CHESAPEAKE UTILITIES CORP Q3 FY2024 earnings call

• Safety is a top priority, starting meetings with a safety moment, including motor vehicle safety checks with the time change and cooler temperatures.
• Jeff Householder discussed demand in growing service areas, capital investment plan, and Florida City Gas integration, noting progress on the 5-year capital investment plan and growth drivers like capital deployment, regulatory agenda management, and business transformation.
• Beth Cooper discussed financial results, strong balance sheet, dividend and earnings growth, with adjusted net income up 48% for the quarter and 30% YTD, and reaffirmed earnings guidance.
• Jim Moriarty reviewed regulatory strategy, including rate case filings in various jurisdictions, progress on the RNG project at Full Circle Dairy, Eastern Shore Worcester Resiliency Upgrade project, and sustainability initiatives, including the second micro sustainability report and community engagements.

Adjusted earnings per share this quarter was $0.80, with year-to-date 2024 earnings per share at $3.76. The Regulated Energy segment had an adjusted gross margin of approximately $102 million this quarter, up 35% from the third quarter of last year. The Unregulated Energy segment had an adjusted gross margin of approximately $20 million for the third quarter of 2024, up 6% from the same period last year. Florida City Gas operations contributed to strong customer growth, with residential customers in Delmarva and Florida each experiencing a 3.9% increase in the third quarter relative to the same period last year, and revenue contribution from these segments was a key driver of overall performance.

• Reaffirmed full year 2024 adjusted earnings per share guidance of $5.33 to $5.45.
• Reaffirmed 2025 adjusted EPS guidance range of $6.15 to $6.35 per share and 2028 guidance range of $7.75 to $8 per share.
• Capital investment plan for 2024 remains on track with $257 million invested through September, and progress toward the $300 million to $360 million full year guidance.

• Regulatory uncertainties, such as the RSAM proceeding in Florida and how it may impact depreciation approaches, and the need to be prepared for different outcomes.
• Potential impacts of legislative and regulatory changes at local, state, and federal levels on business operations and capital deployment.

Q: Did the hurricanes help increase spending on storm hardening infrastructure work or rate base related to it?

A: Beth Cooper said minimal impact to operations, plans for storm protection and improvement continue, no acceleration due to hurricanes but system is becoming more reliable and resilient.

Q: Can you comment on Florida City Gas customer growth opportunity set?

A: Jeff Householder said similar to Florida natural gas distribution growth, with St. Lucie area a big driver for residential, and Miami area for commercial/industrial; seeing significant development in Central Florida and other areas.

Q: Are you taking regulatory action in advance of Florida Supreme Court RSAM decision?

A: Beth Cooper and Jim Moriarty said they are following the proceeding closely, evaluating options, and will act based on the decision, with plans to pursue depreciation approaches if needed.

Q: How does Republican control on federal level impact investment opportunities?

A: Jim Moriarty said they have favorable relationships with federal regulators, expect doors to open quicker, and are excited about the Worcester Resiliency project.

Q: Will Phase 2 Maryland proceeding deal with unification of three franchises?

A: Jim Moriarty said the plan is for Phase 2 to deal with unification of the three franchises.

Q: Any learnings from FCG integration on operations or incremental investment opportunities?

A: Jeff Householder said potential opportunity level increased, seeing operational synergies like leveraging 24/7 emergency call response center, and more growth opportunities than initially anticipated.

Q: Timeline for Miami Inner Loop project?

A: Jeff Householder said filed for approval, expect commission review over next 2-3 months, with construction likely in Q1 2025, to improve gas deliverability in South Florida.

Q: Color on bucket of additional opportunities on Slide 20?

A: Beth Cooper said includes synergies, business transformation efforts like Project 1CX, regulatory successes, and debt placement, all contributing to staying within guidance.

Q: Color on Marlin improvement in the quarter?

A: Beth Cooper said focus on longer-term contracts and RNG transportation, with Jeff Householder adding focus on building asset base and commercializing Marlin's services