CHESAPEAKE UTILITIES CORP Q4 FY2024 earnings call

• Jeff Householder highlighted 2024 was pivotal, with record capital investment of $356 million, integrating FCG, active regulatory front with filing rate cases, receiving project approvals. - Beth Cooper discussed financial results: 2024 adjusted gross margin $567 million, up 25% from 2023; adjusted net income up 24% to ~$122 million; strong balance sheet with $505 million total available liquidity. - Jim Moriarty reviewed regulatory updates, including rate case approvals, project progress (e.g., Worcester Resiliency upgrade LNG storage project), and community engagement with 7,000 hours of volunteerism and $575,000 in donations.

The Regulated Energy segment had an adjusted gross margin of approximately $439 million in 2024, up $106 million or 32% from full year 2023. Excluding transaction and transition costs related to Florida City Gas, operating income grew 47% to $200 million. The Unregulated Energy segment had adjusted gross margin up 6% to approximately $128 million in 2024, with operating income up 30% to $32 million. FCG operations contributed nearly $89 million in 2024 adjusted gross margin.

• Reaffirmed 2025 capital expenditure guidance of $325 million to $375 million, driven by investments in natural gas transmission and distribution businesses. - Reaffirmed 2025 EPS guidance of $6.15 to $6.35 per share, indicating a 16% 1-year EPS growth rate based on the guidance midpoint. - 5-year capital investment plan of $1.5 billion to $1.8 billion, with over 70% of the amount requiring no additional regulatory approval.

• Executive orders and energy policy changes are somewhat chaotic, but generally seen as favorable for the industry, though the full impact is yet to be fully understood.

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

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

Q: Hi, good morning, Chris. I think what I would say is that the tone and content of the executive orders are very favorable to the industry, energy generally, natural gas specifically. And so, we see a lot of opportunity there. I think there's an attempt to rebalance power between the executive branch, the legislative branch and the federal agencies. We've been able to work with everybody, and we take seriously our responsibilities, to each of those agencies and our elected members. So, we see it overall as positive.

Q: On the RSAM issue? Jeff, you're a Florida expert. What - do you have any thoughts about the Florida Supreme Court oral argument from December?

A: Yes. Sure. I have all kinds of thoughts on that. I will tell you, though, that they I don't believe are going to be particularly instructive for us moving forward. The RSAM was an interesting mechanism. We filed a day or two ago a sort of a typical depreciation study for Florida City Gas, and asked for a little bit of an accelerated treatment on the excess depreciation, which would, in fact, deal with that additional $25 million, or $26 million that was left over when the first tranche of RSAM was completed. And we've moved on to a more traditional depreciation study, which we find compelling for us in many ways. And I think the commission will find the same way. And so again, it accelerates what normally is kind of a 5-year depreciation of that excess depreciation amount to 2 years. Which would be a great thing for us if we can get it, and we believe that we'll be successful there. So - I'm not to be flipping about the Supreme Court notion. And Jim, I don't you may want to weigh in on that as well.

Q: Yes. I mean I think the court is seriously looking at the statute, and what the agency did and the support that was in the four corners of the decision. So I think if the court were to remand it, it would probably be to allow the commission another opportunity to address the issue, which we've kind of done here going forward now.

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

A: No. I think if you look at the calendar, we read the decision carefully when we got it, and then almost immediately filed for that clarification. We also were weighing the pending rehearing period, which, as you know, is 30 days from the decision, and we're gratified that no rehearings or protests were filed. So we're now in the next phase, but we're very thankful to the commission for issuing the decision.

Q: In terms of coming up for the fourth quarter, and how that impacted results overall? I was particularly thinking about propane, because it was kind of a relatively mild quarter. So I just wanted to get your thoughts?

A: Sure. It was, Chris, as we started the quarter. I will tell you that as we ended up getting closer to the end of the year, there was a little bit more favorable weather, from a propane standpoint that positively impacted us. So not certainly as much as we've seen as we're coming into the first quarter here, but there was the last two weeks of December, we're favorable in that regard.

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

A: Sounds great. Thank you, Dylan.