addressing changes in operating conditions, including the extreme weather conditions we experienced in the polar vortex during the winter of 2015, will contribute to the continued reliable and safe service that is at the center of our Company's mission."
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
About Eastern Shore Natural Gas Company
Eastern Shore Natural Gas Company, a subsidiary of Chesapeake Utilities Corporation, owns and operates a 442-mile interstate pipeline that transports natural gas from various points in Pennsylvania to customers in Delaware, Maryland and Pennsylvania. For more information, visit www.esng.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Jeffrey Tietbohl
Vice President
Eastern Shore Natural Gas
302.734.6742
jtietbohl@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
8/5/2016Chesapeake Utilities Corporation To Host Investor Day On August 11, 2016
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Aug. 4, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities") announced today that it will host an Investor Day on Thursday, August 11, 2016 in Amelia Island, Florida to discuss the Company's growth strategy, current businesses and financial results.
The by-invitation event will be led by Michael P. McMasters, Chesapeake Utilities Corporation President and Chief Executive Officer, and will feature presentations by Chesapeake Utilities' executive management team, including:
Presentations will cover the Company's regulated and unregulated energy businesses and the Eight Flags Energy Combined Heat and Power plant ("CHP") which went online in June. Included as part of the Investor Day event will be a tour of the CHP plant.
Access to the slide presentations will be posted in the Investors section of the Chesapeake Utilities Corporation website.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President and Chief Financial Officer
Chesapeake Utilities Corporation
302.734.6022
bcooper@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
8/4/2016Chesapeake Utilities Corporation Reports Second Quarter Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Aug. 4, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today reported second quarter financial results. The Company's net income for the quarter ended June 30, 2016 was $8.0 million, or $0.52 per share. This represents an increase of $1.7 million, or $0.11 per share over the same quarter in 2015. Excluding a non-recurring $1.4 million pre-tax gain ($0.05 per share) related to the settlement with a vendor in connection with a customer billing system implementation, which occurred in the second quarter of 2015, earnings per share increased by $0.16 quarter-over-quarter.
For the six months ended June 30, 2016, the Company reported net income of $28.4 million, or $1.85 per share, an increase of $993,000, or $0.02 per share, over the same period in 2015. The Company's growth strategy generated earnings that offset the negative effect of warmer weather experienced in the first quarter of 2016. The warmer weather reduced earnings per share by $0.26 compared to the same period in 2015.
"Our higher results for the second quarter reflect the success of our efforts to grow the services we provide on the Delmarva Peninsula, in Florida and Ohio," stated Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "In Florida, we completed construction and placed in service the Combined Heat and Power plant in Nassau County, fueled by natural gas that we supply, to provide electricity to our residential and commercial customers and steam for industrial use. In Ohio, Aspire Energy continued to contribute additional income as it began its second year as a Chesapeake business. Our employees' concerted efforts powered this successful execution of our growth strategy, and they continue to identify and develop additional growth opportunities while providing superior service in the Chesapeake Utilities tradition," Mr. McMasters added.
A more detailed discussion and analysis of the Company's results for each segment is provided in the following pages.
Comparative Results for the Quarters Ended June 30, 2016 and 2015
Operating income for the second quarter increased by $2.6 million, or 20 percent, to $15.7 million compared to the same period in 2015. The growth in operating income was driven by an increase in gross margin of $6.5 million, which was partially offset by an increase of $3.9 million in other operating expenses. The increase in operating expenses reflects the additional cost to support growth as well as the absence of a $1.5 million gain from a customer billing system settlement, recorded in 2015, which was partially offset by an associated gain of $130,000 during the second quarter of 2016, representing an additional current portion of the settlement recovery. Additional details on key variances in gross margin and other operating expenses are provided in the Financial Summary Highlights section later in this release.
Regulated Energy Segment
Regulated Energy operating income grew by $1.6 million compared to the same period in 2015. The increased operating income resulted from a $4.8 million increase in gross margin, partially offset by a $3.2 million increase in other operating expenses. The significant components of the gross margin increase included:
The significant components of the increase in other operating expenses included:
Unregulated Energy Segment
The Unregulated Energy segment reported operating income of $412,000, an increase of $952,000 compared to the same period in 2015. The improved operating income resulted from a $1.7 million increase in gross margin partially offset by a $722,000 increase in other operating expenses. The significant components of the gross margin increase included:
The increase in other operating expenses was due primarily to $481,000 in higher payroll and benefits costs for additional personnel to support growth.
Comparative Results for the Six Months Ended June 30, 2016 and 2015
Operating income for the six months ended June 30, 2016 increased by $1.4 million to $52.1 million for the six months ended June 30, 2016, compared to $50.7 million for the same period in 2015. The increase in operating income was driven by a $6.1 million increase in gross margin, which was partially offset by a $4.7 million increase in other operating expenses. Excluding the non-recurring gain associated with the billing system settlement, operating income increased by $2.8 million for the six months ended June 30, 2016.
Regulated Energy Segment
Operating income for the Regulated Energy segment for the six months ended June 30, 2016 increased by $3.8 million. The increase in operating income was driven by an increase in gross margin of $6.7 million, which was partially offset by an increase of $2.9 million in other operating expenses. The significant components of the gross margin increase included:
The above increases were partially offset by $2.5 million in lower gross margin due to reduced consumption of natural gas and electricity largely as a result of warmer weather during the first quarter of 2016, compared to the same period in 2015.
The significant components of the increase in other operating expenses included:
Unregulated Energy Segment
The Unregulated Energy segment reported operating income of $12.3 million for the six months ended June 30, 2016, compared to operating income of $14.7 million for the same period in 2015. The $2.4 million decrease in operating income resulted from a $1.8 million increase in other operating expenses and a $544,000 decrease in gross margin. The significant components of the gross margin decrease included:
These decreases were partially offset by $4.9 million in gross margin generated by Aspire Energy and $905,000 from the Company's natural gas marketing operation as a result of customer growth, which included a new long-term sales agreement entered into with an Ohio distribution company, and the positive impact from favorable supply management and hedging activities.
The increase in other operating expenses was due primarily to $2.0 million in other operating expenses incurred by Aspire Energy, given the additional quarter's results included in 2016 as compared to only three months of results in the six months ended June 30, 2015. Aspire Energy had no operating expenses during the first quarter of 2015 because it commenced operations on April 1, 2015. These expenses were partially offset by $161,000 in lower accruals for incentive compensation as a result of the lower financial results, due to the impact of significantly warmer weather.
Matters discussed 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 2015 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
The discussions of the results use the term "gross margin," a non-Generally Accepted Accounting Principles ("GAAP") financial measure, which management uses to evaluate the performance of the Company's business segments. For an explanation of the calculation of "gross margin," see the footnote to the Financial Summary.
Unless otherwise noted, earnings per share is presented on a diluted basis.
Conference Call
Chesapeake Utilities will host a conference call on Friday, August 5, 2016, at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter and six months ended June 30, 2016. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2016 Second Quarter Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audio cast section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other related services. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary | |||||||||||||||
|
(in thousands, except per share data) | |||||||||||||||
|
Three Months Ended |
Six Months Ended | ||||||||||||||
|
June 30, |
June 30, | ||||||||||||||
|
2016 |
2015 |
2016 |
2015 | ||||||||||||
|
Gross Margin (1) |
|||||||||||||||
|
Regulated Energy segment |
$ |
45,760 |
$ |
40,936 |
$ |
100,071 |
$ |
93,389 |
|||||||
|
Unregulated Energy segment |
12,077 |
10,403 |
35,178 |
35,722 |
|||||||||||
|
Other businesses and eliminations |
(64) |
(53) |
(109) |
(108) |
|||||||||||
|
Total Gross Margin |
$ |
57,773 |
$ |
51,286 |
$ |
135,140 |
$ |
129,003 |
|||||||
|
Operating Income |
|||||||||||||||
|
Regulated Energy segment |
$ |
15,226 |
$ |
13,605 |
$ |
39,545 |
$ |
35,788 |
|||||||
|
Unregulated Energy segment |
412 |
(540) |
12,347 |
14,689 |
|||||||||||
|
Other businesses and eliminations |
104 |
105 |
230 |
201 |
|||||||||||
|
Total Operating Income |
15,742 |
13,170 |
52,122 |
50,678 |
|||||||||||
|
Other Expense, net |
(8) |
(171) |
(42) |
(38) |
|||||||||||
|
Interest Charges |
2,624 |
2,485 |
5,274 |
4,933 |
|||||||||||
|
Pre-tax Income |
13,110 |
10,514 |
46,806 |
45,707 |
|||||||||||
|
Income Taxes |
5,081 |
4,220 |
18,410 |
18,304 |
|||||||||||
|
Net Income |
$ |
8,029 |
$ |
6,294 |
$ |
28,396 |
$ |
27,403 |
|||||||
|
Earnings Per Share of Common Stock |
|||||||||||||||
|
Basic |
$ |
0.52 |
$ |
0.41 |
$ |
1.86 |
$ |
1.84 |
|||||||
|
Diluted |
$ |
0.52 |
$ |
0.41 |
$ |
1.85 |
$ |
1.83 |
|||||||
|
(1) "Gross margin" is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane and the cost of labor spent on direct revenue-producing activities. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. Chesapeake Utilities believes that gross margin, although a non-GAAP measure, is meaningful in the Company's regulated operations because the cost of natural gas and electricity are passed through and changes in commodity prices can cause revenue to go up and down in ways that are not indicative of volumes sold or tied to profitability. Gross margin provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. Chesapeake Utilities' management uses gross margin in measuring its business units' performance and has historically analyzed and reported gross margin information publicly. Other companies may calculate gross margin in a different manner. | |||||||||||||||
|
Financial Summary Highlights | ||||||||||||
|
Key variances for the three months ended June 30, 2016 included: | ||||||||||||
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Second Quarter of 2015 Reported Results |
$ |
10,514 |
$ |
6,294 |
$ |
0.41 |
||||||
|
Adjusting for Unusual Items: |
||||||||||||
|
Net gain from settlement agreement associated with customer billing system |
(1,370) |
(820) |
(0.05) |
|||||||||
|
(1,370) |
(820) |
(0.05) |
||||||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Service expansions (See Major Projects and Initiatives table) |
1,992 |
1,192 |
0.08 |
|||||||||
|
GRIP |
1,040 |
623 |
0.04 |
|||||||||
|
Natural gas growth (excluding service expansions) |
820 |
491 |
0.03 |
|||||||||
|
Aspire Energy |
708 |
424 |
0.03 |
|||||||||
|
Implementation of Delaware division interim rates |
555 |
332 |
0.02 |
|||||||||
|
Eight Flags |
551 |
330 |
0.02 |
|||||||||
|
Natural gas marketing |
464 |
278 |
0.02 |
|||||||||
|
Increase in customer consumption |
345 |
207 |
0.01 |
|||||||||
|
6,475 |
3,877 |
0.25 |
||||||||||
|
Decreased (Increased) Other Operating Expenses: |
||||||||||||
|
Higher payroll and benefit costs |
(1,100) |
(658) |
(0.04) |
|||||||||
|
Higher service contractor costs |
(786) |
(470) |
(0.03) |
|||||||||
|
Higher depreciation, asset removal, amortization and property tax costs due |
(493) |
(295) |
(0.02) |
|||||||||
|
(2,379) |
(1,423) |
(0.09) |
||||||||||
|
Interest Charges |
(139) |
(83) |
(0.01) |
|||||||||
|
Net Other Changes |
9 |
184 |
0.01 |
|||||||||
|
Second Quarter of 2016 Reported Results |
$ |
13,110 |
$ |
8,029 |
$ |
0.52 |
||||||
|
Key variances for the six months ended June 30, 2016 included: | ||||||||||||
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
Six months ended June 30, 2015 Reported Results |
$ |
45,707 |
$ |
27,403 |
$ |
1.83 |
||||||
|
Adjusting for Unusual Items: |
||||||||||||
|
Weather impact, primarily in the first quarter |
(6,596) |
(3,954) |
(0.26) |
|||||||||
|
Net gain from settlement agreement associated with customer billing system |
(1,370) |
(821) |
(0.05) |
|||||||||
|
(7,966) |
(4,775) |
(0.31) |
||||||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Service expansions (See Major Projects and Initiatives table) |
3,939 |
2,361 |
0.16 |
|||||||||
|
GRIP |
2,148 |
1,288 |
0.09 |
|||||||||
|
Lower retail propane margins |
(1,737) |
(1,041) |
(0.07) |
|||||||||
|
Natural gas growth (excluding service expansions) |
1,579 |
947 |
0.06 |
|||||||||
|
Natural gas marketing |
905 |
543 |
0.04 |
|||||||||
|
Implementation of Delaware division interim rates |
878 |
526 |
0.03 |
|||||||||
|
Eight Flags |
551 |
330 |
0.02 |
|||||||||
|
8,263 |
4,954 |
0.33 |
||||||||||
|
Decreased (Increased) Other Operating Expenses: |
||||||||||||
|
Higher payroll and benefit costs |
(1,339) |
(803) |
(0.05) |
|||||||||
|
Higher depreciation, asset removal and property tax costs due to recent |
(1,253) |
(751) |
(0.05) |
|||||||||
|
Lower bad debt, sales and advertising |
482 |
289 |
0.02 |
|||||||||
|
Decreased incentive compensation |
466 |
279 |
0.02 |
|||||||||
|
(1,644) |
(986) |
(0.06) |
||||||||||
|
Net contribution from Aspire Energy, including impact of shares issued |
2,978 |
1,892 |
0.09 |
|||||||||
|
Interest Charges |
(341) |
(204) |
(0.01) |
|||||||||
|
Net Other Changes |
(191) |
112 |
(0.02) |
|||||||||
|
Six months ended June 30, 2016 Reported Results |
$ |
46,806 |
$ |
28,396 |
$ |
1.85 |
||||||
|
Major Projects and Initiatives | ||||||||||||||||||||||||||||||
|
The following table summarizes gross margin for the Company's existing and future major projects and initiatives. Gross margin reflects operating revenue less cost of sales, excluding depreciation, amortization and accretion (dollars in thousands): | ||||||||||||||||||||||||||||||
|
Gross Margin for the Period | ||||||||||||||||||||||||||||||
|
Three Months Ended |
Six Months Ended |
Total |
||||||||||||||||||||||||||||
|
June 30, |
June 30, |
2015 |
Estimate for | |||||||||||||||||||||||||||
|
2016 |
2015 |
2016 |
2015 |
Margin |
2016 |
2017 |
2018 | |||||||||||||||||||||||
|
Completed major |
$ |
10,487 |
$ |
5,642 |
$ |
22,256 |
$ |
9,791 |
$ |
25,270 |
$ |
47,769 |
$ |
53,991 |
$ |
54,646 |
||||||||||||||
|
Major projects and |
— |
— |
— |
— |
— |
2,250 |
4,500 |
|||||||||||||||||||||||
|
$ |
10,487 |
$ |
5,642 |
$ |
22,256 |
$ |
9,791 |
$ |
25,270 |
$ |
47,769 |
$ |
56,241 |
$ |
59,146 |
|||||||||||||||
|
(1) This represents gross margin for the 2017 System Reliability Project. | ||||||||||||||||||||||||||||||
|
Completed Major Projects and Initiatives | ||||||||||||||||||||||||||||||||||||||
|
The following table summarizes gross margin generated from the Company's major projects and initiatives completed since 2014 (dollars in thousands): | ||||||||||||||||||||||||||||||||||||||
|
Gross Margin for the Period | ||||||||||||||||||||||||||||||||||||||
|
Three Months Ended |
Six Months Ended |
Total |
||||||||||||||||||||||||||||||||||||
|
June 30, |
June 30, |
2015 |
Estimate for | |||||||||||||||||||||||||||||||||||
|
2016 |
2015 |
Variance |
2016 |
2015 |
Variance |
Margin |
2016 |
2017 |
2018 | |||||||||||||||||||||||||||||
|
Acquisition: |
||||||||||||||||||||||||||||||||||||||
|
Aspire Energy |
$ |
2,331 |
$ |
1,624 |
$ |
707 |
$ |
6,573 |
$ |
1,624 |
$ |
4,949 |
$ |
6,324 |
$ |
12,824 |
$ |
14,198 |
$ |
15,415 |
||||||||||||||||||
|
Natural Gas Transmission |
||||||||||||||||||||||||||||||||||||||
|
Short-term contracts |
||||||||||||||||||||||||||||||||||||||
|
New Castle County, Delaware |
$ |
616 |
$ |
523 |
$ |
93 |
$ |
1,375 |
$ |
1,491 |
$ |
(116) |
$ |
2,682 |
$ |
2,707 |
$ |
1,885 |
$ |
677 |
||||||||||||||||||
|
Kent County, Delaware (1) |
2,032 |
398 |
1,634 |
3,815 |
398 |
3,417 |
2,270 |
7,965 |
1,534 |
— |
||||||||||||||||||||||||||||
|
Total short-term contracts |
$ |
2,648 |
$ |
921 |
$ |
1,727 |
$ |
5,190 |
$ |
1,889 |
$ |
3,301 |
$ |
4,952 |
$ |
10,672 |
$ |
3,419 |
$ |
677 |
||||||||||||||||||
|
Long-term contracts |
||||||||||||||||||||||||||||||||||||||
|
Kent County, Delaware |
$ |
455 |
$ |
463 |
$ |
(8) |
$ |
911 |
$ |
926 |
$ |
(15) |
$ |
1,844 |
$ |
1,815 |
$ |
7,629 |
$ |
7,605 |
||||||||||||||||||
|
Polk County, Florida |
407 |
134 |
273 |
814 |
161 |
653 |
908 |
1,627 |
1,627 |
1,627 |
||||||||||||||||||||||||||||
|
Total long-term contracts |
$ |
862 |
$ |
597 |
$ |
265 |
$ |
1,725 |
$ |
1,087 |
$ |
638 |
$ |
2,752 |
$ |
3,442 |
$ |
9,256 |
$ |
9,232 |
||||||||||||||||||
|
Total Expansions & Contracts |
$ |
3,510 |
$ |
1,518 |
$ |
1,992 |
$ |
6,915 |
$ |
2,976 |
$ |
3,939 |
$ |
7,704 |
$ |
14,114 |
$ |
12,675 |
$ |
9,909 |
||||||||||||||||||
|
Florida GRIP |
$ |
2,809 |
$ |
1,769 |
$ |
1,040 |
$ |
5,396 |
$ |
3,248 |
$ |
2,148 |
$ |
7,508 |
$ |
11,405 |
$ |
13,756 |
$ |
15,960 |
||||||||||||||||||
|
Florida Electric Rate Case |
$ |
731 |
$ |
731 |
$ |
— |
$ |
1,943 |
$ |
1,943 |
$ |
— |
$ |
3,734 |
$ |
3,562 |
$ |
3,562 |
$ |
3,562 |
||||||||||||||||||
|
Delaware Division Rate Case (2) |
$ |
555 |
$ |
— |
$ |
555 |
$ |
878 |
$ |
— |
$ |
878 |
$ |
— |
$ |
2,164 |
$ |
2,500 |
$ |
2,500 |
||||||||||||||||||
|
Eight Flags CHP Plant (3) |
$ |
551 |
$ |
— |
$ |
551 |
$ |
551 |
$ |
— |
$ |
551 |
$ |
— |
$ |
3,700 |
$ |
7,300 |
$ |
7,300 |
||||||||||||||||||
|
Total Completed Major Projects and |
$ |
10,487 |
$ |
5,642 |
$ |
4,845 |
$ |
22,256 |
$ |
9,791 |
$ |
12,465 |
$ |
25,270 |
$ |
47,769 |
$ |
53,991 |
$ |
54,646 |
||||||||||||||||||
|
(1) |
In April 2015, Eastern Shore Natural Gas Company ("Eastern Shore"), the Company's interstate pipeline subsidiary, commenced interruptible service to an electric power generator in Kent County, Delaware. The interruptible service concluded in December 2015 and was replaced by a short-term Off Peak ≤ 90 Firm Transportation Service ("OPT ≤ 90 Service"). The short-term OPT ≤ 90 Service is expected to be replaced by a 20-year contract for OPT ≤ 90 Service in the first quarter of 2017. | ||||||||||||||||||||||||||||||||||||||
|
(2) |
In December 2015, the Company's Delaware division submitted a rate case filing with the Delaware Public Service Commission ("PSC"). A decision on this application is expected during the first quarter of 2017. Pending the decision, the Company's Delaware division implemented interim rates effective February 19, 2016. These rates are subject to refund. The Company cannot predict the revenue requirement the Delaware PSC will ultimately authorize or forecast timing of the decision. | ||||||||||||||||||||||||||||||||||||||
|
(3) |
This amount includes gross margin of $432,000 for the three and six months ended June 30, 2016, attributed to natural gas distribution and transportation services provided by the Company's affiliates. | ||||||||||||||||||||||||||||||||||||||
Aspire Energy
On April 1, 2015, the Company completed the merger of Gatherco, Inc. with and into Aspire Energy, a then newly formed, wholly-owned subsidiary of Chesapeake Utilities. Aspire Energy is an unregulated natural gas infrastructure company with approximately 2,500 miles of pipeline systems in 40 counties throughout Ohio. The majority of Aspire Energy's margin is derived from long-term sales agreements with Columbia Gas of Ohio and Consumers Gas Cooperative, which together serve more than 20,000 end-use customers in Ohio. Aspire Energy sources gas primarily from 300 conventional producers. Aspire Energy also provides gathering and processing services necessary to maintain quality and reliability to its wholesale markets.
Aspire Energy generated $707,000 and $4.9 million in additional gross margin for the three and six months ended June 30, 2016 and incurred $363,000 and $2.0 million in other operating expenses for the same periods, respectively. As projected, this merger was accretive to earnings per share in the first full year of operations, generating $0.03 in additional earnings per share for the Company.
Service Expansions
On January 16, 2015, the Florida PSC approved a firm transportation agreement between Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), the Company's wholly-owned Florida intrastate pipeline subsidiary, and Chesapeake Utilities' Florida natural gas distribution division. Under this agreement, Peninsula Pipeline provides natural gas transmission service to support the Company's expansion of natural gas distribution service in Polk County, Florida. Peninsula Pipeline began the initial phase of its service to Chesapeake Utilities' Florida natural gas distribution division in March 2015. This new service generated $273,000 and $653,000 of additional gross margin for the three and six months ended June 30, 2016, respectively, compared to the same periods in 2015. When all phases of this service are complete, this expansion will generate an estimated annual gross margin of $1.6 million.
In April 2015, Eastern Shore commenced interruptible service to an electric power generator in Kent County, Delaware. The interruptible service concluded in December 2015 and was replaced by a short-term OPT ≤ 90 Service, which generated additional gross margin of $1.6 million and $3.4 million during the three and six months ended June 30, 2016, respectively. The short-term OPT ≤ 90 Service is expected to be replaced by a 20-year contract for OPT ≤ 90 Service in the first quarter of 2017.
On October 13, 2015, Eastern Shore submitted an application to the Federal Energy Regulatory Commission ("FERC") to make certain measurement and related improvements at its Texas Eastern Transmission, LP ("TETLP") interconnect facilities, which will enable Eastern Shore to increase natural gas receipts from TETLP by 53,000 dekatherms per day ("Dts/d"), for a total capacity of 160,000 Dts/d. In December 2015, the FERC authorized Eastern Shore to proceed with this project, which was completed and placed in service in March 2016. Approximately, 80 percent of the increased capacity has been subscribed on a short-term firm service basis. This service generated an additional gross margin of $108,000 and $128,000 for the three and six months ended June 30, 2016, respectively, and will generate approximately $1.4 million in additional gross margin through 2016. The remaining capacity is available for firm or interruptible service.
GRIP
GRIP is a natural gas pipe replacement program approved by the Florida PSC, designed to expedite the replacement of qualifying distribution mains and services (any material other than coated steel or plastic) to enhance reliability and integrity of the Company's Florida natural gas distribution systems. This program allows recovery, through regulated rates, of capital and other program-related costs, inclusive of a return on investment, associated with the replacement of the mains and services. Since the program's inception in August 2012, the Company has invested $91.5 million to replace 191 miles of qualifying distribution mains, including $14.7 million during the first six months of 2016. The Company expects to invest an additional $6.4 million in this program during the remainder of 2016. The increased investment in GRIP generated additional gross margin of $1.0 million and $2.1 million for the three and six months ended June 30, 2016, respectively, compared to the same periods in 2015.
Eight Flags
In June 2016, Eight Flags, one of the Company's unregulated energy subsidiaries, substantially completed construction of a CHP plant in Nassau County, Florida. This CHP plant, which consists of a natural-gas-fired turbine and associated electric generator, can produce approximately 20 megawatts of base load power and includes a heat recovery steam generator capable of providing approximately 75,000 pounds per hour of unfired steam. Beginning June 13, 2016, Eight Flags began selling power generated from the CHP plant to Florida Public Utilities ("FPU"), the Company's wholly-owned subsidiary, for distribution to its retail electric customers pursuant to a 20-year power purchase agreement. On July 1, 2016, it also started selling steam to an industrial customer pursuant to a separate 20-year contract. FPU will be transporting natural gas through its distribution system to Eight Flags' CHP plant. Eight Flags and other Chesapeake Utilities' affiliates generated $551,000 in additional gross margin as a result of these new services, including natural gas transportation and distribution services, for the three and six months ended June 30, 2016. On a consolidated basis, this project is expected to generate approximately $7.3 million in annual gross margin, which could fluctuate based upon various factors, including, but not limited to, the quantity of steam delivered and the CHP plant's hours of operations.
Major Projects and Initiatives Underway
White Oak Mainline Expansion Project: In December 2014, Eastern Shore entered into a precedent agreement with an electric power generator in Kent County, Delaware, to provide a 20-year natural gas transmission service for 45,000 Dts/d for the customer's facility, upon the satisfaction of certain conditions. This new service will be provided as long-term OPT ≤ 90 Service and is expected to generate at least $5.8 million in annual gross margin. In November 2014, Eastern Shore requested authorization by the FERC to construct 5.4 miles of 16-inch pipeline looping and 3,550 horsepower of new compression in Delaware to provide this service. As previously discussed, during the three and six months ended June 30, 2016, the Company generated $1.6 million and $3.4 million, respectively, in additional gross margin by providing interruptible service and short-term OPT ≤ 90 Service to this customer. The estimated annual gross margin contribution from this project, once it is placed in service, is approximately $5.8 million. On July 21, 2016, the FERC issued a certificate of public convenience and necessity authorizing Eastern Shore to construct and operate the proposed White Oak Mainline Project.
System Reliability Project: On May 22, 2015, Eastern Shore submitted an application to the FERC seeking authorization to construct, own and operate approximately 10.1 miles of 16-inch pipeline looping and auxiliary facilities in New Castle and Kent Counties, Delaware and a new compressor at its existing Bridgeville compressor station in Sussex County, Delaware. Eastern Shore further proposes to reinforce critical points on its pipeline system. The total project will benefit all of Eastern Shore's customers by modifying the pipeline system to respond to severe operational conditions experienced during actual winter peak days. Since the project is intended to improve system reliability, Eastern Shore requested a predetermination of rolled-in rate treatment for the costs of the project and an order granting the requested authorization. This project will be included in Eastern Shore's upcoming 2017 rate case filing. The estimated annual gross margin associated with this project, assuming recovery in the 2017 rate case, is approximately $4.5 million. On July 21, 2016, the FERC issued a certificate of public convenience and necessity authorizing Eastern Shore to construct and operate the proposed System Reliability Project.
2017 Expansion Project: On May 12, 2016, Eastern Shore submitted a request to the FERC to initiate the FERC's pre-filing procedures for its proposed 2017 expansion project. The 2017 expansion project consists of approximately 33 miles of pipeline looping in Pennsylvania, Maryland and Delaware; upgrades to existing facilities; installation of an additional 3,550 horsepower compressor unit at the existing Daleville compressor station in Chester County, Pennsylvania; approximately 17 miles of new mainline extension; and the addition of two pressure control stations in Sussex County, Delaware. The proposed 2017 expansion project would provide up to 86,437 Dts/d of additional firm natural gas transportation capacity to meet anticipated market demand. Eastern Shore is currently negotiating precedent agreements with customers who have expressed an interest in this service.
Other factors influencing gross margin
Weather and Consumption
Weather was not a significant factor in the second quarter. Temperatures on the Delmarva Peninsula and in Florida during the first quarter of 2016 were significantly warmer than the first quarter of 2015, which negatively affected the Company's year-to-date results in 2016. Lower customer consumption, directly attributable to warmer than normal temperatures during the six months ended June 30, 2016, reduced gross margin by $6.6 million compared to the same period in 2015.
The following tables summarize the heating degree-day ("HDD") and cooling degree-day ("CDD") information for the three and six months ended June 30, 2016 and 2015 resulting from weather fluctuations in those periods.
|
HDD and CDD Information | |||||||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||||||
|
June 30, |
June 30, |
||||||||||||||||
|
2016 |
2015 |
Variance |
2016 |
2015 |
Variance | ||||||||||||
|
Delmarva |
|||||||||||||||||
|
Actual HDD |
485 |
386 |
99 |
2,579 |
3,208 |
(629) |
|||||||||||
|
10-Year Average HDD ("Delmarva Normal") |
452 |
443 |
9 |
2,854 |
2,843 |
11 |
|||||||||||
|
Variance from Delmarva Normal |
33 |
(57) |
(275) |
365 |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual HDD |
49 |
— |
49 |
646 |
501 |
145 |
|||||||||||
|
10-Year Average HDD ("Florida Normal") |
19 |
24 |
(5) |
553 |
557 |
(4) |
|||||||||||
|
Variance from Florida Normal |
30 |
(24) |
93 |
(56) |
|||||||||||||
|
Ohio |
|||||||||||||||||
|
Actual HDD |
830 |
632 |
198 |
3,683 |
4,413 |
(730) |
|||||||||||
|
10-Year Average HDD ("Ohio Normal") |
666 |
669 |
(3) |
3,842 |
3,778 |
64 |
|||||||||||
|
Variance from Ohio Normal |
164 |
(37) |
(159) |
635 |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual CDD |
1,028 |
1,114 |
(86) |
1,214 |
1,236 |
(22) |
|||||||||||
|
10-Year Average CDD ("Florida CDD Normal") |
948 |
909 |
39 |
1,025 |
982 |
43 |
|||||||||||
|
Variance from Florida CDD Normal |
80 |
205 |
189 |
254 |
|||||||||||||
Propane prices
For the quarter ended June 30, 2016, retail propane margins per gallon generated additional gross margin of $185,000 compared to the same period last year. For the six months ended June 30, 2016, compared to the same period in 2015, margins per retail gallon returned to more normal levels, which resulted in a year-to-date decline in gross margin of $1.9 million, driven principally by lower propane prices and local market conditions. The levels of retail margins per gallon generated during 2015 were not expected to be sustained over the long term; accordingly, the Company has assumed more normal levels of margins in its long-term financial plans and forecasts.
In Florida, higher retail propane margins per gallon, resulting from local market conditions, generated $6,000 and $131,000 of additional gross margin for the three and six months ended June 30, 2016, respectively, compared to the same periods in 2015.
These market conditions, which are influenced by competition with other propane suppliers as well as the availability and price of alternative energy sources, may fluctuate based on changes in demand, supply and other energy commodity prices.
Other Natural Gas Growth - Distribution Operations
In addition to service expansions, the natural gas distribution operations on the Delmarva Peninsula generated $509,000 and $854,000 in additional gross margin for the three and six months ended June 30, 2016, respectively, compared to the same periods in 2015, due to an increase in residential, commercial and industrial customers served. The average number of residential customers on the Delmarva Peninsula during the three and six months ended June 30, 2016 increased by 3.8 percent and 3.2 percent, respectively, compared to the same periods in 2015. The natural gas distribution operations in Florida generated $406,000 and $652,000 in additional gross margin for the three and six months ended June 30, 2016, respectively, compared to the same periods in 2015, due primarily to an increase in commercial and industrial customers in Florida.
Delaware division rate case
On December 21, 2015, the Company's Delaware division filed an application with the Delaware PSC for a base rate increase and certain other changes to its tariff. The Company proposed an increase of approximately $4.7 million, or nearly ten percent, in its revenue requirement based on the test period ending March 31, 2016. The Company expects a decision on the application during the first quarter of 2017. Pending the decision, the Company's Delaware division increased rates on an interim basis based on the $2.5 million annualized interim rates approved by the Delaware PSC, effective February 19, 2016. The Company generated additional gross margin of approximately $555,000 ($332,000 net of tax) and $878,000 ($526,000 net of tax), for the three and six months ended June 30, 2016, respectively, from the implementation of interim rates. In addition, the Company's Delaware division requested and received approval on July 26, 2016 from the Delaware PSC to implement revised interim rates of $4.7 million annualized for usage on and after August 1, 2016.These rates, are subject to refund. Although a final decision is expected during the first quarter of 2017 the Company cannot predict the revenue requirement the Delaware PSC will ultimately authorize or forecast the timing of a final decision.
Capital Expenditures
The Company's capital expenditures for the six months ended June 30, 2016 were $70.3 million. We currently project capital expenditures of $179.3 million in 2016. The 2016 forecast includes expenditures for the following projects: Eight Flags' CHP plant; anticipated new facilities to serve an electric power generator in Kent County, Delaware under the OPT ≤ 90 Service; Eastern Shore's system reliability project; additional expansions of the Company's natural gas distribution and transmission systems; continued natural gas infrastructure improvement activities; continued replacement of facilities under the Florida GRIP; replacement of other facilities and systems; and other strategic initiatives and investments expected in 2016. In addition, approximately $30.0 million included in this forecast is for projects that continue to be in the early development stage. The timing of capital expenditures can vary based on securing environmental approvals and other permits. The regulatory application and approval process has lengthened, and the Company expects this trend to continue.
In order to fund the 2016 capital expenditures, the Company may further increase the level of borrowings during 2016 to supplement cash provided by operating activities. The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent, and the Company has maintained a ratio of equity to total capitalization, including short-term borrowings, of between 52 and 54 percent during the past three years.
On October 8, 2015, the Company entered into an unsecured revolving credit facility with certain lenders, which increased its borrowing capacity by $150.0 million. To facilitate the refinancing of a portion of the short-term borrowings into long-term debt, as appropriate, the Company also entered into a long-term private placement shelf agreement for $150.0 million.
On May 13, 2016, the Company formally requested that $70 million of unsecured senior shelf notes be purchased under the long-term private placement shelf agreement. On May 20, 2016, the purchaser accepted the Company's request. The unsecured senior shelf notes are expected to be issued on or before April 28, 2017. The proceeds received from the sale and issuance of the unsecured senior shelf notes will be used to fund capital expenditures and/or reduce short-term borrowings under the Company's revolving credit facility and lines of credit.
For larger capital projects, the Company will seek to align, as much as feasible, any such long-term debt or equity issuance(s) with the earnings associated with the commencement of long-term service for revenue-generating capital projects. The exact timing of any long-term debt or equity issuance(s) will be based on market conditions.
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | |||||||||||||||
|
Three Months Ended |
Six Months Ended | ||||||||||||||
|
June 30, |
June 30, | ||||||||||||||
|
2016 |
2015 |
2016 |
2015 | ||||||||||||
|
Operating Revenues |
|||||||||||||||
|
Regulated Energy |
$ |
67,395 |
$ |
62,060 |
$ |
156,611 |
$ |
171,642 |
|||||||
|
Unregulated Energy and other |
34,947 |
30,622 |
92,027 |
91,121 |
|||||||||||
|
Total Operating Revenues |
102,342 |
92,682 |
248,638 |
262,763 |
|||||||||||
|
Operating Expenses |
|||||||||||||||
|
Regulated Energy cost of sales |
21,635 |
21,124 |
56,540 |
78,253 |
|||||||||||
|
Unregulated Energy and other cost of sales |
22,934 |
20,272 |
56,958 |
55,507 |
|||||||||||
|
Operations |
28,087 |
26,190 |
55,246 |
53,133 |
|||||||||||
|
Maintenance |
2,904 |
2,727 |
5,383 |
5,431 |
|||||||||||
|
Gain from a settlement |
(130) |
(1,500) |
(130) |
(1,500) |
|||||||||||
|
Depreciation and amortization |
7,780 |
7,543 |
15,283 |
14,518 |
|||||||||||
|
Other taxes |
3,390 |
3,156 |
7,236 |
6,743 |
|||||||||||
|
Total operating expenses |
86,600 |
79,512 |
196,516 |
212,085 |
|||||||||||
|
Operating Income |
15,742 |
13,170 |
52,122 |
50,678 |
|||||||||||
|
Other expense, net |
(8) |
(171) |
(42) |
(38) |
|||||||||||
|
Interest charges |
2,624 |
2,485 |
5,274 |
4,933 |
|||||||||||
|
Income Before Income Taxes |
13,110 |
10,514 |
46,806 |
45,707 |
|||||||||||
|
Income taxes |
5,081 |
4,220 |
18,410 |
18,304 |
|||||||||||
|
Net Income |
$ |
8,029 |
$ |
6,294 |
$ |
28,396 |
$ |
27,403 |
|||||||
|
Weighted Average Common Shares Outstanding: |
|||||||||||||||
|
Basic |
15,315,020 |
15,235,860 |
15,300,931 |
14,922,094 |
|||||||||||
|
Diluted |
15,352,702 |
15,280,657 |
15,342,287 |
14,970,190 |
|||||||||||
|
Earnings Per Share of Common Stock: |
|||||||||||||||
|
Basic |
$ |
0.52 |
$ |
0.41 |
$ |
1.86 |
$ |
1.84 |
|||||||
|
Diluted |
$ |
0.52 |
$ |
0.41 |
$ |
1.85 |
$ |
1.83 |
|||||||
|
Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Assets |
June 30, 2016 |
December 31, 2015 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Property, Plant and Equipment |
||||||||
|
Regulated Energy |
$ |
868,016 |
$ |
842,756 |
||||
|
Unregulated Energy |
189,034 |
145,734 |
||||||
|
Other businesses and eliminations |
19,608 |
18,999 |
||||||
|
Total property, plant and equipment |
1,076,658 |
1,007,489 |
||||||
|
Less: Accumulated depreciation and amortization |
(229,826) |
(215,313) |
||||||
|
Plus: Construction work in progress |
61,975 |
62,774 |
||||||
|
Net property, plant and equipment |
908,807 |
854,950 |
||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
3,266 |
2,855 |
||||||
|
Accounts receivable (less allowance for uncollectible accounts of $631 and $909, respectively) |
41,851 |
41,007 |
||||||
|
Accrued revenue |
8,658 |
12,452 |
||||||
|
Propane inventory, at average cost |
4,285 |
6,619 |
||||||
|
Other inventory, at average cost |
4,025 |
3,803 |
||||||
|
Regulatory assets |
7,042 |
8,268 |
||||||
|
Storage gas prepayments |
5,014 |
3,410 |
||||||
|
Income taxes receivable |
7,395 |
24,950 |
||||||
|
Prepaid expenses |
4,184 |
7,146 |
||||||
|
Mark-to-market energy assets |
405 |
153 |
||||||
|
Other current assets |
771 |
1,044 |
||||||
|
Total current assets |
86,896 |
111,707 |
||||||
|
Deferred Charges and Other Assets |
||||||||
|
Goodwill |
15,070 |
14,548 |
||||||
|
Other intangible assets, net |
2,033 |
2,222 |
||||||
|
Investments, at fair value |
4,325 |
3,644 |
||||||
|
Regulatory assets |
76,563 |
77,519 |
||||||
|
Receivables and other deferred charges |
3,353 |
2,831 |
||||||
|
Total deferred charges and other assets |
101,344 |
100,764 |
||||||
|
Total Assets |
$ |
1,097,047 |
$ |
1,067,421 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Capitalization and Liabilities |
June 30, 2016 |
December 31, 2015 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Capitalization |
||||||||
|
Stockholders' equity |
||||||||
|
Common stock, par value $0.4867 per share |
||||||||
|
(authorized 25,000,000 shares) |
$ |
7,456 |
$ |
7,432 |
||||
|
Additional paid-in capital |
191,776 |
190,311 |
||||||
|
Retained earnings |
185,490 |
166,235 |
||||||
|
Accumulated other comprehensive loss |
(5,168) |
(5,840) |
||||||
|
Deferred compensation obligation |
2,452 |
1,883 |
||||||
|
Treasury stock |
(2,452) |
(1,883) |
||||||
|
Total stockholders' equity |
379,554 |
358,138 |
||||||
|
Long-term debt, net of current maturities |
143,865 |
149,006 |
||||||
|
Total capitalization |
523,419 |
507,144 |
||||||
|
Current Liabilities |
||||||||
|
Current portion of long-term debt |
12,075 |
9,151 |
||||||
|
Short-term borrowing |
180,042 |
173,397 |
||||||
|
Accounts payable |
35,496 |
39,300 |
||||||
|
Customer deposits and refunds |
27,572 |
27,173 |
||||||
|
Accrued interest |
1,250 |
1,311 |
||||||
|
Dividends payable |
4,673 |
4,390 |
||||||
|
Accrued compensation |
6,742 |
10,014 |
||||||
|
Regulatory liabilities |
6,808 |
7,365 |
||||||
|
Mark-to-market energy liabilities |
256 |
433 |
||||||
|
Other accrued liabilities |
8,978 |
7,059 |
||||||
|
Total current liabilities |
283,892 |
279,593 |
||||||
|
Deferred Credits and Other Liabilities |
||||||||
|
Deferred income taxes |
199,623 |
192,600 |
||||||
|
Regulatory liabilities |
43,093 |
43,064 |
||||||
|
Environmental liabilities |
8,765 |
8,942 |
||||||
|
Other pension and benefit costs |
32,695 |
33,481 |
||||||
|
Deferred investment tax credits and other liabilities |
5,560 |
2,597 |
||||||
|
Total deferred credits and other liabilities |
289,736 |
280,684 |
||||||
|
Total Capitalization and Liabilities |
$ |
1,097,047 |
$ |
1,067,421 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Three Months Ended June 30, 2016 |
For the Three Months Ended June 30, 2015 | |||||||||||||||||||||||||||||||
|
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric |
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric | |||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
10,480 |
$ |
1,267 |
$ |
6,294 |
$ |
10,418 |
$ |
11,600 |
$ |
1,175 |
$ |
4,929 |
$ |
10,263 |
||||||||||||||||
|
Commercial |
5,779 |
1,230 |
6,926 |
10,280 |
6,544 |
1,135 |
6,026 |
10,262 |
||||||||||||||||||||||||
|
Industrial |
1,658 |
1,590 |
5,041 |
661 |
1,636 |
1,561 |
4,112 |
567 |
||||||||||||||||||||||||
|
Other (1) |
(1,740) |
840 |
(1,578) |
(1,471) |
(4,357) |
767 |
407 |
(2,308) |
||||||||||||||||||||||||
|
Total Operating |
$ |
16,177 |
$ |
4,927 |
$ |
16,683 |
$ |
19,888 |
$ |
15,423 |
$ |
4,638 |
$ |
15,474 |
$ |
18,784 |
||||||||||||||||
|
Volume (in Dts/MWHs) |
||||||||||||||||||||||||||||||||
|
Residential |
612,620 |
74,658 |
290,174 |
67,872 |
609,797 |
66,072 |
258,428 |
66,636 |
||||||||||||||||||||||||
|
Commercial |
670,593 |
1,356,421 |
532,434 |
75,071 |
675,668 |
1,373,449 |
580,233 |
73,849 |
||||||||||||||||||||||||
|
Industrial |
1,175,665 |
2,797,836 |
1,004,336 |
4,900 |
1,059,440 |
2,848,051 |
1,024,294 |
2,140 |
||||||||||||||||||||||||
|
Other |
26,581 |
— |
(16,406) |
1,961 |
18,089 |
— |
(27,076) |
10,128 |
||||||||||||||||||||||||
|
Total |
2,485,459 |
4,228,915 |
1,810,538 |
149,804 |
2,362,994 |
4,287,572 |
1,835,879 |
152,753 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
66,085 |
15,328 |
53,286 |
24,268 |
63,686 |
14,833 |
51,973 |
24,045 |
||||||||||||||||||||||||
|
Commercial |
6,745 |
1,388 |
4,265 |
4,406 |
6,629 |
1,343 |
4,264 |
7,390 |
||||||||||||||||||||||||
|
Industrial |
122 |
72 |
1,749 |
3,006 |
117 |
67 |
1,608 |
2 |
||||||||||||||||||||||||
|
Other |
4 |
— |
— |
— |
6 |
— |
— |
— |
||||||||||||||||||||||||
|
Total |
72,956 |
16,788 |
59,300 |
31,680 |
70,438 |
16,243 |
57,845 |
31,437 |
||||||||||||||||||||||||
|
(1) |
Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees | ||||||||||||||||||||||||||||||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Six Months Ended June 30, 2016 |
For the Six Months Ended June 30, 2015 | |||||||||||||||||||||||||||||||
|
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric |
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric | |||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
31,747 |
$ |
2,838 |
$ |
15,582 |
$ |
21,725 |
$ |
48,206 |
$ |
2,685 |
$ |
13,570 |
$ |
22,673 |
||||||||||||||||
|
Commercial |
15,440 |
2,646 |
15,160 |
19,822 |
22,983 |
2,493 |
15,543 |
19,939 |
||||||||||||||||||||||||
|
Industrial |
3,579 |
3,227 |
10,573 |
1,478 |
3,767 |
3,058 |
8,486 |
1,549 |
||||||||||||||||||||||||
|
Other (1) |
(1,088) |
1,757 |
(3,411) |
(3,604) |
(3,728) |
1,531 |
(1,515) |
(4,959) |
||||||||||||||||||||||||
|
Total Operating |
$ |
49,678 |
$ |
10,468 |
$ |
37,904 |
$ |
39,421 |
$ |
71,228 |
$ |
9,767 |
$ |
36,084 |
$ |
39,202 |
||||||||||||||||
|
Volume (in Dts/MWHs) |
||||||||||||||||||||||||||||||||
|
Residential |
2,318,217 |
213,130 |
797,086 |
141,795 |
2,951,229 |
206,792 |
773,393 |
147,488 |
||||||||||||||||||||||||
|
Commercial |
2,069,483 |
2,804,168 |
1,224,765 |
143,186 |
2,493,359 |
2,764,538 |
1,417,065 |
144,573 |
||||||||||||||||||||||||
|
Industrial |
2,545,306 |
6,091,648 |
2,130,091 |
11,580 |
2,329,581 |
5,683,848 |
2,154,061 |
9,650 |
||||||||||||||||||||||||
|
Other |
40,085 |
— |
23,976 |
4,599 |
28,432 |
— |
(108,633) |
5,348 |
||||||||||||||||||||||||
|
Total |
6,973,091 |
9,108,946 |
4,175,918 |
301,160 |
7,802,601 |
8,655,178 |
4,235,886 |
307,059 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
66,084 |
15,285 |
53,165 |
24,218 |
64,056 |
14,814 |
51,811 |
23,981 |
||||||||||||||||||||||||
|
Commercial |
6,771 |
1,383 |
4,263 |
4,404 |
6,670 |
1,349 |
4,276 |
7,380 |
||||||||||||||||||||||||
|
Industrial |
121 |
72 |
1,732 |
2,996 |
116 |
67 |
1,577 |
2 |
||||||||||||||||||||||||
|
Other |
4 |
— |
— |
— |
6 |
— |
— |
— |
||||||||||||||||||||||||
|
Total |
72,980 |
16,740 |
59,160 |
31,618 |
70,848 |
16,230 |
57,664 |
31,363 |
||||||||||||||||||||||||
SOURCE Chesapeake Utilities Corporation
Article Date
8/4/2016Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Aug. 3, 2016 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.305 per share on the Company's common stock. The $0.305 per share dividend will be paid on October 5, 2016 to all shareholders of record at the close of business on September 15, 2016.
Chesapeake has paid dividends to its shareholders without interruption for 55 years. During those 55 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing; and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
8/3/2016Chesapeake Utilities Corporation Commences Operation of Eight Flags Energy combined heat and power Plant
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
AMELIA ISLAND, Fla., Aug. 1, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities") announced today that the Company commenced operation of its Eight Flags Energy Combined Heat and Power ("CHP") Plant on Amelia Island in Nassau County, Florida.
The CHP plant began generating electricity in June and began producing steam in July. Rayonier Performance Fibers ("Rayonier"), a subsidiary of Rayonier Advanced Materials, is buying the steam for use in its cellulose specialties production facility, a pulp and paper mill. Capturing the thermal energy improves overall efficiency, generates savings and provides environmental benefits.
The CHP plant generates approximately 20 MW of base load power, producing enough electricity to meet 50 percent of Amelia Island's demand. Florida Public Utilities Company ("FPU") is buying the power for distribution to its electric retail customers on Amelia Island.
"We're happy to report that the Eight Flags Energy CHP Plant is officially in service, providing opportunities across our business units to deliver more value to our customers and shareholders," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "FPU customers will benefit from reliable, environmentally friendly electricity in their homes and businesses and cost savings in the coming years. We're thrilled that the plant is operational, and we look forward to the many benefits for customers, shareholders, and the Amelia Island community."
The Eight Flags Energy CHP Plant operates with a Solar Turbines Titan 250 gas turbine generator set coupled with a Rentech heat recovery steam generator. CR Meyer led the construction of the facility, which took approximately 115,000 hours and employed nearly 100 workers. The plant's operations also yielded several new, full-time jobs.
"The Eight Flags Energy CHP Plant project was well executed on all fronts," added Jeffry M. Householder, President of Florida Public Utilities Company. "Our partners in construction spent approximately 115,000 hours to bring this plant to fruition on time and on budget, all while operating under the most safe and reliable practices. With the additional steam generated by the new CHP plant, Rayonier Advanced Materials will gain greater operational flexibility for their production facility."
The plant is expected to generate $3.7 million in margin in 2016, and $7.3 million in margin on an annual basis.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other related services. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com.
About Florida Public Utilities Company
Florida Public Utilities Company is a wholly-owned subsidiary of Chesapeake Utilities Corporation. Headquartered in West Palm Beach, Florida, FPU distributes natural gas and propane and provides electric services to approximately 100,000 customers in markets throughout Florida. For more information, visit www.fpuc.com.
About Rayonier Advanced Materials, Inc.
Rayonier Advanced Materials, Inc. is the leading global supplier of high-purity, cellulose specialties products, a natural polymer for the chemical industry. Working closely with its customers, the company engineers natural polymeric chemical chains to create dozens of customized high-purity performance fibers at its plants in Florida and Georgia. Rayonier Advanced Materials is consistently ranked among the nation's top 50 exporters and delivers products to 79 ports around the world, serving customers in 20 countries across five continents. For more information, visit www.RayonierAM.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "target," "continue," "sustain," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including the factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
For more information, contact:
Beth W. Cooper
Senior Vice President and Chief Financial Officer
Chesapeake Utilities Corporation
302.734.6022
bcooper@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
8/1/2016Chesapeake Utilities Corporation Earns Two National Safety Awards
Source: PR Newswire
DOVER, Del., July 12, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake) announced today that it has earned two Safety Achievement Awards from the American Gas Association (AGA). The Awards for 2015 were presented at the AGA's Operations Conference in Phoenix, Arizona.
"Chesapeake is committed to promoting a positive safety culture," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "I'm extremely proud to see our team recognized for maintaining the very highest standards of safety for our workplace, our customers and our communities."
Eastern Shore Natural Gas Company (ESNG), Chesapeake's natural gas transmission subsidiary, owns and operates a 442-mile interstate pipeline originating from various locations in Pennsylvania to service customers in Delaware, Maryland and Pennsylvania. ESNG earned a 2015 AGA Safety Achievement Award for excellence in fleet safety. The AGA's Safety Achievement Award for excellence in fleet safety performance is given to member companies that experienced the fewest preventable motor vehicle incidents. ESNG performed in the top quartile of AGA membership in 2015 when compared to the most recent industry data.
Florida Public Utilities Company, Chesapeake's subsidiary that distributes natural gas to approximately 74,000 residential and commercial customers and propane to 16,000 customers across Florida, earned a 2015 AGA Safety Achievement Award for excellence in employee safety. The AGA's Safety Achievement Award for excellence in employee safety is given to member companies that experienced the lowest DART (Days Away, Restricted and Transferred) incident rate — a mathematical calculation that describes the number of recordable injuries and illnesses per 100 full-time employees that resulted in days away from work or restricted work activity. Measured against the most recent industry data, Florida Public Utilities performed in the top quartile of its peer group in 2015.
"This recognition by AGA is a great testament to the work done by our employees every day," said Bill Gradie, Director of Corporate Safety and Compliance. "We will continue to implement the best practices known to the industry in order to maintain safe environments for our employees and customers."
The American Gas Association, founded in 1918, represents more than 200 local energy companies that deliver clean natural gas throughout the United States. There are more than 72 million residential, commercial and industrial natural gas customers in the U.S., of which 95 percent — just under 69 million customers — receive their gas from AGA members. Today, natural gas meets more than one-fourth of the United States' energy needs.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Bill Gradie
Director of Corporate Safety and Compliance
Chesapeake Utilities Corporation
302.734.6799
bgradie@chpk.com
Photo - http://photos.prnewswire.com/prnh/20160712/388944
SOURCE Chesapeake Utilities Corporation
Article Date
7/12/20167/11/2016 - Chesapeake Utilities Corporation to Host Conference Call to Review Second Quarter 2016 Financial Results
Chesapeake Utilities Corporation to Host Conference Call to Review Second Quarter 2016 Financial Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., July 11, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, August 5, 2016, at 10:30 a.m. ET to discuss the Company's financial results for the second quarter ended June 30, 2016. The earnings press release will be issued on Thursday, August 4, 2016, before the market opens.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2016 Second Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
7/11/2016Chesapeake Utilities Corporation And Sharp Energy Hold Ribbon Cutting Ceremony For New Sharp Energy Headquarters And AutoGas Fueling Station In Georgetown, Delaware
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., July 7, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake) and Sharp Energy Inc., its wholly-owned subsidiary, have opened the new Sharp Energy headquarters building and AutoGas fueling station in Georgetown, Delaware. The ribbon cutting ceremony was held June 30, 2016 at 22945 East Piney Grove Road, Georgetown, Delaware. The event was hosted by Chesapeake and Sharp Energy and attended by state, local and Company officials.
The new 18,000-square-foot building provides a central location for both customers and employees and consolidates Sharp Energy's operations. With the construction of this new modern facility, Sharp Energy is able to house its retail and supply functions in one location, increase its storage capacity and offer a public dispensing center for AutoGas. In addition, 20 positions have moved to the new facility almost doubling the previous number of employees based in Georgetown.
"I am extremely pleased to see the completion of the new Sharp Energy headquarters building in Georgetown," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "This new facility will allow us to more effectively meet the needs of our Delmarva energy customers in Sussex County. We're looking forward to playing an even bigger role in supporting this community."
Sharp Energy's new headquarters site is the location of the seventh public AutoGas fueling station in the Mid-Atlantic region. "We're very proud to add this propane fueling station to Sussex County," said Elaine B. Bittner, Senior Vice President of Strategic Development and Chief Operating Officer of Sharp Energy, Inc. "The stations are supporting the Company's environmental initiatives in supplying propane, a clean burning alternative fuel, to the rapidly growing number of fleet vehicles in the area." AutoGas-powered vehicles produce up to 20 percent lower emissions than gasoline vehicles and offer substantial cost savings on fuel and maintenance.
"The site of our new headquarters building provides an ideal working environment for our employees and a convenient location for our customers," said S. Robert Zola, President of Sharp Energy. "We look forward to continuing to serve our customers and the community for many years to come."
Sharp Energy's new facility incorporates green technology best management practices (GTBMPs) that consist of grassed channels, bio-swales and filter strips. These GTBMPs clean the runoff through filtration and reduce the amount of rainfall leaving the site.
The headquarters building is located on 12 acres of land. Construction was completed on time in May and created 80 construction jobs.
ABOUT THE COMPANIES
Sharp Energy
Now based in Georgetown, Delaware, Sharp Energy distributes propane to approximately 38,000 residential, commercial and industrial customers in Maryland, Delaware, Virginia and Pennsylvania. With four rail facilities and over 2,000,000 gallons of propane storage, Sharp Energy has established a solid supply portfolio. SharpCGS specializes in the design and operation of innovative propane distribution systems for the home and for communities. Sharp has been providing reliable, dependable gas service on the Delmarva Peninsula and beyond for more than 25 years and has built regulated gas distribution systems for more than 20 years. Sharp Energy is a proud partner of Alliance AutoGas, a national network of companies that have joined together to deliver a comprehensive alternative fueling solution including EPA-certified propane AutoGas vehicle conversions, on-site fueling infrastructure, fuel supply, safety and operational training and ongoing technical support. To learn more about Sharp Energy and the Sharp family of businesses, visit www.sharpenergy.com.
Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. In total, the Company currently serves approximately 226,000 customers with natural gas, propane or electricity. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com.
For more information, contact:
Michael Stock
Senior Director, Corporate Communications
Chesapeake Utilities Corporation
302.736.7808
mstock@chpk.com
Photo - http://photos.prnewswire.com/prnh/20160707/387056
SOURCE Chesapeake Utilities Corporation
Article Date
7/7/20166/28/2016 - Chesapeake Utilities Corporation Welcomes Greg Robinson As Director of Corporate Security
Chesapeake Utilities Corporation Welcomes Greg Robinson As Director of Corporate Security
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., June 28, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) announced today that Greg Robinson has joined the Company as Director of Corporate Security. In this role, he will be responsible for the direction and planning of corporate security, physical security systems, government intelligence coordination and coordination of business continuity programs for Chesapeake Utilities.
Mr. Robinson brings over 30 years of broad based security and protection experience to Chesapeake Utilities. He is skilled in critical system and executive protection, international security, corporate safety policy, law enforcement, public safety and cyber investigation. He also has experience with risk/vulnerability assessments, strategic planning and crisis management.
"Greg's seasoned expertise and vast experience with topline security procedures combined with his high level of professionalism and accessibility makes him an ideal fit for our team," said James F. Moriarty, Vice President, General Counsel and Corporate Secretary for Chesapeake Utilities Corporation. "Our Company is experiencing tremendous growth, and we are excited to have Greg on board to help maintain the safety and security of all of our employees and facilities."
Mr. Robinson comes to Chesapeake Utilities from the National Basketball Association (NBA) in New York City where he spearheaded all aspects of arena and team security including the protection for 500 Professional Athletes, 30 NBA teams, 29 NBA arenas, employees, spectators and facilities in the U.S. and Canada since 2005. In this role, he led and developed a team of four Security Directors, four Administrative Assistants and 100 Security Professionals, and assisted with the management and administration of the Security Department that includes the formulation of a $6 million budget.
Prior to his position with the NBA, Mr. Robinson was the Senior Security Advisor for the Joint Staff, Protection Directorate at The Pentagon and the Senior Operations Director for Homeland Security at the Army Operations Center. In addition, he held the positions of Director and Senior Investigator for the Criminal Investigations Division and the Senior Manager of Prison Operations and Security at Fort Leavenworth Federal Military Prison in Kansas.
Mr. Robinson served in the U.S. Army for 20 years and achieved accolades while on tour in many locations including Panama, Germany, Macedonia, Korea, El Salvador, Nicaragua and Honduras.
Mr. Robinson earned his Bachelor of Science in Business Administration from Iowa State University and his Masters of Science in Administration from Central Michigan University. He is a member of the Overseas Security Advisory Council, the American Society for Industrial Security Professionals and the Department of Homeland Security Sports League Council.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Michael Stock
Senior Director, Corporate Communications
Chesapeake Utilities Corporation
302.736.7808
mstock@chpk.com
Photo - http://photos.prnewswire.com/prnh/20160628/384169
SOURCE Chesapeake Utilities Corporation
Article Date
6/28/20165/24/2016 - Chesapeake Utilities Corporation Welcomes Sheri Richard As Vice President Of Rates And Regulatory Affairs
Chesapeake Utilities Corporation Welcomes Sheri Richard As Vice President Of Rates And Regulatory Affairs
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., May 24, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) (Chesapeake Utilities) announced today that Sheri Richard has joined the Company as Vice President of Rates and Regulatory Affairs. In this role, she will manage Chesapeake's rates and regulatory affairs and communicate the Company's position on business and regulatory matters to various governmental authorities. Ms. Richard will be directly responsible for handling government relations with the Federal Energy Regulatory Commission (FERC) and the Delaware and Maryland Public Service Commissions.
Ms. Richard brings over 16 years of broad based regulatory experience in the energy industry to Chesapeake Utilities including case management, testimonials, strategy, budget and financial reporting. She has extensive experience managing rates cases for approval, testifying before regulatory commissions and developing and recommending strategies for cost recovery requests.
"Sheri's extensive experience with utilities coupled with her broad regulatory expertise makes her a great addition to our team," said James F. Moriarty, Vice President, General Counsel and Corporate Secretary for Chesapeake Utilities. "Our Company is experiencing tremendous growth, and we are delighted that Sheri has joined our team. We are excited about the opportunity to expand our regulatory team and further position the Company for expected future growth."
Ms. Richard comes to Chesapeake Utilities from OGE Energy Corporation. Based in Oklahoma City, OGE Energy is the parent company of Oklahoma Gas and Electric, a regulated utility serving approximately 825,000 electric customers in Oklahoma and Arkansas. While at OGE Energy, Ms. Richard actively participated in over 25 proceedings in several jurisdictions. Ms. Richard has held various positions with OGE including Director of Revenue Requirements since 2008, Manager of Costing and Pricing, Manager of AP & Special Projects and Business Support Supervisor.
Ms. Richard earned her Bachelor of Science in Accounting from Northwestern Oklahoma State University, and her Masters of Business Administration from the University of Phoenix. Ms. Richard is a Certified Public Accountant.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Sydney Hawthorne Davis
External Communications Manager
Chesapeake Utilities Corporation
302.736.7828
shdavis@chpk.com
Photo - http://photos.prnewswire.com/prnh/20160524/371383
SOURCE Chesapeake Utilities Corporation
Article Date
5/24/2016Chesapeake Utilities Corporation's Natural Gas Transmission Subsidiary Begins Regulatory Process For Its 2017 Expansion Project
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., May 16, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced that its natural gas transmission subsidiary, Eastern Shore Natural Gas Company ("Eastern Shore"), submitted a request to the Federal Energy Regulatory Commission (the "FERC") on May 12, 2016 to initiate FERC's pre-filing procedures for Eastern Shore's proposed 2017 Expansion Project. The 2017 Expansion Project consists of (i) approximately 33 miles of pipeline looping in Pennsylvania, Maryland and Delaware; (ii) upgrades to existing metering facilities; (iii) installation of an additional 3,550 horsepower compressor unit at the existing Daleville Compressor Station in Chester County, Pennsylvania; and (iv) approximately 17 miles of new mainline extension and the addition of two pressure control stations in Sussex County, Delaware. The proposed 2017 Expansion Project facilities will provide up to an aggregate of 86,437 dekatherms per day of additional firm natural gas transportation capacity to meet anticipated market demand.
Eastern Shore intends to file its certificate application for the 2017 Expansion Project with the FERC approximately 180 days after FERC approval to commence the pre-filing review process. Such filing is anticipated to occur in November 2016. Subject to the FERC's approval and issuance of the certificate, Eastern Shore intends to commence construction of the expansion project facilities in June 2017 and to place the facilities in service in the fourth quarter of 2017.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other related services. Information about Chesapeake Utilities Corporation and the Chesapeake Utilities family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
About Eastern Shore Natural Gas Company
Eastern Shore Natural Gas Company, a subsidiary of Chesapeake Utilities Corporation, owns and operates a 442-mile interstate pipeline that transports natural gas from various points in Pennsylvania to customers in Delaware, Maryland and Pennsylvania. For more information, visit www.esng.com.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
5/16/2016Ralph J. Adkins, Richard Bernstein, And Joseph E. Moore Retire From The Chesapeake Utilities Corporation Board Of Directors
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., May 6, 2016 /PRNewswire/ -- On May 4, 2016, the Board of Chesapeake Utilities Corporation (NYSE: CPK) recognized Board Chair Emeritus Ralph J. Adkins and Board members Richard Bernstein and Joseph E. Moore for their many years of service to the Company and its shareholders. Messrs. Adkins, Bernstein and Moore retired from the Board, effective May 4, 2016.
"We are grateful to Messrs. Adkins, Bernstein and Moore for their leadership and guidance throughout their many years of service on the Board. Their experiences and perspectives have helped refine Chesapeake Utilities' strategy, vision and market position, ultimately resulting in the Company's market capitalization increasing five fold over the last ten years," noted John R. Schimkaitis, Chair of the Board of Directors of Chesapeake Utilities Corporation.
"Their dedication to the Company's shareholders, customers and employees is evidenced through the Company's growth and achievements. In 2015, the Company achieved its ninth consecutive year of record earnings, placing us in the top quartile in 18 of 20 key financial benchmarks used to compare our performance with our peers. It has been a great honor to have served with these gentlemen," commented Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation.
The Company's remaining ten Board members have a diverse combination of skills and experiences that will continue to support the Company's growth initiatives and performance. Chesapeake Utilities Corporation and its Board of Directors wish Messrs. Adkins, Bernstein and Moore the best in their future endeavors.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com or through our IR App.
For more information, contact:
Elaine B. Bittner
Senior Vice President of Strategic Development
302.734.6799
Michael J. Stock
Senior Director, Corporate Communication
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
5/6/2016Chesapeake Utilities Corporation Raises Dividend By 6.1 Percent
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., May 4, 2016 /PRNewswire/ -- At their meeting held today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) voted to increase the quarterly cash dividend on the Company's common stock from $0.2875 per share to $0.305 per share. The Board's action raises the annualized dividend $0.07 per share from $1.15 per share to $1.22 per share, which represents a 6.1 percent increase. The $0.305 per share dividend will be payable July 5, 2016 to all shareholders of record at the close of business on June 15, 2016.
"In 2015, we grew by nearly every financial measure, including recognizing our ninth consecutive year of record earnings. We measured our total shareholder return for the 1, 3, 5 and 10 year periods ending December 31, 2015 against the more than 2,000 companies listed on the New York Stock Exchange and our performance represented 84th percentile or greater for all four periods. Not only am I unbelievably proud of our past success, I am equally excited about our future growth potential. Our foundation for growth is already in place for 2016 and 2017. We are currently laying the groundwork for additional growth in 2018 and beyond," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "The Board's decision to increase the dividend by 6.1 percent today is validation of their positive future outlook and the Company's commitment to shareholder value through dividend growth that is supported by sustainable future earnings growth," Mr. McMasters added.
Chesapeake has paid dividends to its shareholders without interruption for 55 years. During those 55 years, Chesapeake has either maintained or increased its annualized dividend.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
5/4/2016Chesapeake Utilities Corporation Reports First Quarter Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., May 4, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today reported first quarter financial results. The Company's net income for the quarter ended March 31, 2016 was $20.4 million, or $1.33 per share. This represents a decrease of $742,000, or $0.11 per share, compared to 2015. The period-over-period decrease was due primarily to the impact of warmer weather on the Company's natural gas and propane distribution operations. The Company estimates that lower usage due to the 26-percent warmer weather during the first quarter of 2016 reduced net income by $4.0 million and earnings per share by $0.27 compared to the first quarter of 2015. The warmer weather impact was significantly offset by increased gross margin from the performance of Aspire Energy of Ohio, LLC ("Aspire Energy") and natural gas services growth unaffected by weather.
"Despite significantly warmer weather, net income for the first quarter was only 3.5 percent lower than the same quarter in 2015, thanks to the continued growth and diversity of our businesses," stated Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "The execution of our growth strategy and the diversity of our business portfolio have created natural hedges against adverse weather impacts," added Mr. McMasters. "I am pleased to report that Aspire Energy of Ohio increased our earnings per share in its first full year of operations, consistent with our projections at the time of the acquisition. We are also making significant progress on several large growth projects, including the combined heat and power plant in Florida and new natural gas transmission services on the Delmarva Peninsula, which will begin to come on line later this year. Our primary objective remains identifying and developing profitable growth opportunities to enable us to generate continued future earnings and dividend growth."
A more detailed discussion and analysis of the Company's results for each segment is provided in the following pages.
Comparative Results for the Quarters Ended March 31, 2016 and 2015
Operating income decreased by $1.1 million, or three percent, to $36.4 million for the first quarter of 2016, compared to $37.5 million for the same period in 2015. The decrease in operating income was due primarily to the impact of warmer than normal weather during the first quarter of 2016 and was partially offset by growth in the Regulated Energy segment and by income generated by Aspire Energy. Additional details on key variances in gross margin and other operating expenses are provided in the Financial Summary Highlights section later in this release.
Regulated Energy Segment
Regulated Energy operating income increased by $2.1 million, or ten percent, to $24.3 million for the quarter ended March 31, 2016 as growth from system expansions, investments in system reliability and new customers more than offset the impact of significantly warmer weather. The increase in operating income reflects additional gross margin of $1.9 million and a $279,000 decrease in other operating expenses. The significant components of the gross margin increase included:
The aforementioned increases were partially offset by $2.4 million in lower gross margin due to reduced consumption of natural gas and electricity largely as a result of warmer weather during the first quarter of 2016.
Unregulated Energy Segment
The Unregulated Energy segment reported operating income of $11.9 million for the quarter ended March 31, 2016, compared to operating income of $15.2 million for the same quarter in 2015. The $3.3 million decrease in operating income resulted from a $2.2 million decrease in gross margin and a $1.1 million increase in other operating expenses. The significant components of the gross margin decrease included:
These decreases were partially offset by $4.2 million in gross margin generated by Aspire Energy, the Company's wholly-owned subsidiary, into which Gatherco, Inc. ("Gatherco") merged on April 1, 2015. Since Aspire Energy commenced operations on April 1, 2015, it had no operating results for the quarter ended March 31, 2015.
The increase in other operating expenses was due primarily to $1.6 million in other operating expenses incurred by Aspire Energy and was partially offset by $436,000 in lower accruals for incentive compensation due to the impact of significantly warmer weather on financial results during the quarter.
Matters discussed 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 2015 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
The discussions of the results use the term "gross margin," a non-Generally Accepted Accounting Principles ("GAAP") financial measure, which management uses to evaluate the performance of the Company's business segments. For an explanation of the calculation of "gross margin," see the footnote to the Financial Summary.
Unless otherwise noted, earnings per share is presented on a diluted basis.
Conference Call
Chesapeake Utilities will host a conference call on Friday, May 6, 2016, at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter ended March 31, 2016. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2016 First Quarter Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audio cast section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other related services. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.
Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary | |||||||
|
(in thousands, except per share data) | |||||||
|
Three Months Ended | |||||||
|
March 31, | |||||||
|
2016 |
2015 | ||||||
|
Gross Margin (1) |
|||||||
|
Regulated Energy segment |
$ |
54,311 |
$ |
52,453 |
|||
|
Unregulated Energy segment |
23,101 |
25,319 |
|||||
|
Other businesses and eliminations |
(45) |
(54) |
|||||
|
Total Gross Margin |
$ |
77,367 |
$ |
77,718 |
|||
|
Operating Income |
|||||||
|
Regulated Energy segment |
$ |
24,319 |
$ |
22,182 |
|||
|
Unregulated Energy segment |
11,936 |
15,229 |
|||||
|
Other businesses and eliminations |
125 |
97 |
|||||
|
Total Operating Income |
36,380 |
37,508 |
|||||
|
Other (Expense) Income, net |
(34) |
133 |
|||||
|
Interest Charges |
2,650 |
2,448 |
|||||
|
Pre-tax Income |
33,696 |
35,193 |
|||||
|
Income Taxes |
13,329 |
14,084 |
|||||
|
Net Income |
$ |
20,367 |
$ |
21,109 |
|||
|
Earnings Per Share of Common Stock |
|||||||
|
Basic |
$ |
1.33 |
$ |
1.45 |
|||
|
Diluted |
$ |
1.33 |
$ |
1.44 |
|||
|
(1) "Gross margin" is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane and the cost of labor spent on direct revenue-producing activities. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. Chesapeake Utilities believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. Chesapeake Utilities' management uses gross margin in measuring its business units' performance and has historically analyzed and reported gross margin information publicly. Other companies may calculate gross margin in a different manner. | |||||||
|
Financial Summary Highlights | ||||||||||||
|
Key variances for the three months ended March 31, 2016 included: | ||||||||||||
|
(in thousands, except per share data) |
Pre-tax |
Net |
Earnings | |||||||||
|
First Quarter of 2015 Reported Results |
$ |
35,193 |
$ |
21,109 |
$ |
1.44 |
||||||
|
Adjusting for Unusual Items: |
||||||||||||
|
Weather impact |
(6,656) |
(3,992) |
(0.27) |
|||||||||
|
(6,656) |
(3,992) |
(0.27) |
||||||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Service expansions (See Major Projects and Initiatives table) |
1,947 |
1,168 |
0.08 |
|||||||||
|
Lower retail propane margins |
(1,837) |
(1,102) |
(0.07) |
|||||||||
|
GRIP |
1,108 |
665 |
0.05 |
|||||||||
|
Natural gas growth (excluding service expansions) |
745 |
447 |
0.03 |
|||||||||
|
1,963 |
1,178 |
0.09 |
||||||||||
|
Decreased (Increased) Other Operating Expenses: |
||||||||||||
|
Higher depreciation, asset removal and property tax costs due to recent capital investments |
(740) |
(444) |
(0.03) |
|||||||||
|
Decreased incentive compensation |
717 |
430 |
0.03 |
|||||||||
|
(23) |
(14) |
— |
||||||||||
|
Net contribution from Aspire Energy, including impact of shares issued |
2,633 |
1,676 |
0.06 |
|||||||||
|
Interest Charges |
(202) |
(121) |
(0.01) |
|||||||||
|
Net Other Changes |
788 |
531 |
0.02 |
|||||||||
|
First Quarter of 2016 Reported Results |
$ |
33,696 |
$ |
20,367 |
$ |
1.33 |
||||||
|
Major Projects and Initiatives | |||||||||||||||||||||||
|
The following table summarizes gross margin for the Company's major projects and initiatives completed and underway (dollars in thousands): | |||||||||||||||||||||||
|
Gross Margin for the Period | |||||||||||||||||||||||
|
Three Months Ended |
Total |
||||||||||||||||||||||
|
March 31, |
2015 |
Estimate for | |||||||||||||||||||||
|
2016 |
2015 |
Margin |
2016 |
2017 |
2018 | ||||||||||||||||||
|
Completed major projects |
$ |
11,445 |
$ |
4,149 |
$ |
25,270 |
$ |
40,791 |
$ |
42,350 |
$ |
44,846 |
|||||||||||
|
Major projects and |
— |
— |
— |
3,700 |
9,550 |
11,800 |
|||||||||||||||||
|
$ |
11,445 |
$ |
4,149 |
$ |
25,270 |
$ |
44,491 |
$ |
51,900 |
$ |
56,646 |
||||||||||||
|
Completed Major Projects and Initiatives | ||||||||||||||||||||||||||||
|
The following table summarizes the Company's major projects and initiatives effected since 2014 (dollars in thousands): | ||||||||||||||||||||||||||||
|
Gross Margin for the Period |
||||||||||||||||||||||||||||
|
Three Months Ended |
Total |
|||||||||||||||||||||||||||
|
March 31, |
2015 |
Estimate for |
||||||||||||||||||||||||||
|
2016 |
2015 |
Variance |
Margin |
2016 |
2017 |
2018 |
||||||||||||||||||||||
|
Acquisition: |
||||||||||||||||||||||||||||
|
Aspire Energy |
$ |
4,241 |
$ |
— |
$ |
4,241 |
$ |
6,324 |
$ |
12,824 |
$ |
14,198 |
$ |
15,415 |
||||||||||||||
|
Natural Gas Transmission |
||||||||||||||||||||||||||||
|
Short-term contracts |
||||||||||||||||||||||||||||
|
New Castle County, Delaware |
$ |
760 |
$ |
968 |
$ |
(208) |
$ |
2,682 |
$ |
2,607 |
$ |
1,578 |
$ |
677 |
||||||||||||||
|
Kent County, Delaware (1) |
1,783 |
— |
1,783 |
2,270 |
6,951 |
— |
— |
|||||||||||||||||||||
|
Total short-term contracts |
$ |
2,543 |
$ |
968 |
$ |
1,575 |
$ |
4,952 |
$ |
9,558 |
$ |
1,578 |
$ |
677 |
||||||||||||||
|
Long-term contracts |
||||||||||||||||||||||||||||
|
Kent County, Delaware |
$ |
455 |
$ |
463 |
$ |
(8) |
$ |
1,844 |
$ |
1,815 |
$ |
7,629 |
$ |
7,605 |
||||||||||||||
|
Polk County, Florida |
407 |
27 |
380 |
908 |
1,627 |
1,627 |
1,627 |
|||||||||||||||||||||
|
Total long-term contracts |
$ |
862 |
$ |
490 |
$ |
372 |
$ |
2,752 |
$ |
3,442 |
$ |
9,256 |
$ |
9,232 |
||||||||||||||
|
Total Expansions & Contracts |
$ |
3,405 |
$ |
1,458 |
$ |
1,947 |
$ |
7,704 |
$ |
13,000 |
$ |
10,834 |
$ |
9,909 |
||||||||||||||
|
Florida GRIP |
$ |
2,587 |
$ |
1,479 |
$ |
1,108 |
$ |
7,508 |
$ |
11,405 |
$ |
13,756 |
$ |
15,960 |
||||||||||||||
|
Florida Electric Rate Case |
$ |
1,212 |
$ |
1,212 |
$ |
— |
$ |
3,734 |
$ |
3,562 |
$ |
3,562 |
$ |
3,562 |
||||||||||||||
|
Total Completed Major Projects |
$ |
11,445 |
$ |
4,149 |
$ |
7,296 |
$ |
25,270 |
$ |
40,791 |
$ |
42,350 |
$ |
44,846 |
||||||||||||||
|
(1) In April 2015, Eastern Shore Natural Gas Company ("Eastern Shore") the Company's interstate pipeline subsidiary, commenced interruptible service to an industrial customer facility in Kent County, Delaware. The interruptible service concluded in December 2015 and was replaced by a short-term Off Peak ≤ 90 Firm Transportation Service ("OPT ≤ 90 Service"). The short-term OPT ≤ 90 Service is expected to be replaced by a 20-year contract for OPT ≤ 90 Service in the first quarter of 2017. | ||||||||||||||||||||||||||||
Aspire Energy
On April 1, 2015, the Company completed the merger of Gatherco with and into Aspire Energy, a newly-formed, wholly-owned subsidiary of Chesapeake Utilities. Aspire Energy is an unregulated natural gas infrastructure company with approximately 2,500 miles of pipeline systems in 40 counties throughout Ohio. The majority of Aspire Energy's margin is derived from long-term supply agreements with Columbia Gas of Ohio and Consumers Gas Cooperative, which together serve more than 20,000 end-use customers. Aspire Energy sources gas primarily from 300 conventional producers. Aspire Energy also provides gathering and processing services necessary to maintain quality and reliability to its wholesale markets.
Aspire Energy generated $4.2 million in additional gross margin and incurred $1.6 million in other operating expenses for the three months ended March 31, 2016. As predicted, this acquisition was accretive to earnings per share in the first full year of operations, generating $0.03 in additional earnings per share for the Company.
Service Expansions
In April 2015, Eastern Shore commenced interruptible service to an industrial customer facility in Kent County, Delaware. The interruptible service concluded in December 2015 and was replaced by a short-term OPT ≤ 90 Service, which generated additional gross margin of $1.8 million during the three months ended March 31, 2016. The short-term OPT ≤ 90 Service is expected to be replaced by a 20-year contract for OPT ≤ 90 Service in the first quarter of 2017.
On January 16, 2015, the Florida Public Service Commission ("PSC") approved a firm transportation agreement between Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), and Chesapeake Utilities' Florida natural gas distribution division. Under this agreement, Peninsula Pipeline provides natural gas transmission service to support our expansion of natural gas distribution service in Polk County, Florida. Peninsula Pipeline began the initial phase of its service to Chesapeake Utilities' Florida natural gas distribution division in March 2015. This initial phase of new service generated $380,000 of additional gross margin for the three months ended March 31, 2016 compared to the same quarter in 2015. When all phases of this service are completed, this agreement will generate an estimated annual gross margin of $1.6 million.
On October 13, 2015, Eastern Shore submitted an application to the Federal Energy Regulatory Commission ("FERC") to make certain measurement and related improvements at its Texas Eastern Transmission, LP ("TETLP") interconnect facilities which will enable Eastern Shore to increase natural gas receipts from TETLP by 53,000 dekatherms per day ("Dts/d"), for a total capacity of 160,000 Dts/d. In December 2015, the FERC authorized Eastern Shore to proceed with this project, which was completed and placed in service in March 2016. Currently, 8,100 Dts/d of the increased capacity have been subscribed on a firm basis. This service will generate approximately $344,000 in additional gross margin through 2016. The remaining capacity is available for firm or interruptible service.
Gas Reliability Infrastructure Program ("GRIP")
GRIP is a natural gas pipe replacement program approved by the Florida PSC, designed to expedite the replacement of qualifying distribution mains and services (any material other than coated steel or plastic) to enhance reliability and integrity of the Company's Florida natural gas distribution systems. This program allows recovery, through regulated rates, of capital and other program-related costs, inclusive of a return on investment, associated with the replacement of the mains and services. Since the program's inception in August 2012, the Company has invested $84.3 million to replace 174 miles of qualifying distribution mains, including $7.4 million during the first quarter of 2016. The Company expects to invest an additional $13.6 million in this program during the remainder of 2016. The increased investment in GRIP generated additional gross margin of $1.1 million for the three months ended March 31, 2016, compared to the same quarter in 2015.
Major Projects and Initiatives Underway
White Oak Mainline Expansion Project: In December 2014, Eastern Shore entered into a precedent agreement with an industrial customer in Kent County, Delaware, to provide a 20-year natural gas transmission service for 45,000 Dts/d for the customer's facility, upon the satisfaction of certain conditions. This new service will be provided as OPT ≤ 90 Service and is expected to generate at least $5.8 million in annual gross margin. In November 2014, Eastern Shore requested authorization by the FERC to construct 7.2 miles of 16-inch pipeline looping and 3,550 horsepower of new compression in Delaware to provide this service. As previously discussed, during the three months ended March 31, 2016, the Company generated $1.8 million in additional gross margin by providing interruptible service and short-term OPT ≤ 90 Service to this customer. The estimated annual gross margin contribution from this project, once it is placed in service, is approximately $5.8 million.
System Reliability Project: On May 22, 2015, Eastern Shore submitted an application to the FERC seeking authorization to construct, own and operate approximately 10.1 miles of 16-inch pipeline looping and auxiliary facilities in New Castle and Kent Counties, Delaware and a new compressor at its existing Bridgeville compressor station in Sussex County, Delaware. Eastern Shore further proposes to reinforce critical points on its pipeline system. The total project will benefit all of Eastern Shore's customers by modifying the pipeline system to respond to severe operational conditions experienced during actual winter peak days. Since the project is intended to improve system reliability, Eastern Shore requested a predetermination of rolled-in rate treatment for the costs of the project and an order granting the requested authorization. This project will be included in Eastern Shore's upcoming 2017 rate case filing. The estimated annual gross margin associated with this project, assuming recovery in the 2017 rate case filing, is approximately $4.5 million.
Eight Flags Energy, LLC ("Eight Flags"): Eight Flags, one of our unregulated energy subsidiaries, is engaged in the development and construction of a combined heat and power ("CHP") plant in Nassau County, Florida. This CHP plant, which will consist of a natural-gas-fired turbine and associated electric generator, is designed to generate approximately 20 megawatts of base load power and will include a heat recovery system generator capable of providing approximately 75,000 pounds per hour of unfired steam. Eight Flags will sell the power generated from the CHP plant to Florida Public Utilities ("FPU"), our wholly-owned subsidiary, for distribution to its retail electric customers pursuant to a 20-year power purchase agreement. It will also sell the steam to an industrial customer pursuant to a separate 20-year contract. FPU will transport natural gas through its distribution system to Eight Flags' CHP plant, which will then produce the power and steam. On a consolidated basis, this project is expected to generate approximately $7.3 million in annual gross margin, which could fluctuate based upon various factors, including, but not limited to, the quantity of steam delivered and the CHP plant's hours of operations.
The following table summarizes estimated gross margin for the foregoing projects (dollars in thousands):
|
Estimated Margin for (1) | ||||||||||||
|
Project |
2016 |
2017 |
Annualized | |||||||||
|
Eastern Shore System Reliability Project |
$ |
— |
$ |
2,250 |
$ |
4,500 |
||||||
|
Eight Flags CHP plant in Nassau County, Florida |
3,700 |
7,300 |
7,300 |
|||||||||
|
Total Major Projects and Initiatives Underway (2) |
$ |
3,700 |
$ |
9,550 |
$ |
11,800 |
||||||
|
(1)Estimated gross margin for these projects is based on current tariff or negotiated rates. | ||||||||||||
|
(2)This table excludes gross margin associated with the White Oak Mainline Expansion project. The gross margin for short-term OPT ≤ 90 Service contract in place through December 2016, and for the long-term OPT ≤ 90 Service contract associated with this project are shown in the Completed Major Projects and Initiatives table above. | ||||||||||||
Other factors influencing gross margin
Weather and Consumption
Significantly warmer temperatures during the three months ended March 31, 2016 when the demand for natural gas and propane is normally high, had a large negative impact on gross margin for that quarter. Lower customer consumption, directly attributable to warmer than normal temperatures during the three months ended March 31, 2016, reduced gross margin by $6.7 million compared to the same quarter in 2015. This reduction was significantly offset by increased gross margin from the expansion services under long-term and short-term contracts, customer growth and Aspire Energy. The following tables summarize the heating degree-day ("HDD") and cooling degree-day ("CDD") information for the three months ended March 31, 2016 and 2015 and the gross margin variance resulting from weather fluctuations in those periods.
|
HDD and CDD Information |
||||||||
|
Three Months Ended |
||||||||
|
March 31, |
||||||||
|
2016 |
2015 |
Variance | ||||||
|
Delmarva |
||||||||
|
Actual HDD |
2,094 |
2,822 |
(728) | |||||
|
10-Year Average HDD ("Delmarva Normal") |
2,400 |
2,372 |
28 | |||||
|
Variance from Delmarva Normal |
(306) |
450 |
||||||
|
Florida |
||||||||
|
Actual HDD |
597 |
501 |
96 | |||||
|
10-Year Average HDD ("Florida Normal") |
534 |
533 |
1 | |||||
|
Variance from Florida Normal |
63 |
(32) |
||||||
|
Ohio |
||||||||
|
Actual HDD |
2,854 |
— |
N/A | |||||
|
10-Year Average HDD ("Ohio Normal") |
3,176 |
— |
N/A | |||||
|
Variance from Ohio Normal |
(322) |
— |
||||||
|
Florida |
||||||||
|
Actual CDD |
186 |
122 |
64 | |||||
|
10-Year Average CDD ("Florida CDD Normal") |
77 |
73 |
4 | |||||
|
Variance from Florida CDD Normal |
109 |
49 |
||||||
|
Gross Margin Variance Attributed to Weather |
||||||||
|
(in thousands) |
Q1 2016 vs. |
Q1 2016 vs. |
Q1 2015 vs. | |||||
|
Delmarva |
||||||||
|
Regulated Energy segment |
$ |
(2,036) |
$ |
(866) |
$ |
1,088 | ||
|
Unregulated Energy segment |
(4,810) |
(2,985) |
1,185 | |||||
|
Florida |
||||||||
|
Regulated Energy segment |
(4) |
(85) |
(448) | |||||
|
Unregulated Energy segment |
194 |
(109) |
122 | |||||
|
Total |
$ |
(6,656) |
$ |
(4,045) |
$ |
1,947 | ||
Propane prices
Lower retail margins per gallon reduced gross margin by $2.0 million for the Company's Delmarva propane distribution operation for the three months ended March 31, 2016, compared to the same period in 2015, as margins per retail gallon began to return to more normal levels. The decline in margin was principally driven by lower propane prices, as well as local market conditions. The level of retail margins per gallon generated during 2015 were not expected to be sustained over the long term; accordingly, the Company has assumed more normal levels of margins in its long-term financial plans and forecasts.
In Florida, higher retail propane margins per gallon as a result of local market conditions generated $122,000 of additional gross margin for the three months ended March 31, 2016.
These market conditions, which are influenced by competition with other propane suppliers as well as the availability and price of alternative energy sources, may fluctuate based on changes in demand, supply and other energy commodity prices.
Other Natural Gas Growth - Distribution Operations
In addition to service expansions, the natural gas distribution operations on the Delmarva Peninsula generated $346,000 in additional gross margin for the three months ended March 31, 2016, compared to the same period in 2015, due to an increase in residential, commercial and industrial customers served. The average number of residential customers on the Delmarva Peninsula during the first quarter of 2016 increased by 2.6 percent compared to the same quarter in 2015. The natural gas distribution operations in Florida generated $341,000 in additional gross margin for the three months ended March 31, 2016, compared to the same period in 2015, due primarily to an increase in commercial and industrial customers in Florida.
Capital Expenditures
The Company's capital expenditures for the three months ended March 31, 2016 were $30.4 million. The 2016 capital budget is $179.3 million, a significant increase over the prior three years' average annual level of capital expenditures, excluding the Aspire Energy acquisition, due to a shifting in the capital outlay from 2015 to 2016 for several ongoing projects. These ongoing projects include but are not limited to the Eight Flags CHP plant, anticipated new facilities to serve an industrial customer in Kent County Delaware under the OPT ≤90 Service, and Eastern Shore's system reliability projects; additional expansions of the Company's natural gas distribution and transmission systems; continued natural gas infrastructure improvement activities as well as expenditures for continued replacement under the Florida GRIP; replacement of several facilities and systems; and other strategic initiatives and investments expected in 2016. In addition, approximately $30.0 million is included in the 2016 capital budget for projects that are in the early development stage. The timing of capital expenditures can vary based on securing environmental reviews and other permits. The regulatory application and approval process has lengthened compared to the Company's previous filings, and the Company expects this trend to continue.
In order to fund the 2016 capital expenditures, the Company may further increase the level of borrowings during 2016 to supplement cash provided by operating activities. The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent, and the Company has maintained a ratio of equity to total capitalization, including short-term borrowings, of between 52 and 54 percent during the past three years.
On October 8, 2015, the Company entered into an unsecured revolving credit facility with certain lenders, which increased its borrowing capacity by $150.0 million. To facilitate the refinancing of a portion of the short-term borrowings into long-term debt, as appropriate, the Company entered into a long-term private placement shelf agreement also for $150.0 million.
For larger capital projects, the Company will seek to align, as much as feasible, any such long-term debt or equity issuance(s) with the earnings associated with commencement of service on such projects. The exact timing of any long-term debt or equity issuance(s) will be based on market conditions.
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (in thousands, except shares and per share data) | |||||||
|
Three Months Ended | |||||||
|
March 31, | |||||||
|
2016 |
2015 | ||||||
|
Operating Revenues |
|||||||
|
Regulated Energy |
$ |
89,216 |
$ |
109,582 |
|||
|
Unregulated Energy and other |
57,080 |
60,499 |
|||||
|
Total Operating Revenues |
146,296 |
170,081 |
|||||
|
Operating Expenses |
|||||||
|
Regulated Energy cost of sales |
34,905 |
57,129 |
|||||
|
Unregulated Energy and other cost of sales |
34,024 |
35,234 |
|||||
|
Operations |
27,159 |
26,945 |
|||||
|
Maintenance |
2,479 |
2,703 |
|||||
|
Depreciation and amortization |
7,503 |
6,975 |
|||||
|
Other taxes |
3,846 |
3,587 |
|||||
|
Total operating expenses |
109,916 |
132,573 |
|||||
|
Operating Income |
36,380 |
37,508 |
|||||
|
Other (expense) income, net |
(34) |
133 |
|||||
|
Interest charges |
2,650 |
2,448 |
|||||
|
Income Before Income Taxes |
33,696 |
35,193 |
|||||
|
Income taxes |
13,329 |
14,084 |
|||||
|
Net Income |
$ |
20,367 |
$ |
21,109 |
|||
|
Weighted Average Common Shares Outstanding: |
|||||||
|
Basic |
15,286,842 |
14,604,841 |
|||||
|
Diluted |
15,331,912 |
14,656,310 |
|||||
|
Earnings Per Share of Common Stock: |
|||||||
|
Basic |
$ |
1.33 |
$ |
1.45 |
|||
|
Diluted |
$ |
1.33 |
$ |
1.44 |
|||
|
Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Assets |
March 31, 2016 |
December 31, 2015 | ||||||
|
(in thousands, except share and per share data) |
||||||||
|
Property, Plant and Equipment |
||||||||
|
Regulated Energy |
$ |
850,041 |
$ |
842,756 |
||||
|
Unregulated Energy |
147,221 |
145,734 |
||||||
|
Other businesses and eliminations |
19,430 |
18,999 |
||||||
|
Total property, plant and equipment |
1,016,692 |
1,007,489 |
||||||
|
Less: Accumulated depreciation and amortization |
(222,650) |
(215,313) |
||||||
|
Plus: Construction work in progress |
87,187 |
62,774 |
||||||
|
Net property, plant and equipment |
881,229 |
854,950 |
||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
3,315 |
2,855 |
||||||
|
Accounts receivable (less allowance for uncollectible accounts of $684 and $909, |
44,434 |
41,007 |
||||||
|
Accrued revenue |
12,331 |
12,452 |
||||||
|
Propane inventory, at average cost |
5,412 |
6,619 |
||||||
|
Other inventory, at average cost |
4,289 |
3,803 |
||||||
|
Regulatory assets |
6,451 |
8,268 |
||||||
|
Storage gas prepayments |
1,213 |
3,410 |
||||||
|
Income taxes receivable |
16,260 |
24,950 |
||||||
|
Prepaid expenses |
4,982 |
7,146 |
||||||
|
Mark-to-market energy assets |
— |
153 |
||||||
|
Other current assets |
1,688 |
1,044 |
||||||
|
Total current assets |
100,375 |
111,707 |
||||||
|
Deferred Charges and Other Assets |
||||||||
|
Goodwill |
15,070 |
14,548 |
||||||
|
Other intangible assets, net |
2,128 |
2,222 |
||||||
|
Investments, at fair value |
3,674 |
3,644 |
||||||
|
Regulatory assets |
76,934 |
77,519 |
||||||
|
Receivables and other deferred charges |
2,574 |
2,831 |
||||||
|
Total deferred charges and other assets |
100,380 |
100,764 |
||||||
|
Total Assets |
$ |
1,081,984 |
$ |
1,067,421 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
|
Capitalization and Liabilities |
March 31, 2016 |
December 31, 2015 | ||||||
|
(in thousands, except share and per share data) |
||||||||
|
Capitalization |
||||||||
|
Stockholders' equity |
||||||||
|
Common stock, par value $0.4867 per share |
||||||||
|
(authorized 25,000,000 shares) |
$ |
7,449 |
$ |
7,432 |
||||
|
Additional paid-in capital |
190,389 |
190,311 |
||||||
|
Retained earnings |
182,165 |
166,235 |
||||||
|
Accumulated other comprehensive loss |
(5,751) |
(5,840) |
||||||
|
Deferred compensation obligation |
2,221 |
1,883 |
||||||
|
Treasury stock |
(2,221) |
(1,883) |
||||||
|
Total stockholders' equity |
374,252 |
358,138 |
||||||
|
Long-term debt, net of current maturities |
148,602 |
149,006 |
||||||
|
Total capitalization |
522,854 |
507,144 |
||||||
|
Current Liabilities |
||||||||
|
Current portion of long-term debt |
9,163 |
9,151 |
||||||
|
Short-term borrowing |
172,742 |
173,397 |
||||||
|
Accounts payable |
36,299 |
39,300 |
||||||
|
Customer deposits and refunds |
27,039 |
27,173 |
||||||
|
Accrued interest |
3,021 |
1,311 |
||||||
|
Dividends payable |
4,400 |
4,390 |
||||||
|
Accrued compensation |
4,107 |
10,014 |
||||||
|
Regulatory liabilities |
9,313 |
7,365 |
||||||
|
Mark-to-market energy liabilities |
423 |
433 |
||||||
|
Other accrued liabilities |
7,942 |
7,059 |
||||||
|
Total current liabilities |
274,449 |
279,593 |
||||||
|
Deferred Credits and Other Liabilities |
||||||||
|
Deferred income taxes |
197,416 |
192,600 |
||||||
|
Regulatory liabilities |
42,946 |
43,064 |
||||||
|
Environmental liabilities |
8,843 |
8,942 |
||||||
|
Other pension and benefit costs |
32,848 |
33,481 |
||||||
|
Deferred investment tax credits and other liabilities |
2,628 |
2,597 |
||||||
|
Total deferred credits and other liabilities |
284,681 |
280,684 |
||||||
|
Total Capitalization and Liabilities |
$ |
1,081,984 |
$ |
1,067,421 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | ||||||||||||||||||||||||||||||||
|
For the Three Months Ended March 31, 2016 |
For the Three Months Ended March 31, 2015 | |||||||||||||||||||||||||||||||
|
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution |
Delmarva NG Distribution |
Chesapeake Utilities Florida NG Division |
FPU NG Distribution |
FPU Electric Distribution | |||||||||||||||||||||||||
|
Operating Revenues (in thousands) |
||||||||||||||||||||||||||||||||
|
Residential |
$ |
21,267 |
$ |
1,571 |
$ |
9,287 |
$ |
11,307 |
$ |
36,606 |
$ |
1,510 |
$ |
8,641 |
$ |
12,410 |
||||||||||||||||
|
Commercial |
9,661 |
1,416 |
8,234 |
9,542 |
16,439 |
1,358 |
9,517 |
9,677 |
||||||||||||||||||||||||
|
Industrial |
1,920 |
1,637 |
5,533 |
817 |
2,131 |
1,496 |
4,374 |
982 |
||||||||||||||||||||||||
|
Other (1) |
653 |
917 |
(1,833) |
(2,133) |
628 |
765 |
(1,922) |
(2,651) |
||||||||||||||||||||||||
|
Total Operating |
$ |
33,501 |
$ |
5,541 |
$ |
21,221 |
$ |
19,533 |
$ |
55,804 |
$ |
5,129 |
$ |
20,610 |
$ |
20,418 |
||||||||||||||||
|
Volume (in Dts/MWHs) |
||||||||||||||||||||||||||||||||
|
Residential |
1,705,597 |
138,472 |
506,912 |
73,923 |
2,341,432 |
140,726 |
493,869 |
80,852 |
||||||||||||||||||||||||
|
Commercial |
1,398,890 |
1,447,747 |
692,331 |
68,115 |
1,817,691 |
1,391,090 |
831,642 |
70,723 |
||||||||||||||||||||||||
|
Industrial |
1,369,641 |
3,293,812 |
1,125,755 |
6,680 |
1,270,141 |
2,835,798 |
1,056,842 |
7,510 |
||||||||||||||||||||||||
|
Other |
13,504 |
— |
40,382 |
2,637 |
10,343 |
— |
2,807 |
|||||||||||||||||||||||||
|
Total |
4,487,632 |
4,880,031 |
2,365,380 |
151,355 |
5,439,607 |
4,367,614 |
2,385,160 |
159,085 |
||||||||||||||||||||||||
|
Average Customers |
||||||||||||||||||||||||||||||||
|
Residential |
66,083 |
15,242 |
53,044 |
24,167 |
64,426 |
14,794 |
51,651 |
23,918 |
||||||||||||||||||||||||
|
Commercial |
6,795 |
1,378 |
4,261 |
7,386 |
6,710 |
1,354 |
4,285 |
7,369 |
||||||||||||||||||||||||
|
Industrial |
122 |
72 |
1,716 |
2 |
116 |
67 |
1,522 |
2 |
||||||||||||||||||||||||
|
Other |
4 |
— |
— |
— |
6 |
— |
— |
— |
||||||||||||||||||||||||
|
Total |
73,004 |
16,692 |
59,021 |
31,555 |
71,258 |
16,215 |
57,458 |
31,289 |
||||||||||||||||||||||||
|
(1) Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, | ||||||||||||||||||||||||||||||||
SOURCE Chesapeake Utilities Corporation
Article Date
5/4/20164/13/2016 - Chesapeake Utilities Corporation To Host Conference Call To Review First Quarter 2016 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review First Quarter 2016 Financial Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., April 13, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, May 6, 2016, at 10:30 a.m. ET to discuss the Company's financial results for the first quarter ended March 31, 2016. The earnings press release will be issued on Wednesday, May 4, 2016, before the market opens.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2016 First Quarter Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
4/13/20163/28/2016 - Chesapeake Utilities Corporation Welcomes Naimul Islam As Vice President And Corporate Controller
Chesapeake Utilities Corporation Welcomes Naimul Islam As Vice President And Corporate Controller
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., March 28, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake") announced today that Naimul Islam has joined the Company as Vice President and Corporate Controller. In this role, he will manage all of Chesapeake's accounting operations, including corporate accounting, internal and external financial reporting, business unit accounting, accounts payable, capital accounting, income taxes and shared services-accounting.
Mr. Islam has over 20 years of broad based experience in accounting, financial reporting and governance, technical accounting research, operational finance, budgeting, forecasting, enterprise risk management, performance management and benchmarking, finance organizational transformation and financial systems planning. He has experience with several regulated and unregulated energy companies and has served in a strategic financial advisory role in most of his previous positions.
"Naimul's extensive experience with utilities coupled with his broad accounting and financial experience and his reputation as a finance transformational leader make him an ideal fit for Chesapeake," said Beth Cooper, Senior Vice President and Chief Financial Officer for Chesapeake. "Our Company is experiencing tremendous growth internally as well as externally, and we are delighted that Naimul has joined our team. We are excited about the opportunity to further transform the accounting organization under Naimul's leadership to meet our current and expected future growth."
Mr. Islam comes to Chesapeake from SourceGas, a GE Energy and Alinda Capital-owned regulated and non-regulated utility based in Golden, Colorado where he was the Corporate Controller – Accounting. As a key member of the Executive team, he led the transformation of the accounting organization into a "best in class" position in terms of accounting, reporting, advisory and financial operations, which better aligned with the company's strategic objectives and GE's leadership philosophy. He also guided the establishment and ongoing evolution of the organization's accounting principles, practices and procedures associated with its financial records and controls as well as the preparation of its financial reports for regulators, bankers and the respective SEC filings.
Prior to SourceGas, Mr. Islam was with Southern California Edison for over 10 years. While there, he served as the Affiliate Controller and Principal Manager of Accounting where he managed all accounting functions. He also held the positions of Senior Manager – Financial Information Services, Senior Manager – Financial Analysis, and Manager – Business Planning. Prior to his time with Southern California Edison, Mr. Islam held previous financial positions with Ernst & Young, Edison Enterprises and Northeast Utilities.
Mr. Islam earned his Bachelor of Science with Distinction in Electrical Engineering from the University of Maine, and his Masters of Business Administration in Finance and International Business from New York University. He also holds Harvard Business School Certificates in Strategy Formulation & Execution and Operations.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at www.chpk.com.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
Chesapeake Utilities Corporation
302.734.6799
bcooper@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
3/28/2016Chesapeake Utilities Corporation (NYSE: CPK) To Ring The Closing Bell® At The New York Stock Exchange
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., March 7, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities"), a diversified energy company headquartered in Dover, Delaware, will ring The Closing Bell® on March 9, 2016 at the New York Stock Exchange. Ralph J. Adkins, Chair Emeritus and former Chair and Chief Executive Officer, will join the Company's executive leadership team to celebrate his more than 50 years of service to Chesapeake Utilities and its stockholders.
Mr. Adkins served as Chair of the Chesapeake Utilities Board of Directors for 18 years, as a director for 26 years, and as an employee for approximately 40 years. During his remarkable service and leadership, the Company began trading on the New York Stock Exchange in 1993 with a market capitalization of $55 million. As of close of business Friday, March 4, 2016, the Company's market capitalization was $912 million.
"Ralph has significantly contributed to the Company's growth during his extraordinary service to Chesapeake Utilities and our stockholders, and we are honored to celebrate this special occasion with him, our investors, customers and employees," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "Our continued efforts to transform opportunities into profitable growth have resulted in our ninth consecutive year of record earnings, placing us in the top quartile in 18 of 20 key financial benchmarks used to compare our performance with our peers. The combination of stock price appreciation and dividends for the most recent year-end, 2015, produced a total return to our stockholders of 16.7 percent. The dedication of Ralph and all of our employees, has produced a compound annual shareholder return of 13.5 percent, since we began trading on the New York Stock Exchange in 1993."
"Ringing The Closing Bell® at the New York Stock Exchange is a testament to the growth and success of our Company, made possible by a strong leadership team and employees that work hard every day to make an undeniable difference for our stockholders and the communities we serve," said John Schimkaitis, Chairman of the Board of Chesapeake Utilities Corporation.
"To have been with Chesapeake as we have grown and achieved so much has been exciting," said Mr. Adkins. "I am honored to experience this special moment with my family and friends at Chesapeake Utilities."
The bell-ringing is scheduled for 4:00 p.m. Eastern Time on Wednesday, March 9, 2016. The New York Stock Exchange will stream The Closing Bell® ringing on its website: http://livestream.com/NYSE. A video of the bell-ringing will be archived on that same page after the livestream. Photos and video of the NYSE bell ringing ceremony will also be available, courtesy of the NYSE, on Facebook (NYSE) and Twitter (@NYSE).
Information will also be available on the Company's IR App which can be downloaded for free through the App Store on an iPhone or iPad, or Google Play on an Android mobile device by searching for Chesapeake Utilities Corporation.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation's businesses is available at www.chpk.com.
Please note that Chesapeake Utilities Corporation has no affiliation with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.
PHOTO: Provided upon request after the closing bell on March 9, 2016.
For more information, contact:
Elaine B. Bittner
Senior Vice President
Chesapeake Utilities Corporation
302.734.6799
ebittner@chpk.com
SOURCE Chesapeake Utilities Corporation
Article Date
3/7/2016Chesapeake Utilities Corporation Reports Ninth Consecutive Year Of Record Earnings
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Feb. 25, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced financial results for both the year and the fourth quarter ended December 31, 2015. The Company's net income for the year ended December 31, 2015 was $41.1 million, or $2.72 per share, an increase of $5.0 million, or $0.25 per share, compared to 2014. The growth in net income and earnings per share in 2015 occurred despite the impact of significantly warmer temperatures, particularly in the fourth quarter of 2015. The Company estimates that the impact of warmer temperatures in 2015 reduced earnings by $2.7 million or $0.18 per share.
For the fourth quarter of 2015, the Company reported net income of $8.6 million, or $0.56 per share, a decrease of $1.5 million, or $0.13 per share, compared to the same quarter in 2014. The decline in the quarter-over-quarter results was caused by lower consumption due to warmer temperatures that reduced earnings by an estimated $2.5 million or $0.17 per share in the fourth quarter of 2015. The fourth quarter of 2015 was the warmest fourth quarter on the Delmarva Peninsula in the past 30 years.
"2015 was another banner year for our Company. Our earnings per share set a record for the ninth consecutive year, surpassing 2014 by 10.1 percent, despite the warmer winter weather in the fourth quarter," stated Michael P. McMasters, President and Chief Executive Officer. "Our results place us in the top quartile in 18 of 20 key financial benchmarks used to compare our performance with our peers. Our success is driven by our employees' hard work and discipline in transforming opportunities into profitable growth. Their efforts resulted in excellent performance in 2015 by smartly executing our strategic plan, working hard to advance several large growth projects, and continuing to identify and develop additional growth opportunities within and beyond our current markets. We look forward to their delivering more of the same in 2016," added Mr. McMasters.
A more detailed discussion and analysis of the Company's results for each segment is provided in the following pages.
Operating Results for the Years Ended December 31, 2015 and 2014
Operating income increased year-over-year by $7.1 million, excluding the impact of several non-recurring items. The increase in operating income was driven by an increase in gross margin of $18.5 million, which was partially offset by an increase of $11.4 million in other operating expenses necessary to support growth. The non-recurring items included two non-cash pre-tax impairment charges recorded in 2014 in the aggregate amount of $6.9 million, and a gain from a customer billing system settlement of $1.5 million, recorded in 2015, associated with one of the impairment charges. The impact of these non-recurring items resulted in additional operating income of $8.4 million in 2015 compared to 2014.
Regulated Energy
Operating income for the Regulated Energy segment increased by $2.6 million year-over-year, excluding the impact of several non-recurring items, as previously discussed above. The increase in operating income of $2.6 million was a result of an increase in gross margin of $13.2 million, partially offset by a $10.6 million increase in other operating expenses. The significant components of the gross margin increase included:
The significant components of the increase in other operating expenses included:
The non-recurring items added incremental operating income of $7.9 million in 2015, which reflected the absence of the $6.4 million asset impairment charge recorded in 2014 related to the then uncertainty about the implementation of a customer billing system and receipt of $1.5 million in 2015 as part of a settlement with the vendor of the customer billing system.
Unregulated Energy
Operating income for the Unregulated Energy segment was $16.4 million, an increase of $4.6 million compared to 2014. The increased operating income was driven by a $12.4 million increase in gross margin, which was partially offset by a $7.8 million increase in other operating expenses. The significant components of the gross margin increase included:
Other operating expenses increased by $7.8 million due primarily to:
Operating Results for the Quarters Ended December 31, 2015 and 2014
The Company's operating income for the fourth quarter of 2015 was $16.2 million, an increase of $3.8 million, compared to the same quarter in 2014. The increased operating income is due primarily to growth in the regulated energy segment, higher retail propane margins per gallon and additional gross margin generated by Aspire Energy following the acquisition of Gatherco in April 2015. The fourth quarter of 2015 reflects the absence of the two aforementioned non-cash, pre-tax asset impairment charges recorded in the fourth quarter of 2014 totaling $6.9 million. Partially offsetting these increases was the impact of warmer temperatures quarter-over-quarter which reduced operating income in the fourth quarter of 2015 by $4.2 million.
Regulated Energy Segment
Operating income for the Regulated Energy segment increased by $3.9 million to $13.4 million in the fourth quarter of 2015, compared to the same quarter in 2014. The absence of the asset impairment charges of $6.4 million, recorded in the fourth quarter of 2014, and an increase in gross margin of $331,000, partially offset by an increase in operating expenses of $2.9 million, contributed to this increase. The significant components of the gross margin increase included:
The significant components of the increase in other operating expenses included:
Unregulated Energy
The Unregulated Energy segment reported operating income of $2.7 million for the fourth quarter of 2015 compared to $2.9 million for the same quarter in 2014. The slight reduction in operating income reflects a $2.3 million increase in other operating expenses, partially offset by a $2.1 million increase in gross margin. The significant components of the gross margin increase included:
The significant components of the increase in other operating expenses included:
Matters discussed 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 2015 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.
The discussions of the results use the term "gross margin," a non-Generally Accepted Accounting Principles ("GAAP") financial measure, which management uses to evaluate the performance of the Company's business segments. For an explanation of the calculation of "gross margin," see the footnote to the Financial Summary.
Unless otherwise noted, earnings per share information is presented on a diluted basis.
Conference Call
Chesapeake Utilities Corporation will host a conference call on February 26, 2016 at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter and year ended December 31, 2015. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2015 Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audiocast section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering, processing and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other related services. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through its IR App.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
|
Financial Summary (in thousands, except per-share data) | ||||||||||||||||
|
Year Ended |
Fourth Quarter | |||||||||||||||
|
For the Periods Ended December 31, |
2015 |
2014 |
2015 |
2014 | ||||||||||||
|
Gross Margin (1) |
||||||||||||||||
|
Regulated Energy |
$ |
179,088 |
$ |
165,882 |
$ |
45,064 |
$ |
44,734 |
||||||||
|
Unregulated Energy |
60,317 |
47,880 |
14,388 |
12,317 |
||||||||||||
|
Other businesses and eliminations |
(203) |
6,956 |
(46) |
(64) |
||||||||||||
|
Total Gross Margin |
$ |
239,202 |
$ |
220,718 |
$ |
59,406 |
$ |
56,987 |
||||||||
|
Operating Income |
||||||||||||||||
|
Regulated Energy |
$ |
60,985 |
$ |
50,451 |
$ |
13,369 |
$ |
9,448 |
||||||||
|
Unregulated Energy |
16,355 |
11,723 |
2,689 |
2,879 |
||||||||||||
|
Other businesses and eliminations |
418 |
105 |
113 |
81 |
||||||||||||
|
Total Operating Income |
$ |
77,758 |
$ |
62,279 |
$ |
16,171 |
$ |
12,408 |
||||||||
|
Gains from sales of businesses |
— |
7,139 |
— |
6,742 |
||||||||||||
|
Other income, net of other expenses |
293 |
101 |
297 |
117 |
||||||||||||
|
Interest charges |
10,006 |
9,482 |
2,582 |
2,528 |
||||||||||||
|
Income taxes |
26,905 |
23,945 |
5,267 |
6,642 |
||||||||||||
|
Net Income |
$ |
41,140 |
$ |
36,092 |
$ |
8,619 |
$ |
10,097 |
||||||||
|
Earnings Per Share of Common Stock |
||||||||||||||||
|
Basic |
$ |
2.73 |
$ |
2.48 |
$ |
0.56 |
$ |
0.69 |
||||||||
|
Diluted |
$ |
2.72 |
$ |
2.47 |
$ |
0.56 |
$ |
0.69 |
||||||||
|
(1) "Gross margin" is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane and the cost of labor spent on direct revenue-producing activities. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. Chesapeake Utilities believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. Chesapeake Utilities' management uses gross margin in measuring its business units' performance and has historically analyzed and reported gross margin information publicly. Other companies may calculate gross margin in a different manner. |
|
Financial Summary Highlights | ||||||||||||
|
Key variances for the year ended December 31, 2015 included: | ||||||||||||
|
(in thousands, except per share) |
Pre-tax Income |
Net Income |
Earnings Per Share | |||||||||
|
Year ended December 31, 2014 Reported Results |
$ |
60,037 |
$ |
36,092 |
$ |
2.47 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
Gains on sales of businesses, recorded in 2014 |
(7,139) |
(4,292) |
(0.29) |
|||||||||
|
Asset impairment charges, recorded in 2014 |
6,880 |
4,136 |
0.28 |
|||||||||
|
Weather impact |
(4,408) |
(2,650) |
(0.18) |
|||||||||
|
Gain from a customer billing system settlement |
1,500 |
902 |
0.06 |
|||||||||
|
(3,167) |
(1,904) |
(0.13) |
||||||||||
|
Increased (Decreased) Gross Margins: |
||||||||||||
|
Higher retail propane margins |
8,930 |
5,369 |
0.37 |
|||||||||
|
Service expansions (see Major Projects and Initiatives table) |
5,215 |
3,135 |
0.21 |
|||||||||
|
Other natural gas growth |
4,260 |
2,561 |
0.17 |
|||||||||
|
GRIP |
4,151 |
2,496 |
0.17 |
|||||||||
|
FPU electric base rate increase |
2,465 |
1,482 |
0.10 |
|||||||||
|
Propane wholesale marketing |
(1,179) |
(709) |
(0.05) |
|||||||||
|
Decreased wholesale propane sales |
(446) |
(268) |
(0.02) |
|||||||||
|
23,396 |
14,066 |
0.95 |
||||||||||
|
Increased Other Operating Expenses: |
||||||||||||
|
Higher payroll and benefits costs |
(4,071) |
(2,447) |
(0.17) |
|||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital investments |
(3,265) |
(1,963) |
(0.13) |
|||||||||
|
Higher facility maintenance and service contractor costs |
(2,499) |
(1,502) |
(0.10) |
|||||||||
|
Costs associated with a customer billing system settlement and other transactions |
(1,081) |
(650) |
(0.04) |
|||||||||
|
Increased incentive compensation |
(910) |
(547) |
(0.04) |
|||||||||
|
(11,826) |
(7,109) |
(0.48) |
||||||||||
|
Net contribution from Aspire Energy, including impact of shares issued |
567 |
341 |
(0.06) |
|||||||||
|
Adjustment for other shares issued in 2015 |
— |
— |
(0.01) |
|||||||||
|
Interest Charges |
(525) |
(316) |
(0.02) |
|||||||||
|
Net Other Changes |
(437) |
(259) |
(0.02) |
|||||||||
|
Tax Rate Change |
— |
229 |
0.02 |
|||||||||
|
Year ended December 31, 2015 Reported Results |
$ |
68,045 |
$ |
41,140 |
$ |
2.72 |
||||||
|
Key variances for the quarter ended December 31, 2015 included: | ||||||||||||
|
(in thousands, except per share) |
Pre-tax |
Net |
Earnings | |||||||||
|
Fourth Quarter of 2014 Reported Results |
$ |
16,739 |
$ |
10,097 |
$ |
0.69 |
||||||
|
Adjusting for unusual items: |
||||||||||||
|
Asset impairment charges, recorded in 2014 |
6,880 |
4,150 |
0.27 |
|||||||||
|
Gains on sales of businesses, recorded in 2014 |
(6,742) |
(4,067) |
(0.27) |
|||||||||
|
Weather impact |
(4,192) |
(2,529) |
(0.17) |
|||||||||
|
(4,054) |
(2,446) |
(0.17) |
||||||||||
|
Increased Gross Margins: |
||||||||||||
|
Higher retail propane margins |
2,166 |
1,307 |
0.09 |
|||||||||
|
Service expansions (see Major Projects and Initiatives table) |
1,130 |
682 |
0.04 |
|||||||||
|
GRIP |
1,082 |
653 |
0.04 |
|||||||||
|
Other natural gas growth |
1,038 |
626 |
0.04 |
|||||||||
|
Propane wholesale marketing |
(326) |
(197) |
(0.01) |
|||||||||
|
Other non-weather consumption impact |
(744) |
(449) |
(0.03) |
|||||||||
|
4,346 |
2,622 |
0.17 |
||||||||||
|
Increased Other Operating Expenses: |
||||||||||||
|
Higher depreciation, asset removal and property tax costs due to new capital investments |
(1,219) |
(735) |
(0.05) |
|||||||||
|
Higher payroll and benefits costs |
(1,065) |
(642) |
(0.04) |
|||||||||
|
Higher facility maintenance and service contractor costs |
(953) |
(575) |
(0.04) |
|||||||||
|
(3,237) |
(1,952) |
(0.13) |
||||||||||
|
Net contribution from Aspire Energy, including impact of shares issued |
733 |
442 |
0.03 |
|||||||||
|
Adjustment for other shares issued in 2015 |
— |
— |
(0.03) |
|||||||||
|
Interest Charges |
(54) |
(33) |
— |
|||||||||
|
Net Other Changes |
(587) |
(341) |
(0.02) |
|||||||||
|
Tax Rate Change |
— |
230 |
0.02 |
|||||||||
|
Fourth Quarter of 2015 Reported Results |
$ |
13,886 |
$ |
8,619 |
$ |
0.56 |
||||||
The following information highlights certain key factors contributing to the Company's results for the year and quarter ended December 31, 2015:
Major Projects and Initiatives
The following table summarizes gross margin for the Company's existing and future major projects and initiatives (dollars in thousands):
|
Gross Margin for the Period |
|||||||||||||||||||||||||||||||
|
Year Ended |
Three Months Ended |
||||||||||||||||||||||||||||||
|
December 31, |
December 31, |
Estimate |
|||||||||||||||||||||||||||||
|
2015 |
2014 |
Variance |
2015 |
2014 |
Variance |
2016 |
2017 |
||||||||||||||||||||||||
|
Existing major projects and initiatives |
$ |
25,270 |
$ |
7,115 |
$ |
18,155 |
$ |
8,174 |
$ |
3,267 |
$ |
4,907 |
$ |
37,275 |
$ |
36,493 |
|||||||||||||||
|
Future major projects and initiatives |
— |
— |
— |
— |
— |
— |
7,200 |
18,150 |
|||||||||||||||||||||||
|
$ |
25,270 |
$ |
7,115 |
$ |
18,155 |
$ |
8,174 |
$ |
3,267 |
$ |
4,907 |
$ |
44,475 |
$ |
54,643 |
||||||||||||||||
Existing Major Projects and Initiatives
The following table summarizes the Company's major projects and initiatives commenced since 2014 (dollars in thousands):
|
Gross Margin for the Period (1) |
|||||||||||||||||||||||||||||||||
|
Year Ended |
Three Months Ended |
||||||||||||||||||||||||||||||||
|
December 31, |
December 31, |
Estimate For |
|||||||||||||||||||||||||||||||
|
2015 |
2014 |
Variance |
2015 |
2014 |
Variance |
2016 |
2017 |
||||||||||||||||||||||||||
|
Acquisition: |
|||||||||||||||||||||||||||||||||
|
Aspire Energy(2) |
$ |
6,324 |
$ |
— |
$ |
6,324 |
$ |
2,663 |
$ |
— |
$ |
2,663 |
$ |
12,824 |
$ |
14,198 |
|||||||||||||||||
|
Natural Gas Transmission Expansions and Contracts: |
|||||||||||||||||||||||||||||||||
|
Short-term contracts |
|||||||||||||||||||||||||||||||||
|
New Castle County, Delaware |
$ |
2,682 |
$ |
2,026 |
$ |
656 |
$ |
684 |
$ |
770 |
$ |
(86) |
$ |
2,294 |
$ |
1,561 |
|||||||||||||||||
|
Kent County, Delaware (3) |
2,270 |
— |
2,270 |
817 |
— |
817 |
3,748 |
— |
|||||||||||||||||||||||||
|
Total short-term Contracts |
4,952 |
2,026 |
2,926 |
1,501 |
770 |
731 |
6,042 |
1,561 |
|||||||||||||||||||||||||
|
Long-term Contracts |
|||||||||||||||||||||||||||||||||
|
Kent County, Delaware |
1,844 |
463 |
1,381 |
455 |
463 |
(8) |
1,815 |
1,789 |
|||||||||||||||||||||||||
|
Polk County, Florida |
908 |
— |
908 |
407 |
— |
407 |
1,627 |
1,627 |
|||||||||||||||||||||||||
|
Total long-term contracts |
$ |
2,752 |
$ |
463 |
$ |
2,289 |
$ |
862 |
$ |
463 |
$ |
399 |
$ |
3,442 |
$ |
3,416 |
|||||||||||||||||
|
Total Expansions & Contracts |
$ |
7,704 |
$ |
2,489 |
$ |
5,215 |
$ |
2,363 |
$ |
1,233 |
$ |
1,130 |
$ |
9,484 |
$ |
4,977 |
|||||||||||||||||
|
Florida GRIP |
$ |
7,508 |
$ |
3,357 |
$ |
4,151 |
$ |
2,194 |
$ |
1,112 |
$ |
1,082 |
$ |
11,405 |
$ |
13,756 |
|||||||||||||||||
|
Florida Electric Rate Case |
$ |
3,734 |
$ |
1,269 |
$ |
2,465 |
$ |
954 |
$ |
922 |
$ |
32 |
$ |
3,562 |
$ |
3,562 |
|||||||||||||||||
|
Total Major Projects and Initiatives |
$ |
25,270 |
$ |
7,115 |
$ |
18,155 |
$ |
8,174 |
$ |
3,267 |
$ |
4,907 |
$ |
37,275 |
$ |
36,493 |
|||||||||||||||||
|
(1) |
Does not include gross margin of $21.8 million and $5.4 million, for the year and quarter ended December 31, 2014, respectively, related to projects initiated prior to 2014. These projects were previously disclosed and are excluded from this table as they no longer result in period-over-period variances |
|
(2) |
During the quarter and year ended December 31, 2015, the Company incurred $1.9 million and $5.8 million, respectively, of other operating expenses related to Aspire Energy's operation. |
|
(3) |
Gross margin for the quarter and year ended December 31, 2015 of $817,000 and $2.3 million, respectively, is attributable to interruptible service and a short-term OPT ≤ 90 Service, which Eastern Shore provided to an industrial customer beginning in April 2015. These short-term services will be replaced by a 20-year OPT ≤ 90 Service. |
Gatherco Acquisition
On April 1, 2015, the Company completed the merger with Gatherco, pursuant to which Gatherco merged with and into Aspire Energy. Aspire Energy is an unregulated natural gas infrastructure company with approximately 2,500 miles of pipeline systems in 40 counties throughout Ohio. The majority of Aspire Energy's margin is derived from long-term supply agreements with Columbia Gas of Ohio and Consumers Gas Cooperative, which together serve more than 20,000 end-use customers. Aspire Energy primarily sources gas from 300 conventional producers and provides gathering and processing services necessary to maintain quality and reliability to its wholesale markets.
Aspire Energy generated $6.3 million in additional gross margin and incurred $5.8 million in other operating expenses for the year ended December 31, 2015. Aspire Energy generated $2.7 million in additional gross margin and incurred $1.9 million in additional operating expenses in the fourth quarter of 2015. The financial results of Aspire Energy had a minimal impact on the Company's earnings per share in 2015, because the merger was completed after the first quarter and Ohio experienced warmer than normal weather during the fourth quarter of 2015. The first and fourth quarters include key winter months, which historically produced a significant portion of Gatherco's annual earnings. This acquisition is expected to be accretive to the Company's earnings in the first full year of operations, which will include the first quarter of 2016.
Service Expansions
During 2014, Eastern Shore Natural Gas Company ("Eastern Shore"), the Company's interstate pipeline subsidiary, executed a one-year contract with an industrial customer in New Castle County, Delaware to provide 50,000 Dts/d of additional transmission service from April 2014 to April 2015. This contract was subsequently amended to provide 55,580 Dts/d of transmission service at a lower reservation rate through August 2020. For the year ended December 31, 2015, the extension of the contract, net of the impact of the lower rate, generated additional gross margin of $334,000. The net impact of the contract resulted in a gross margin decline of $175,000 for the fourth quarter of 2015 compared to the same period in 2014.
In December 2014 and November 2015, Eastern Shore executed two separate short-term contracts with the same customer in New Castle County, Delaware to provide an additional 10,000 Dts/d of Off Peak ≤ 90 firm transportation service ("OPT ≤ 90 Service") from December 2014 through March 2015 and November 2015 through March 2016, respectively. The OPT ≤ 90 Service is a new firm transportation service that allows Eastern Shore not to schedule service for up to 90 days during the peak months of November through April each year. These short-term contracts generated additional gross margin of $322,000 and $88,000 for the year and quarter ended December 31, 2015, respectively, compared to the same periods in 2014.
On October 1, 2014, Eastern Shore commenced a new lateral service to an industrial customer facility in Kent County, Delaware. This service commenced after construction of new facilities, including approximately 5.5 miles of pipeline lateral and metering facilities extending from Eastern Shore's mainline to the new industrial customer facility. This service generated additional gross margin of $1.4 million for the year ended December 31, 2015 compared to 2014. The Company expects this service to generate approximately $1.2 million to $1.8 million of annual margin during the 37-year service period.
In April 2015, Eastern Shore commenced interruptible service to the same industrial customer in Kent County, Delaware and generated additional gross margin of $1.6 million and $171,000 for the year and quarter ended December 31, 2015, respectively. In December 2015, the interruptible service was replaced by a short-term OPT ≤ 90 Service, which generated additional gross margin of $646,000 for the year and quarter ended December 31, 2015. The short-term OPT ≤ 90 Service is expected to be replaced by a 20-year OPT ≤ 90 Service once construction of the associated facilities is complete.
On January 16, 2015, the Florida PSC approved a firm transportation agreement between Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), and Chesapeake Utilities' Florida natural gas distribution division. Under this agreement, Peninsula Pipeline provides natural gas transmission service to support Chesapeake Utilities' expansion of natural gas distribution service in Polk County, Florida. Peninsula Pipeline began the initial phase of its service to Chesapeake Utilities' Florida natural gas distribution division in March 2015, generating $908,000 and $407,000, of additional gross margin for the year and quarter ended December 31, 2015, respectively. Once completed, all phases of this service will generate an estimated annual gross margin of $1.6 million.
GRIP
GRIP is a natural gas pipe replacement program approved by the Florida PSC, designed to expedite the replacement of qualifying distribution mains and services (any material other than coated steel or plastic) to enhance reliability and integrity of the Company's Florida natural gas distribution systems. This program allows recovery, through regulated rates, of capital and other program-related costs, inclusive of a return on investment, associated with the replacement of the mains and services. Since the program's inception in August 2012, the Company's Florida natural gas distribution operations have invested $76.7 million to replace 162 miles of qualifying distribution mains, $32.8 million of which was invested during 2015. The Company expects to invest an additional $21.1 million in this program in 2016. The increased investment in GRIP generated additional gross margin of $4.2 million and $1.1 million, for the year and quarter ended December 31, 2015, respectively, compared to the same periods in 2014.
Florida Electric Rate Case
On September 15, 2014, the Florida PSC approved a settlement agreement between Florida Public Utilities Company ("FPU") and the Florida Office of Public Counsel in FPU's base rate case filing for its electric operation, which included, among other things, an increase in FPU's annual revenue requirement of approximately $3.8 million and a 10.25 percent rate of return on common equity. The new rates became effective for all meter reads on or after November 1, 2014. Previously, the Florida PSC approved interim rate relief, effective for meter readings on or after August 10, 2014. The higher base rates in FPU's electric operation generated $2.5 million and $32,000 in additional gross margin for the year and quarter ended December 31, 2015, respectively.
Future Major Projects and Initiatives
White Oak Mainline Expansion Project: In December 2014, Eastern Shore entered into a precedent agreement with an industrial customer in Kent County, Delaware, to provide a 20-year natural gas transmission service for 45,000 Dts/d for the customer's new facility, upon the satisfaction of certain conditions. This new service will be provided as OPT ≤ 90 Service and is expected to generate at least $5.8 million in annual gross margin. In November 2014, Eastern Shore requested authorization by the Federal Energy Regulatory Commission ("FERC") to construct 7.2 miles of 16-inch pipeline looping and 3,550 horsepower of new compression in Delaware to provide this service. The updated, estimated cost of these new facilities is approximately $32.0 - $35.0 million. As previously discussed, during the year and quarter ended December 31, 2015, the Company generated $2.3 million and $817,000, respectively, in additional gross margin by providing interruptible service and short -term OPT ≤ 90 Service to this customer. The estimated annual gross margin from this project, once it is in service, will be approximately $5.8 million.
System Reliability Project: On May 22, 2015, Eastern Shore submitted an application to the FERC seeking authorization to construct, own and operate approximately 10.1 miles of 16-inch pipeline looping and auxiliary facilities in New Castle and Kent Counties, Delaware and a new compressor at its existing Bridgeville compressor station in Sussex County, Delaware. Eastern Shore further proposes to reinforce critical points on its pipeline system. The project will benefit all of Eastern Shore's customers by modifying the pipeline system to respond to severe operational conditions experienced during winter peak days in 2014 and 2015. Since the project is intended to improve system reliability, Eastern Shore requested a predetermination of rolled-in rate treatment for the costs of the project. The estimated cost of the project is $32.1 million. The estimated annual gross margin associated with this project, assuming rolled-in rate treatment is approved in the 2017 rate case, is approximately $4.5 million.
Texas Eastern Transmission, LP ("TETLP") Capacity Expansion Project: On October 13, 2015, Eastern Shore submitted an application to the FERC to make certain improvements at its TETLP interconnect facilities, which will enable Eastern Shore to increase natural gas receipts from TETLP by 53,000 Dts/d, for a total capacity of 160,000 Dts/d. FERC's authorization of the project became effective on December 22, 2015. On a short-term basis, the Company anticipates that Eastern Shore will generate additional gross margin of approximately $2.8 million as a result of this project.
Eight Flags: Eight Flags Energy, LLC ("Eight Flags"), one of the Company's unregulated energy subsidiaries, is engaged in the development and construction of a Combined Heat and Power ("CHP") plant in Nassau County, Florida. This CHP plant, which will consist of a natural-gas-fired turbine and associated electric generator, is designed to generate approximately 20 megawatts of base load power and will include a heat recovery system generator capable of providing approximately 75,000 pounds per hour of unfired steam. Eight Flags will sell the power generated from the CHP plant to FPU for distribution to its retail electric customers pursuant to a 20-year power purchase agreement. It will also sell the steam to an industrial customer pursuant to a separate 20-year contract. FPU will transport natural gas through its distribution system to Eight Flags' CHP plant, which will then produce the power and steam. On a consolidated basis, this project is expected to generate approximately $7.3 million of annual gross margin, which could fluctuate based upon various factors, including, but not limited to, the quantity of steam delivered and the CHP plant's hours of operations. The total projected investment, by Eight Flags and other Chesapeake Utilities' affiliates, to construct the CHP plant and associated facilities is approximately $40.0 million.
The following table summarizes estimated gross margin for the foregoing projects (dollars in thousands):
|
Estimated Margin for (1) | ||||||||||||
|
Project |
2016 |
2017 |
Annualized Margin | |||||||||
|
White Oak Mainline Expansion Project in Kent County, Delaware |
$ |
1,300 |
$ |
5,800 |
$ |
5,800 |
||||||
|
Eastern Shore System Reliability Project |
— |
2,250 |
4,500 |
|||||||||
|
Eastern Shore TETLP Capacity Expansion Project |
2,200 |
2,800 |
2,800 |
|||||||||
|
Eight Flags CHP plant in Nassau County, Florida |
3,700 |
7,300 |
7,300 |
|||||||||
|
$ |
7,200 |
$ |
18,150 |
$ |
20,400 |
|||||||
|
(1) Estimated margin for these projects is based on current tariff or negotiated rates. | ||||||||||||
Weather and Consumption
Significantly warmer temperatures in 2015, particularly during the last three months of the year when the demand for natural gas and propane is normally high, had a large negative impact on the Company's earnings. Lower customer energy consumption directly attributable to warmer than normal temperatures during 2015 reduced gross margin for the year and quarter ended December 31, 2015, by $4.4 million and $4.2 million, respectively, compared to the same periods in 2014. The following tables summarize the HDD and CDD information for the years and quarters ended December 31, 2015 and 2014, respectively, and the gross margin variance resulting from weather fluctuations in those periods.
|
HDD and CDD Information | |||||||||||||||||
|
Year to Date |
Fourth Quarter | ||||||||||||||||
|
For the Periods Ended December 31, |
2015 |
2014 |
Variance from prior year |
Q4 2015 |
Q4 2014 |
Variance from prior year | |||||||||||
|
Delmarva |
|||||||||||||||||
|
Actual HDD |
4,363 |
4,826 |
(463) |
1,114 |
1,564 |
(450) |
|||||||||||
|
10-Year Average HDD ("Normal") |
4,496 |
4,483 |
13 |
1,588 |
1,590 |
(2) |
|||||||||||
|
Variance from Normal |
(133) |
343 |
(474) |
(26) |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual HDD |
569 |
888 |
(319) |
68 |
314 |
(246) |
|||||||||||
|
10-Year Average HDD ("Normal") |
859 |
856 |
3 |
302 |
301 |
1 |
|||||||||||
|
Variance from Normal |
(290) |
32 |
(234) |
13 |
|||||||||||||
|
Ohio (1) |
|||||||||||||||||
|
Actual HDD |
2,404 |
— |
N/A |
1,693 |
— |
N/A |
|||||||||||
|
10-Year Average HDD ("Normal") |
2,903 |
— |
N/A |
2,100 |
— |
N/A |
|||||||||||
|
Variance from Normal |
(499) |
— |
(407) |
— |
|||||||||||||
|
Florida |
|||||||||||||||||
|
Actual CDD |
3,338 |
2,705 |
633 |
511 |
207 |
304 |
|||||||||||
|
10-Year Average CDD ("Normal") |
2,760 |
2,768 |
(8) |
254 |
267 |
(13) |
|||||||||||
|
Variance from Normal |
578 |
(63) |
257 |
(60) |
|||||||||||||
|
(1) HDD for Ohio is presented from April 1, 2015 through December 31, 2015. | |||||||||||||||||
|
Gross Margin Variance attributed to Weather | |||||||||||||||
|
(in thousands) |
Year to Date |
Fourth Quarter | |||||||||||||
|
For the Periods Ended December 31, |
2015 vs. 2014 |
2015 vs. Normal |
2015 vs. 2014 |
2015 vs. Normal | |||||||||||
|
Delmarva |
|||||||||||||||
|
Regulated Energy |
$ |
(1,414) |
$ |
(183) |
$ |
(1,327) |
$ |
(1,055) |
|||||||
|
Unregulated Energy |
(780) |
593 |
(1,438) |
(1,039) |
|||||||||||
|
Florida |
|||||||||||||||
|
Regulated Energy |
(1,326) |
(922) |
(867) |
(465) |
|||||||||||
|
Unregulated Energy |
(888) |
297 |
(560) |
94 |
|||||||||||
|
Total |
$ |
(4,408) |
$ |
(215) |
$ |
(4,192) |
$ |
(2,465) |
|||||||
Propane prices
The Delmarva propane distribution operation generated higher retail margins per gallon of $7.0 million and $1.3 million for the year and quarter ended December 31, 2015, respectively, compared to the same periods in 2014. A large decline in propane prices in 2015 had a significant impact on the amount of revenue and cost of sales associated with the Company's propane distribution operations. Based on the Mont Belvieu wholesale propane index, propane prices in 2015 were approximately 55 percent lower than prices in 2014. As a result of favorable supply management and hedging activities, the Delmarva propane distribution operation experienced a decrease in its average propane cost in addition to the decrease in wholesale prices, which generated increased retail margins per gallon.
In Florida, higher retail propane margins per gallon as a result of local market conditions generated $1.9 million and $835,000 of additional gross margin for the year and quarter ended December 31, 2015, respectively.
The market conditions impacting the Company's propane distribution operation include competition with other propane suppliers as well as the availability and price of alternative energy sources, which may fluctuate based on changes in demand, supply and other energy commodity prices. The level of retail margins per gallon generated in 2015 is not typical and, therefore, is not included in the Company's long-term financial plans or forecasts.
Xeron, which benefits from wholesale price volatility by entering into trading transactions, experienced a gross margin decrease of $1.2 million and $326,000 for the year and quarter ended December 31, 2015, respectively, compared to the same period in 2014, due to lower wholesale price volatility.
Other Natural Gas Growth - Distribution Operations
In addition to service expansions, the natural gas distribution operations on the Delmarva Peninsula generated $1.4 million and $253,000 in additional gross margin for the year and quarter ended December 31, 2015, respectively, compared to the same periods in 2014, due to an increase in residential, commercial and industrial customers served. The number of residential customers on the Delmarva Peninsula increased by 2.7 percent in 2015, compared to 2014. The natural gas distribution operations in Florida generated $1.9 million and $476,000 in additional gross margin for the year and quarter ended December 31, 2015, respectively, compared to the same periods in 2014, due primarily to an increase in commercial and industrial customers in Florida.
Capital Expenditures
The Company's capital expenditures for 2015 were $142.7 million, excluding the net amount expended to acquire Gatherco of $52.5 million. This represents a significant increase over the level of annual capital expenditures during the preceding three years, which averaged $94.8 million per year. Major expenditures to date associated with projects currently underway, such as the Eight Flags' CHP plant and associated facilities, anticipated new facilities to serve an industrial customer in Kent County, Delaware under the OPT ≤ 90 Service, and additional GRIP investments during 2015, account for approximately $99.0 million of the capital expenditures in 2015.
The 2016 capital budget is $179.3 million, a significant increase over the prior three years' average annual level of capital expenditures, excluding the Gatherco acquisition, due to a shifting in the capital outlay from 2015 to 2016 for several ongoing projects, including but not limited to the Eight Flags' CHP plant and Eastern Shore's White Oak mainline expansion and System Reliability projects; additional expansions of the Company's natural gas distribution and transmission systems; continued natural gas infrastructure improvement activities as well as expenditures for continued replacement under the Florida GRIP; replacement of several facilities and systems; and other strategic initiatives and investments expected in 2016. In addition, approximately $30.0 million is included in the 2016 capital budget for projects that are in the early development stage.
In order to fund the 2016 capital expenditures, the Company may further increase the level of borrowings during 2016 to supplement cash provided by operating activities. The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent, and the Company has maintained a ratio of equity to total capitalization, including short-term borrowings, between 52 and 54 percent during the past three years. By increasing the level of debt during 2015 and 2016 to fund capital expenditures, the Company's ratio of equity to total capitalization, including short-term borrowings, will temporarily decline.
On October 8, 2015, the Company entered into an unsecured revolving credit facility with certain lenders, which increased its borrowing capacity by $150.0 million. To facilitate the refinancing of a portion of the short-term borrowings into long-term debt, as appropriate, the Company entered into a long-term private placement shelf agreement also for $150.0 million.
For larger capital projects, the Company will seek to align, as much as feasible, any such long-term debt or equity issuance(s) with the earnings associated with commencement of service on such projects. The exact timing of any long-term debt or equity issuance(s) will be based on market conditions.
Capital expenditures are subject to continuous review and modification by the Company's management and Board of Directors, and some anticipated capital expenditures are subject to approval by the applicable regulators.
|
Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) For the Periods Ended December 31, 2015 and 2014 (in thousands, except shares and per share data) | |||||||||||||||
|
Year Ended |
Fourth Quarter | ||||||||||||||
|
2015 |
2014 |
2015 |
2014 | ||||||||||||
|
Operating Revenues |
|||||||||||||||
|
Regulated Energy |
$ |
301,902 |
$ |
300,442 |
$ |
66,464 |
$ |
77,274 |
|||||||
|
Unregulated Energy |
162,108 |
184,961 |
38,944 |
43,596 |
|||||||||||
|
Other businesses and eliminations |
(4,766) |
13,431 |
(841) |
(490) |
|||||||||||
|
Total Operating Revenues |
459,244 |
498,834 |
104,567 |
120,380 |
|||||||||||
|
Operating Expenses |
|||||||||||||||
|
Regulated energy cost of sales |
122,814 |
134,560 |
21,399 |
32,540 |
|||||||||||
|
Unregulated energy and other cost of sales |
97,228 |
143,556 |
23,762 |
30,854 |
|||||||||||
|
Operations |
107,562 |
102,197 |
28,042 |
25,590 |
|||||||||||
|
Maintenance |
11,803 |
9,706 |
3,769 |
2,539 |
|||||||||||
|
(Gain from a settlement)/asset impairment charges |
(1,500) |
6,881 |
— |
6,881 |
|||||||||||
|
Depreciation and amortization |
29,972 |
26,316 |
7,817 |
6,171 |
|||||||||||
|
Other taxes |
13,607 |
13,339 |
3,607 |
3,397 |
|||||||||||
|
Total operating expenses |
381,486 |
436,555 |
88,396 |
107,972 |
|||||||||||
|
Operating Income |
77,758 |
62,279 |
16,171 |
12,408 |
|||||||||||
|
Gains from sale of businesses |
— |
7,139 |
— |
6,742 |
|||||||||||
|
Other income, net of other expenses |
293 |
101 |
297 |
117 |
|||||||||||
|
Interest charges |
10,006 |
9,482 |
2,582 |
2,528 |
|||||||||||
|
Income Before Income Taxes |
68,045 |
60,037 |
13,886 |
16,739 |
|||||||||||
|
Income taxes |
26,905 |
23,945 |
5,267 |
6,642 |
|||||||||||
|
Net Income |
$ |
41,140 |
$ |
36,092 |
$ |
8,619 |
$ |
10,097 |
|||||||
|
Weighted Average Common Shares Outstanding: |
|||||||||||||||
|
Basic |
15,094,423 |
14,551,308 |
15,269,068 |
14,585,336 |
|||||||||||
|
Diluted |
15,143,373 |
14,604,944 |
15,320,587 |
14,643,069 |
|||||||||||
|
Earnings Per Share of Common Stock: |
|||||||||||||||
|
Basic |
$ |
2.73 |
$ |
2.48 |
$ |
0.56 |
$ |
0.69 |
|||||||
|
Diluted |
$ |
2.72 |
$ |
2.47 |
$ |
0.56 |
$ |
0.69 |
|||||||
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited) | ||||||||
|
As of December 31, | ||||||||
|
Assets |
2015 |
2014 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Property, Plant and Equipment |
||||||||
|
Regulated energy |
$ |
842,756 |
$ |
766,855 |
||||
|
Unregulated energy |
145,734 |
84,773 |
||||||
|
Other |
18,999 |
18,497 |
||||||
|
Total property, plant and equipment |
1,007,489 |
870,125 |
||||||
|
Less: Accumulated depreciation and amortization |
(215,313) |
(193,369) |
||||||
|
Plus: Construction work in progress |
62,774 |
13,006 |
||||||
|
Net property, plant and equipment |
854,950 |
689,762 |
||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
2,855 |
4,574 |
||||||
|
Accounts receivable (less allowance for uncollectible |
41,007 |
53,300 |
||||||
|
Accrued revenue |
12,452 |
13,617 |
||||||
|
Propane inventory, at average cost |
6,619 |
7,250 |
||||||
|
Other inventory, at average cost |
3,803 |
3,699 |
||||||
|
Regulatory assets |
8,268 |
8,967 |
||||||
|
Storage gas prepayments |
3,410 |
4,258 |
||||||
|
Income taxes receivable |
24,950 |
18,806 |
||||||
|
Deferred income taxes |
831 |
— |
||||||
|
Prepaid expenses |
7,146 |
6,652 |
||||||
|
Mark-to-market energy assets |
153 |
1,055 |
||||||
|
Other current assets |
1,044 |
195 |
||||||
|
Total current assets |
112,538 |
122,373 |
||||||
|
Deferred Charges and Other Assets |
||||||||
|
Goodwill |
14,548 |
4,952 |
||||||
|
Other intangible assets, net |
2,222 |
2,404 |
||||||
|
Investments, at fair value |
3,644 |
3,678 |
||||||
|
Regulatory assets |
77,519 |
78,136 |
||||||
|
Receivables and other deferred charges |
3,165 |
3,164 |
||||||
|
Total deferred charges and other assets |
101,098 |
92,334 |
||||||
|
Total Assets |
$ |
1,068,586 |
$ |
904,469 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited) | ||||||||
|
As of December 31, | ||||||||
|
Capitalization and Liabilities |
2015 |
2014 | ||||||
|
(in thousands, except shares and per share data) |
||||||||
|
Capitalization |
||||||||
|
Stockholders' equity |
||||||||
|
Common stock, par value $0.4867 per share |
||||||||
|
(authorized 25,000,000 shares) |
$ |
7,432 |
$ |
7,100 |
||||
|
Additional paid-in capital |
190,311 |
156,581 |
||||||
|
Retained earnings |
166,235 |
142,317 |
||||||
|
Accumulated other comprehensive loss |
(5,840) |
(5,676) |
||||||
|
Deferred compensation obligation |
1,883 |
1,258 |
||||||
|
Treasury stock |
(1,883) |
(1,258) |
||||||
|
Total stockholders' equity |
358,138 |
300,322 |
||||||
|
Long-term debt, net of current maturities |
149,340 |
158,486 |
||||||
|
Total capitalization |
507,478 |
458,808 |
||||||
|
Current Liabilities |
||||||||
|
Current portion of long-term debt |
9,151 |
9,109 |
||||||
|
Short-term borrowing |
173,397 |
88,231 |
||||||
|
Accounts payable |
39,300 |
44,610 |
||||||
|
Customer deposits and refunds |
27,173 |
25,197 |
||||||
|
Accrued interest |
1,311 |
1,352 |
||||||
|
Dividends payable |
4,390 |
3,939 |
||||||
|
Deferred income taxes |
— |
832 |
||||||
|
Accrued compensation |
10,014 |
10,076 |
||||||
|
Regulatory liabilities |
7,365 |
3,268 |
||||||
|
Mark-to-market energy liabilities |
433 |
1,018 |
||||||
|
Other accrued liabilities |
7,059 |
6,603 |
||||||
|
Total current liabilities |
279,593 |
194,235 |
||||||
|
Deferred Credits and Other Liabilities |
||||||||
|
Deferred income taxes |
193,431 |
160,232 |
||||||
|
Regulatory liabilities |
43,064 |
43,419 |
||||||
|
Environmental liabilities |
8,942 |
8,923 |
||||||
|
Other pension and benefit costs |
33,481 |
35,027 |
||||||
|
Deferred investment tax credits and Other liabilities |
2,597 |
3,825 |
||||||
|
Total deferred credits and other liabilities |
281,515 |
251,426 |
||||||
|
Total Capitalization and Liabilities |
$ |
1,068,586 |
$ |
904,469 |
||||
|
Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) | |||||||||||||||||||||||||
|
For the Three Months Ended December 31, 2015 |
For the Three Months Ended December 31, 2014 | ||||||||||||||||||||||||
|
Delmarva |
Chesapeake |
FPU NG |
FPU Electric |
Delmarva |
Chesapeake |
FPU NG |
FPU Electric | ||||||||||||||||||
|
Operating Revenues (in thousands) |
|||||||||||||||||||||||||
|
Residential |
$ |
10,406 |
$ |
1,212 |
$ |
5,299 |
$ |
9,192 |
$ |
14,941 |
$ |
1,227 |
$ |
6,103 |
$ |
9,416 |
|||||||||
|
Commercial |
5,826 |
1,201 |
5,870 |
10,061 |
8,148 |
1,192 |
8,082 |
9,191 |
|||||||||||||||||
|
Industrial |
1,835 |
1,444 |
4,051 |
749 |
2,235 |
1,278 |
3,454 |
658 |
|||||||||||||||||
|
Other (1) |
2,291 |
940 |
1,740 |
(3,975) |
4,367 |
970 |
994 |
(2,460) |
|||||||||||||||||
|
Total Operating Revenues |
$ |
20,358 |
$ |
4,797 |
$ |
16,960 |
$ |
16,027 |
$ |
29,691 |
$ |
4,667 |
$ |
18,633 |
$ |
16,805 |
|||||||||
|
Volume (in Dts for natural gas and MWHs for electric) |
|||||||||||||||||||||||||
|
Residential |
606,758 |
71,945 |
277,250 |
59,298 |
807,734 |
88,072 |
324,189 |
65,587 |
|||||||||||||||||
|
Commercial |
741,866 |
1,347,148 |
531,743 |
74,124 |
932,574 |
697,141 |
656,874 |
73,680 |
|||||||||||||||||
|
Industrial |
1,244,862 |
2,815,222 |
952,282 |
4,660 |
1,289,318 |
2,757,284 |
911,174 |
5,130 |
|||||||||||||||||
|
Other |
25,647 |
— |
66,868 |
(5,815) |
18,029 |
— |
132,403 |
(4,224) |
|||||||||||||||||
|
Total |
2,619,133 |
4,234,315 |
1,828,143 |
132,267 |
3,047,655 |
3,542,497 |
2,024,640 |
140,173 |
|||||||||||||||||
|
Average Customers |
|||||||||||||||||||||||||
|
Residential |
64,503 |
14,999 |
52,462 |
24,092 |
62,780 |
14,555 |
50,997 |
23,856 |
|||||||||||||||||
|
Commercial |
6,636 |
1,388 |
4,220 |
7,385 |
6,542 |
1,362 |
4,322 |
7,382 |
|||||||||||||||||
|
Industrial |
122 |
74 |
1,713 |
2 |
115 |
63 |
1,443 |
2 |
|||||||||||||||||
|
Other |
4 |
— |
— |
— |
8 |
— |
— |
— |
|||||||||||||||||
|
Total |
71,265 |
16,461 |
58,395 |
31,479 |
69,445 |
15,980 |
56,762 |
31,240 |
|||||||||||||||||
|
For the Year Ended December 31, 2015 |
For the Year Ended December 31, 2014 | ||||||||||||||||||||||||
|
Delmarva |
Chesapeake |
FPU NG |
FPU Electric |
Delmarva NG |
Chesapeake |
FPU NG |
FPU Electric | ||||||||||||||||||
|
Operating Revenues (in thousands) |
|||||||||||||||||||||||||
|
Residential |
$ |
63,745 |
$ |
5,000 |
$ |
22,945 |
$ |
46,686 |
$ |
65,958 |
$ |
4,844 |
$ |
24,502 |
$ |
43,023 |
|||||||||
|
Commercial |
33,776 |
4,811 |
26,305 |
42,585 |
36,452 |
4,504 |
33,063 |
37,553 |
|||||||||||||||||
|
Industrial |
7,214 |
5,981 |
16,007 |
3,111 |
6,912 |
5,072 |
12,808 |
3,569 |
|||||||||||||||||
|
Other (1) |
(1,175) |
3,215 |
2,297 |
(12,954) |
1,244 |
3,331 |
(753) |
(8,611) |
|||||||||||||||||
|
Total Operating Revenues |
$ |
103,560 |
$ |
19,007 |
$ |
67,554 |
$ |
79,428 |
$ |
110,566 |
$ |
17,751 |
$ |
69,620 |
$ |
75,534 |
|||||||||
|
Volume (in Dts for natural gas and MWHs for electric) |
|||||||||||||||||||||||||
|
Residential |
3,734,888 |
327,218 |
1,247,820 |
303,642 |
3,761,034 |
342,684 |
1,281,619 |
310,218 |
|||||||||||||||||
|
Commercial |
3,696,839 |
5,416,714 |
2,417,819 |
313,757 |
3,783,741 |
1,717,111 |
2,596,547 |
312,557 |
|||||||||||||||||
|
Industrial |
4,617,183 |
11,002,944 |
3,987,899 |
18,880 |
4,453,053 |
12,618,508 |
3,841,935 |
29,090 |
|||||||||||||||||
|
Other |
82,655 |
— |
(84,763) |
(1,740) |
75,117 |
— |
34,450 |
(8,533) |
|||||||||||||||||
|
Total |
12,131,565 |
16,746,876 |
7,568,775 |
634,539 |
12,072,945 |
14,678,303 |
7,754,551 |
643,332 |
|||||||||||||||||
|
Average Customers |
|||||||||||||||||||||||||
|
Residential |
63,901 |
14,854 |
52,046 |
24,039 |
62,216 |
14,412 |
50,835 |
23,865 |
|||||||||||||||||
|
Commercial |
6,637 |
1,360 |
4,249 |
7,389 |
6,534 |
1,363 |
4,368 |
7,405 |
|||||||||||||||||
|
Industrial |
118 |
69 |
1,633 |
2 |
111 |
60 |
1,321 |
2 |
|||||||||||||||||
|
Other |
5 |
— |
— |
— |
7 |
— |
— |
— |
|||||||||||||||||
|
Total |
70,661 |
16,283 |
57,928 |
31,430 |
68,868 |
15,835 |
56,524 |
31,272 |
|||||||||||||||||
|
(1) Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties and adjustments for pass-through taxes. |
SOURCE Chesapeake Utilities Corporation
Article Date
2/25/2016Chesapeake Utilities Corporation Announces Quarterly Dividend
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Feb. 23, 2016 /PRNewswire/ -- Today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.2875 per share on the Company's common stock. The $0.2875 per share dividend will be paid on April 5, 2016 to all shareholders of record at the close of business on March 15, 2016.
Chesapeake has paid dividends to its shareholders without interruption for 55 years. During those 55 years, Chesapeake has either maintained or increased its annualized dividend.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing; and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
2/23/20161/29/2016 - Chesapeake Utilities Corporation To Host Conference Call To Review 2015 Financial Results
Chesapeake Utilities Corporation To Host Conference Call To Review 2015 Financial Results
Source: PR Newswire
Orignial Article: http://www.prnewswire.com...
DOVER, Del., Jan. 29, 2016 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Friday, February 26, 2016, at 10:30 a.m. ET to discuss the Company's financial results for the fourth quarter and year ended December 31, 2015. The earnings press release will be issued on Thursday, February 25, 2016, before the market opens.
To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities Corporation's 2015 Financial Results Conference Call.
To access the replay recording of this call, please visit the Company's website at CPK - Conference Call Audio Replay.
Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com or through our IR App.
For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
SOURCE Chesapeake Utilities Corporation
Article Date
1/29/2016Projects & Assets
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