CPK - Earnings call transcript Q4 2024 | Chesapeake Utilities Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone, and welcome to Chesapeake Utilities Corporation's Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Ms. Lucia Dempsey, Head of Investor Relations. Please go ahead, ma'am.

Lucia Dempsey

morning, good and you, everyone. Thank be Today's the our under on page presentation and can Investors Events website subsection. accessed and Presentations After open will remarks, call prepared questions. up for our the we disclaimers, X, while discussed show this may risks that call forward-looking conference Slide and On our uncertainties. on I you that we remind matters statements involve include typical

Form information Forward-looking projections could our results. the for harbor safe section could statements statements differ of actual cause further and to our forward-looking annual XXXX XX-K factors that on differ report The on actual materially from provides statements such our results. from

of in Form the appropriate G. adjusted on certain net disclosures of the in the these in Additionally, presented measures share, non-GAAP been margin, to adjusted performance measures and information our gross XXXX appendix per and accordance on our earnings with Regulation annual GAAP adjusted A XX-K. evaluates earnings company non-GAAP income and the its the has related measures, SEC's release includes provided based in the this including presentation reconciliation report today

our the more quite X.X Slide Chesapeake not so American priority. a moment at heart a on affects here is highlighted we'll millions with over, first moment, is safety Utilities, health. million and refocusing meetings great with so Americans it's We celebrate start do Month as health, on than X. around a Heart safety cardiovascular more disease still world. February Heart by Here time to our on and all and heart and

with Officer, Executive presenters today. delivered health overall. of day physical many mental throughout Policy Chief Treasurer Beth on encourage and earnings the financial step will be our Vice an strategy. Householder, results, we Jim our discuss updates do side Jeff dividend Chief Board, agenda, Cooper, full Corporate sheet so turn to XXXX, balance heart. will Executive our Secretary, the summarize Counsel, engagement And our work our growth is health, core improve Risk review trajectory. to now General today Corporate Assistant to ways you Executive President, and XXXX. executing Moriarty, growth provide update over we active and so the purpose improved it including pleasure The and and your take regulatory Officer, there will we key Financial only to can a President introduce Secretary effects is will strengthen Jeff. to President, and Chief However, and in With year that, and much on Officer, Vice project my Chair and call every community strong I'll heart our

Jeffrey Householder

mission today. Lucia. our thanks serve, were and and we Utilities. for persistent Good more successfully all was positioned in enterprise. joining energy a for for communities that makes year of deliver XXXX company Thank life better a larger, morning, much our scalable We to you be you, to Chesapeake call the pivotal to the we

we operate heights phrase. just how and day levels an for with each year's theme across annual the reaching delivering Our isn't embodiment report, all a company. purpose every at marketing It's new of this

So telling in let how we by me delivered XXXX. start you

to to is quarter a diluted XXXX target This Turning accomplishment integrate the range. Maryland our finalization return to the fourth accelerate acquisition, our the capital to year delay in share case. SCG the light per of decision guidance bringing $X.XX of rate the our and X. our was in a structure to warmer-than-normal temperatures, $X.XX, of full earnings Slide for our our midpoint EPS efforts significant Adjusted at

well record million XXXX, end level $XXX the $X.X investment billion on is X-year annual $XXX capital XXXX. of million range toward $X.X of a million the detail of which in to As way into guidance upper our billion and through and more forecast of I'll invested go capital shortly, of our we capital to at $XXX

more were discuss on filings for Jim Service completing with depreciation the and detail, regulatory reliability to XX the we X our related in receiving conservation very projects will Florida and X programs. front, active filed studies, Public approval As expanding infrastructure rate additional and Commission energy including cases, regulatory consolidating filing

technology a also related We management made process will and a company rolled SAP risk time the we and our to capital company-wide later, X. construction OneCX, financings. safety accelerated implemented ago, our on and At system, target number several management our customer customer Slide data organizational improvements new Beth a areas. And structure the discuss Starting finally, return and out of completed care, natural year We as later, our billing system services, on the this year One its to the us ability in Gas, transformation. leverage base need Florida of had to was gas next City to additional growing embarking in nearly asset completed of acquisition Florida. capabilities XX%. FCG's grew phase a our the I'm we've excited just the about transaction Southern to transaction for the demand markets by significant report that progress supply and made. meet this What was key pleased

system. strategy, Chesapeake and in the to I operations transition are million XX% of satisfaction approval companies, and commitment teammates our in still such year the gross invest reliability of we their integrate pillars our the only Utilities X In forward our large company and made with FCG as transform recognition in hope the improvements major as shown manage a of efforts operations, have FCG strategy: SAFE culturally excellence continue company strategy; three, program operationally core quartile allocate nearly for and on business been adjusted many which filed prudently XXXX Utilities, $XX Chesapeake two, integration continually as acquisition indicates with On sustain this in priority X. the the that importantly, core to top and a business start one the move our in margin. integrating with operational Slide today, advancing me contributed that underlies acquisition FCG capital; the transitioned X, gross service strategic let high-growth year. XXXX, would areas. FCG At to business proactively received intentions to one, million by and as We Slide $X.X for adjusted X our foundation for FCG our capital full projects our Most to investment service generated the growth launched performance Our margin. under regulatory the related well area,

day. rely that power safely, beneficiaries we likely fuel You've their we us to This a us geography. very customers X.X% continue to say growth customers, privilege we driving growth Delmarva, rapid XXXX take XXXX, over and we see the businesses. regulated across of residential added our our single our commercial X% is businesses levels. are seriously by on operate over Throughout every as and growth In their new homes that X,XXX heard by

Florida in and growth. of and of we Newbury customer in our invest was lead new in Beach income In Boynton X.X%, for growth existing growth record the driver FCG St. serve service us as nation in-migration areas. to expand communities the City, growth, to In are organic acquired residential communities Delaware added distribution growth the state, new state. XXXX, ground and X,XXX on the served see from our saw #X and our in in level in X.X% driving to natural expansion broke growth Wales, demand Lake system. Florida and This Florida also is respectively. Washington, and metro new the which and and Florida, space growth Philadelphia, the we XX. commercial demand the projects and service customers, population next gas developed continue Baltimore in newly [indiscerbible], of areas and continues in capital Across areas largely areas across our many enabled for additional story of population resident Maryland families Cloud, Slide shown retirees close distribution Lake demand net of phase Above-average for XXXX, remaining of New We've to XXXX, on the D.C. for looking completed Plant core as We drives Smyrna while net new same. is Throughout to investment Beach. by

XXXX. we the earlier, regulated I our transmission upgraded was Florida on Delmarva and and mentioned of Approximately million of As as our enterprise. systems invested capital technology across throughout in XX% distribution spent we invested and businesses that $XXX

infrastructure spend Our immediate of regulated $X of programs us enabling included gross to SPP investments, capital system, and mechanisms for XXXX programs recovery adjusted our provide $XX nearly delivery. consistent contribution reliability for under upgrade that million strengthen safe and driving energy operate GUARD, and the approved regulatory investment million. margin These maintain a SAFE in to

capital capital deployment an have growth customer XXXX. increased continued accelerated throughout demand XXXX set for up us of and and in spend level Our

guidance of expenditure initiating shown businesses. transmission our primarily million, and Slide XX, are million on gas we investments XXXX by $XXX capital in As to natural $XXX distribution driven

of will a Public million a distribution we I'd year. on Florida least FERC Commission Jim to were will meaningful to system see XXXX. at $XX The As LNG storage call, to And our expand Resiliency for infrastructure you gas Miami. $XX filed project million, on In on FCG's number across Miami growth Oster January, million Totaling communities be we detail There approval contributor future for late Later to across projects highlight pleased series our XXXX incremental in this $XX generating additional upgrade receive Interloop progress. transportation project. on approximately in updates will of and can last construction infrastructure approval Slide our projects projects provide investments serve of February, underway X the specifically. margin in XX, transportation Service from service received performance, our support construction like are areas. our new these natural continues

of X-year are this shown $X.X on level capital of to $X.X capital, reaffirming Slide investment billion XX. Given increasing plan as billion, we our

regulatory total. this more Interloop addition now projects, have of no of the least the With of XX% requires this identified And than Miami $X.X we approval. additional billion at amount,

in XX. of including to and an effectively the billing turn opportunities better to acquisition internal organizational systems. efforts safety operate implementation Beth, an standardization we Slide give our the assess Company that services, resulted a and enterprise scale. our pillar consolidation, FCG our of functions, in as I'd number OneCX growth company system construction are approach. This centralization transformation third as strategy of and ensures us customer I in our to call and like XXXX The to customer positioning shown on and identify update over business opportunity Before provided health the we of structures improvement care, to on One rapidly the This information under operate our business

is just the this However, beginning.

transformational Looking a initiatives this have work. ahead to underway number of to we XXXX, continue

of FCG number implementation, efforts. in systems strengthening planning finance, assessing an has also human process which transition security system, customer We a our cybersecurity. overhaul number a We're which to are stages preparing We're cross-functional a multiyear standardization including the our operations systems, also driven in of billing related resources, and new operational management through resource among technology investments of SAP and represents asset ERP also enterprise to early or accounting, artificial programs, intelligence the and of procurement, others.

We in $X Beth billion billion or implement our more seamless will to to ensuring the continue accuracy, I'll effectiveness empowering call work, improve that, we our efficiency operations, a and their $X that the to With changes a operational teammates whether turn company. results of financial now detail. identify discuss and are

Beth Cooper

good everyone. Jeff, and morning, Thanks,

in XXXX, of results, business XX, expansions from This strong addition adjusted driven expectations. growth, performance, efficiencies this gross XXXX. in was drove $XXX year coupled replacements, growth exceptional operational performance. XX% significant generate income, year as full share to Our up performance. full full XXXX up and net we our adjusted operational up Gas, $XXX growth with approximately Slide $X.XX by XXXX infrastructure and earnings distribution full for and the unregulated year were per and of City million, to financial $X.XX, Florida pleased portfolio's With margin over demonstrate on million adjusted XX% with margin year shown line

the delivering middle transaction testament Undertaking a utility factors As of squarely rate higher the mentioned in the then midst and generated City EPS. range valuations XX $X.XX the gross Jeff our truly guidance of the per our first environment to drivers such that is touched key adjusted Gas share and of as of year Chesapeake despite interest some XXXX a this of team deliver. the on to diluted the of full a of Slide the I'll in to conviction significant now margin pressure is accomplishment. a year Florida family. turn contribution on, the with full Jeff member and a highlight

in Increased operations by unregulated share. and generated per $X.XX the amortization operations the higher for of driven operating margin additional absence expense, City regulated EPS were growth share. depreciation Our Florida $X.XX onetime and recorded our expenses of partially increases $X.XX state Gas, addition increased generated facilities the this These per insurance, a of vehicle tax XXXX. expense and incremental an year, by offset and benefit

We dilution by driven due $X.XX share interest acquisition our expense to per the financing of also of share toward incurred of target shares City per increased the Florida $X.XX outstanding accelerating structure. and and capital increased Gas

XX, gross from $XXX our full margin business to XXXX, detail provide segment Adjusted on $XXX million I'll additional Slide Regulated in was approximately XX% Moving or for regulated XXXX. year million our performance. up Energy

related $XXX contribution transition and margin transmission regulatory Gas, operations, City transaction interim for from XX% costs rates distribution gas increases natural related service grew included City and incremental including up mechanisms our Florida FPU This cases, rate in strong operating Electric. Florida and Gas, Excluding growth also reliability organic substantially, Delaware margin to investments, earnings incremental to to expansions income from million. infrastructure growth from and

Slide up strong $XX on XX% exceptional our also capital to delivered drove terms XXXX, adjusted to Marlin with retail operating approximately capital Pipeline million demand services year the drove review competitively Growing of structure our business maintained adequate $X.X Energy priced Slide access I'll X% shown adjusted return adjusted for financing while our million. Throughout preparing to higher up income an in propane now and Unregulated plan. and margin, million $XXX accelerating segment Virtual sheet, capital relative operations our XX As gross our to for Sharp liquidity capital while structure additional to XXXX margin shift we million levels growth of gross our increasing XX, and also $X.X gross to margin. of and to investment. balance full a

$XXX from of XX% year available million our direct via equity remains the at of and the we reinvestment the the total plan. with of end up $XX of end dividend XXXX, Our issued equity Throughout strong an in capitalization ratio primarily million liquidity purchase existing to including liquidity stock the we year, with total XXXX. ended at XX.X%, over equity, and programs,

$XXX cost-effective and quarter also equity the XXXX provide in million optionality We issuance at-the-market fourth equity to issuance established XXXX. a in

EPS You drive us range. will of XX% year guidance by this capitalization see our the total to to end equity reaffirming XXXX while

the successfully we X.X% a the debt $XXX XXXX. long-term On latter a at of part million side, long-term debt consummated placement coupon in

additional pursue a credit we and weeks. substantial rating, in Finally, we committed the have look have made to and we previously progress, updates forward to coming providing

along growth of XX efforts, on to that consistent we All capitalize can of history these of inherent capital finance future growth our in X-pronged guidance. our financing X%. shows investments our strong successfully ensure the Slide our approximately to strategy dividend with and

XXXX capital capital while investment. of this is strategy. approximately to dividend certainly a is while fund our company. our future Annual is shareholders balanced growth reinvestment to strategy of X.X% value of current payout our component back dividend earnings reinvesting Our ratio the for into target key of XX% earnings to also growth allocation return and allowing designed indicative

We but both top are is back dividend We the the earnings significant growth. both our to and from and grow into that not fortunate either/or, can strategy company, also long-term a the dividend enabling an benefit investors reinvest our quartile dividend earnings proposition.

performance share EPS approximately with of range, Slide growth, earnings a guidance XX-year reflecting CAGR XX our earnings demonstrates consistent per of our Speaking XXXX X.X%.

to recognize twice the share growth rates again XX% XXXX reaffirming as in midpoint. on This ability based expectations, of in as a high to this with reflected to guidance our opportunity execute significant X-year targets we XXXX Jim. indicating our turn strategy. pleasure the to a EPS to was over demonstrate industry. my are rate guidance is $X.XX We is our top per Our growth to our advance on it's performance the and call With $X.XX currently growth and line that, pleased continue the

James Moriarty

everyone. morning, and Beth, you, Thank good

discussed is updates fundamental on in as Jeff and would I like to driver, As share our a regulatory earlier, agenda XX. second Slide several this area, growth proactive shown

February we jurisdiction, a case $XX.X continue a this in determine The be held ROE into a will October our million, currently customer we in schedule million million proceeding received increase of For for resolving in relief last rate received proceeding. $X.X hearing hearing increase rate for May. million, of Monday, we and month. was which rates a year. scheduled of August, Last the we X increase. approval revenue In proposing a and an a XX.X%. On subsequently $X.X for to to while $X.X rate incorporating November we interim second filed effective next our increase We filed interim Phase work rate XXXX, XX, XXXX, is September Delaware on jurisdiction, Maryland of for filed rate a

reflects a X-year period. rates Gas, reserve approval revised of for Florida reduction as requesting depreciation that as a over be imbalance This amortized XX resiliency typical annual a project related for last initial million transition recommendation $XX.X increase We Resiliency liquefied PSC study and into support end depreciation southern were from on is we and $X.X an of upgrade, our of Delmarva an a $X.X filed to a approved an and X, And in filed provides storage to our week, natural update review for subject also Last PSC our growth commission system. million Florida indicating Worcester an this $XX rate November effect the the Interim approval. finally, XXXX. Shore operations to expense. updated designed City at electric earlier well and went which Florida would case our August proposing a to filing received week, staff million XX.X% a an strategy Slide we million rates, rates ROE. Eastern depreciation rate gas increase

mentioned, we approval As are year, and receive the pleased area. track were complete in are our on schedule. January storage construction The project of to way their for us this Jeff service to remain tanks FERC our of delivery on enabling to with currently

be XXXX, in project just service expect winter time We the of continue in to next in the third quarter to for year's peak.

Turning XX. our shared engagement with on recap dedication across to and talents I hours who I now community time during continually efforts the am volunteerism a XXXX. year. would Slide the their of like teammates throughout of impressed our provide X,XXX nearly to

and and provided that health, areas to long-term donations our also for continue for we success, our enabling stakeholders community organizations Jeff community for for come Delivering value to and giving: safety turn serving of X the excellence to so XX in all education charitable company, I no a left within environmental As development, stakeholders $XXX,XXX behind. over foundation focus call sponsorships years and is concluding remarks. and the growth our one is us will that, customers for With driving to stewardship.

Jeffrey Householder

significant for point integrate capital and Thanks, has significant on path company, on guidance EPS Gas, targets. achieve to investment, to an turning proactive ranges Jim. capital and the longer-term of XXXX we've I been meaningful our transformation EPS the EPS and to through and company initiatives and successfully XXXX guidance the and demonstrated the XXXX growth our deliver exciting acquisition business capital us embedded in ability the our City position believe our regulatory continued put Florida achieve initiatives

mentioned delivering with our I theme at the heights. this the new is start for reaching As purpose, year of call,

to new and a that, ahead we'll XX% in of to goals your take year and year and be you to exciting at our reaching an throughout With opportunities I now. on year the new growth questions. We'll Operator? including forward progress successes updating explore. new adjusted have heights sharing from EPS us, meet, XXXX, our look We least

Operator

Shank. go Ellinghaus Williams We'll first Chris to morning Instructions]. Siebert at this [Operator

Christopher Ellinghaus

just executive policy things thinking? have and you strategic out, in thoughts Jeff, does orders it energy all change you've of terms coming been like the particularly general, seen? have what And in your any anything got that tariffs on

Jeffrey Householder

might actually point, service, of actively you at one of got hand to orders of executive happens. hopefully, closely. a projects little there. is reviewing your lots occurring people what have We on But think who's going are that and into certainly that Moriarty, to to us trying to than we It generally on understand It's doesn't. if chaotic that, bit encouraged top put those through all otherwise be quicker see anticipated. little have that We'll we've imagine, fairly as been been are including -- We're a doing. we're this might trying Jim those following way for what able

might So Jim, want you to here. jump in

James Moriarty

Yes.

I of would and to say the orders specifically. what favorable natural the executive energy the I very industry, gas tone are generally, that think is content

of a opportunity there. And so see we lot

take and I an We've the agencies. to between of our think work and power been responsibilities federal there's members. to to branch, and each executive legislative everybody, we with attempt branch those rebalance the able our elected the agencies seriously

positive. So we see it overall as

Jeffrey Householder

our Just a to has to see frankly, capital that, lot that. mean, future and We're to trying that cap the do I changed. effectively not in off, pretty continue strategy deploy doing to of opportunities

and regulatory successful make very that and have those agenda, to been transform with continue along growth. we a as mentioned administrative the keep we've our capabilities lines, sure company We pace proactive the we earlier, to very

we X nothing so us of And road but keep a like it's that orders on. to executive kind today this those is the see the broken point, from or things. what in coming any things at those doing And of down to not focused going we're record, sound

Christopher Ellinghaus

you're from Jeff, -- expert. thoughts the a oral about Supreme Okay. Florida December. Florida have do any you argument What Court

Jeffrey Householder

the RSAM issue? On

Jeffrey Householder

the Gas bit additional an Florida that accelerated when $XX was little would, excess a depreciation, kinds for the for be will over believe million mechanism. that. a all was though, are on moving an million particularly a deal We I interesting thoughts of treatment $XX was us left with don't which completed. Yes. instructive ago day have for The or study Sure. RSAM of that filed City and or that you, RSAM I fact, a on depreciation asked typical sort tell to tranche first they in forward. of X I of going

in traditional RSAM as I initial we Gas for which to in RSAM City the place many the find for us more think NextEra depreciation ways. they the so study, rate moved And completed And we've commission a piece the of of XXXX, did. that find had we compelling the case part will in And same tranche that on us, way.

what of X-year if And depreciation is that we amount be kind can thing depreciation normally would a that excess for of to years, get so we'll believe accelerates successful and we be it X great which there. again, us it, a

the [indiscernible] may not Court as flipping to to well. So want be Supreme about notion. And weigh Jim, you I don't on that in

James Moriarty

statute decision. mean court I the of agency the think the I what the is and did seriously support Yes. that at X looking was corners and the the in

sorry, opportunity I commission issue, another if now. I'm to kind of commission the it, remand probably forward it the were -- be we've address So done to the to court here would going think were the allow which

Christopher Ellinghaus

Okay. Jim, let me ask you another question.

took very for a -- that me. FERC time Is With it long But to had you for they which filed to there peculiar that error. on like the they project, make it decision had filing, seemed kind of the for And corrected the once clarification, reason they a quickly. that? seemed LNG you

James Moriarty

No.

it if think then we calendar, read carefully I filed we for at clarification. that and when look immediately you decision the the almost got

the rehearing that XX were We protests decision, weighing as know, were also days is you or no and period, rehearings gratified from the filed. we're pending which,

for the commission to So phase, we're we're the the thankful issuing now very decision. in next but

Christopher Ellinghaus

and give that quarter color last some the influenced Okay. how for you sort us on weather Beth, thing. one And results? can of

Beth Cooper

quarter In terms overall? for impacted of that fourth coming and up how the results

Christopher Ellinghaus

was mean, was a Yes. thinking I mild about propane because kind of I relatively it particularly quarter.

So your I just thoughts. get to wanted

Beth Cooper

closer started as Chris, I It more end the favorable the bit we was impacted you that the little ended propane that we standpoint year, up tell getting a will of Sure. quarter. positively from us. there a as was, to weather

as the seen into not much we're X last here, quarter was but first that December, regard. the favorable we've as of in weeks coming there we're certainly So as

Operator

of now We'll go Lipner Dylan next Ladenburg. to

Dylan Lipner

my I it, forward I speaking soon. quarter. thought a look you questions to great hung answered. All on were on to up Congrats guys but

Operator

and for further I'd questions this [Operator sir, comments. any gentlemen, the closing Householder, turn morning. you, back in conference Instructions]. ladies no And have to I like Mr. to coming

Jeffrey Householder

Thank certainly coming seeing you, at our we morning, company, weeks and thank a these to but that there's Florida to showcase many happening on Investor going forward across of lot things the joining Canaveral. up are try all We'll days. couple you look in down certainly call of and our Day a in for this Cape you of that's in

And be in to talk about able goodbye. that and Thanks so again, we'll detail. more

Operator

you, Householder. Goodbye. Chesapeake Year Full Call. much Thank Again, and Fourth you does thanks all we Corporation's gentlemen, Quarter and joining a Utility this Earnings and Again, conclude Mr. wish everyone, ladies so day. XXXX for us, great

Chesapeake Utilities (CPK) 27 Feb 252024 Q4 Earnings call transcript