News

  View printer-friendly version
<<  Back

Chesapeake Utilities Corporation Reports Record Results For Fiscal Year 2019 And Updates Earnings Guidance

February 26, 2020 at 4:30 PM EST
-- GAAP earnings per share ("EPS")* reached $3.96 for 2019
-- 2019 EPS from continuing operations was a record $3.72, an increase of $0.25 or 7.2 percent over 2018
-- Natural gas expansion projects, customer growth and conversions generated $18.3 million in additional gross margin** in 2019
-- Unregulated Energy acquisitions added $6.8 million in incremental gross margin in 2019
-- Boulden and Elkton Gas acquisitions along with pipeline expansion projects, expected to further enhance growth going forward
-- Successfully exited the natural gas marketing business through the sale of the assets and contracts for PESCO resulting in a pre-tax gain of $7.3 million ($5.4 million after tax)
-- Issued $70.0 million of 2.98 percent uncollateralized senior notes in December 2019 to pay down short-term debt and fund new growth capital investments
-- Increasing earnings guidance through 2022 based on investment and earnings outlook

DOVER, Del., Feb. 26, 2020 /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, 2019.  Net income for 2019 was $65.2 million, or $3.96 per share compared to $56.6 million, or $3.45 per share for 2018.   Fourth quarter 2019 net income was $22.6 million, or $1.37 per share compared to $17.8 million, or $1.08 per share in 2018.

In the fourth quarter of 2019, the Company completed the previously announced sales of the assets and contracts of its natural gas marketing subsidiary, Peninsula Energy Services Company, Inc. (PESCO) and recorded a pre-tax gain of $7.3 million ($5.4 million after tax). As a result, 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 where applicable.  There are no other items included in discontinued operations.  Additional details on the transactions to sell PESCO's assets and contracts are included on page 7 of this press release.

The Company's net income from continuing operations for 2019 was $61.1 million, or $3.72 per share. This represents an increase of $4.3 million or $0.25 per share compared to 2018. Higher earnings for 2019 reflect increased gross margin from recently completed and ongoing pipeline expansion projects, incremental margin from the acquisition of certain assets of Marlin Gas Transport, Inc. ("Marlin Gas Transport"), R. F. Ohl Fuel Oil, Inc. ("Ohl") and Boulden Inc. ("Boulden"), organic growth in the natural gas distribution operations and higher retail propane margins. 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") also contributed to higher earnings growth in 2019. These increases were partially offset by higher operating expenses and interest expense to support the Company's growth initiatives, a one-time pension settlement expense of $0.5 million associated with de-risking the Chesapeake Utilities Corporation Pension Plan (included with Other expense, net on the condensed consolidated statement of income) as well as $4.9 million in lower gross margin due to a decline in customer consumption as a result of warmer weather in 2019 compared to 2018.

The Company's net income from continuing operations for the quarter ended December 31, 2019 was $17.2 million, compared to $17.8 million for the same quarter of 2018. Earnings from continuing operations for the quarter ended December 31, 2019 were $1.04 per share compared to $1.08 per share for the same quarter of 2018. Slightly lower earnings for the fourth quarter of 2019 were largely the result of higher interest, increased stock compensation expense associated with leadership transitions during 2019, increased insurance expense and the pension settlement expense mentioned above.

"2019 was a remarkable year, whether measured by our record earnings and superior growth, the initiatives we completed, those we set into motion or by how effectively our employee team worked together to drive efficiency, increase collaboration and achieve continuous improvement across the organization," stated Jeffry M. Householder, President and Chief Executive Officer.  "When I stepped into the role of CEO at the beginning of 2019, I was energized by the Company's prospects and our employees' commitment to our shareholders, customers and the communities we serve.  My excitement grew over 2019 given the effort and accomplishments of our team.  We reported record earnings on operating income that exceeded $100 million for the first time in our history, and compound annual growth in earnings has exceeded 8.5% for multiple trailing periods including the 10 years ended 2019.  Strategically, we successfully and profitably exited the natural gas marketing business, completed seamless integrations of Marlin Gas Transport and Ohl, while acquiring Boulden and announcing the purchase of Elkton Gas - all while continuing to harvest organic growth, expanding our pipeline and distribution service capacity and ensuring safe, reliable and clean energy service to our customers.  In recognition of our team's success, we have updated our financial guidance and increased our expectations for earnings through 2022."

Increasing Earnings Guidance

The Company previously provided guidance that its EPS should grow at an average annual rate of 7.75 percent to 9.50 percent through 2022, from a base level of $2.89 per share (2017 adjusted, diluted EPS).  That guidance suggested 2022 EPS of $4.20 to $4.55.  Given the investments already made, those underway and the growth prospects included in the Company's strategic growth plan, Management is updating EPS guidance and increasing the forecasted range for 2022 to $4.70 to $4.90 per share.  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 Years Ended December 31, 2019 and 2018

Consolidated Results

 

Year Ended December 31,

       

(in thousands)

2019

 

2018

 

Change

 

Percent
Change

Gross margin

$

325,104

   

$

300,146

   

$

24,958

   

8.3

%

Depreciation, amortization and property taxes

45,423

   

40,220

   

5,203

   

12.9

%

Other operating expenses

173,394

   

165,083

   

8,311

   

5.0

%

Operating income

$

106,287

   

$

94,843

   

$

11,444

   

12.1

%

Operating income, for the year ended December 31, 2019 increased by $11.4 million, or 12.1 percent, compared to the same period in 2018. The increase in operating income reflects higher earnings across the Company generated by recent expansion investments, additional earnings from acquisitions completed in 2018 and 2019, organic growth within existing businesses, higher retail propane margins, regulatory initiatives and rate/pricing mechanisms, and the absence of a one-time non-recurring severance charge recorded in 2018. These increases were partially offset by higher operating expenses to support the Company's growth initiatives and lower gross margin due to a decline in customer consumption as a result of warmer weather in 2019 compared to 2018.

Regulated Energy Segment

 

Year Ended December 31,

       

(in thousands)

2019

 

2018

 

Change

 

Percent
Change

Gross margin

$

240,203

   

$

223,453

   

$

16,750

   

7.5

%

Depreciation, amortization and property taxes

51,683

   

46,523

   

5,160

   

11.1

%

Other operating expenses

101,936

   

97,715

   

4,221

   

4.3

%

Operating income

$

86,584

   

$

79,215

   

$

7,369

   

9.3

%

Operating income for the Regulated Energy segment increased by $7.4 million, or 9.3 percent, for the year ended December 31, 2019 compared to the same period in 2018. Higher operating income resulted from increased gross margin of $16.8 million, offset by $5.2 million in higher depreciation, amortization and property taxes and $4.2 million in higher other operating expenses. In February 2019, the Florida PSC issued a final order regarding the treatment of the TCJA impact, 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 2019 increased by $15.5 million and $6.1 million, or 6.9 percent and 7.7 percent, respectively.

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)

 

$

12,600

 

Natural gas distribution - customer growth (excluding service expansions)

 

4,718

 

2018 retained tax savings for certain Florida natural gas distribution operations

 

1,321

 

Retained tax savings for certain Florida natural gas operations in 2019 associated with TCJA

 

1,023

 

Sandpiper Energy, Inc.'s ("Sandpiper") margin primarily from natural gas conversions

 

983

 

Florida Gas Reliability Infrastructure Program ("GRIP") (1)

 

508

 

Decreased customer consumption - primarily due to warmer weather

 

(3,295)

 

Other variances

 

(1,108)

 

Period-over-period increase in gross margin

 

$

16,750

 

 

(1) 

In 2019, the Company recorded a reduction in depreciation expense totaling $1.3 million as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. The Company also recorded $0.6 million in lower GRIP margin due to a concurrent reduction in surcharges collected from customers as a result of the reduced depreciation rates.

The major components of the increase in other operating expenses are as follows:

(in thousands)

 

Payroll, benefits and other employee-related expenses

$

3,705

 

Insurance (non-health) expense - both insured and self-insured components

1,847

 

Stock compensation expense associated with leadership transitions during 2019

908

 

Vehicle expenses due to additional fleet to support growth

268

 

Timing of excavation and inspection activities in 2018 to comply with the Company's integrity management program

(1,733)

 

Facilities and maintenance costs due to consolidation of facilities

(542)

 

Other variances

(232)

 

Period-over-period increase in other operating expenses

$

4,221

 

Unregulated Energy Segment

 

Year Ended December 31,

       

(in thousands)

2019

 

2018

 

Change

 

Percent
Change

Gross margin

$

85,266

   

$

77,196

   

$

8,070

   

10.5

%

Depreciation, amortization and property taxes

10,129

   

8,263

   

1,866

   

22.6

%

Other operating expenses

55,198

   

51,809

   

3,389

   

6.5

%

Operating income

$

19,939

   

$

17,124

   

$

2,815

   

16.4

%

Operating income for the Unregulated Energy segment increased by $2.8 million in 2019 compared to 2018. Gross margin increased by $8.1 million, or 10.5 percent, partially offset by other operating expenses increasing by $3.4 million and an increase of $1.9 million in depreciation, amortization and property taxes.

The key components of the increase in gross margin are shown below:

(in thousands)

 

Margin Impact

Marlin Gas Services (acquired assets of Marlin Gas Transport in December 2018)

 

$

5,300

 

Propane Operations:

   

Increased retail propane margins per gallon driven by favorable market conditions and supply management

 

3,229

 

Ohl acquisition (assets acquired in December 2018)

 

1,200

 

Boulden acquisition (assets acquired in December 2019)

 

329

 

Decrease in customer consumption due primarily to the absence of the 2018 Bomb Cyclone

 

(1,800)

 

Lower wholesale propane margins due to non-recurring impact of the 2018 Bomb Cyclone

 

(866)

 

Aspire Energy - higher margins from rate increases

 

518

 

Higher Eight Flags margin from increased production

 

418

 

Other variances

 

(258)

 

Period-over-period increase in gross margin

 

$

8,070

 

The key components of the increase in other operating expenses are as follows:

(in thousands)

 

Operating expenses for Unregulated Energy acquisitions

$

3,314

 

Insurance expense (non-health) - both insured and self-insured components

415

 

Other variances

(340)

 

Period-over-period increase in other operating expenses

$

3,389

 

Operating Results for the Quarters Ended December 31, 2019 and 2018

Consolidated Results

 

Three Months Ended
December 31,

       

(in thousands)

2019

 

2018

 

Change

 

Percent
Change

Gross margin

$

88,900

   

$

82,981

   

$

5,919

   

7.1

%

Depreciation, amortization and property taxes

11,812

   

10,481

   

1,331

   

12.7

%

Other operating expenses

47,446

   

43,627

   

3,819

   

8.8

%

Operating income

$

29,642

   

$

28,873

   

$

769

   

2.7

%

Operating income during the fourth quarter of 2019 increased by $0.8 million, or 2.7 percent, compared to the same period in 2018.  The increase in operating income reflects a $5.9 million increase in gross margin, offset by $1.3 million in higher depreciation, amortization and property taxes and $3.8 million in higher other operating expenses to support the Company's growth initiatives and recognition of stock compensation expense associated with leadership transitions during 2019.

Regulated Energy Segment

 

Three Months Ended
December 31,

           

(in thousands)

2019

 

2018

 

Change

 

Percent
Change

Gross margin

$

63,054

   

$

60,528

   

$

2,526

   

4.2

%

Depreciation, amortization and property taxes

12,989

   

12,121

   

868

   

7.2

%

Other operating expenses

28,791

   

26,122

   

2,669

   

10.2

%

Operating income

$

21,274

   

$

22,285

   

$

(1,011)

   

(4.5)

%

Operating income for the Regulated Energy segment decreased by $1.0 million in the fourth quarter of 2019 compared to the same period in 2018. This decrease was driven by a $2.7 million increase in other operating expenses which were impacted by the recognition during the quarter of stock compensation expense associated with leadership transitions that occurred during 2019, higher insurance (non-health) expenses and a $0.9 million increase in depreciation, amortization and property taxes.  Higher expenses during the quarter offset a $2.5 million increase in gross margin.

The key components of the increase in gross margin are shown below:

(in thousands)

Margin Impact

Eastern Shore and Peninsula Pipeline service expansions (including related Florida natural gas distribution operation expansions)

$

2,128

 

Natural gas distribution - customer growth (excluding service expansions)

875

 

Increased margin primarily from the storm recovery surcharge (associated with Hurricanes Irma and Matthew) for Florida electric distribution operations

596

 

Florida GRIP (1)

118

 

Other variances

(1,191)

 

Quarter-over-quarter increase in gross margin

$

2,526

 

 

(1) 

In 2019, the Company recorded a reduction in depreciation expense totaling $0.5 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 surcharges collected from customers as a result of the reduced depreciation rates.

The major components of the increase in other operating expenses are as follows:

(in thousands)

Other Operating
Expenses

Payroll, benefits and other employee-related expenses

$

1,406

 

Stock compensation expense associated with leadership transitions during 2019

908

 

Insurance expense (non-health) - both insured and self-insured components

872

 

Timing of excavation and inspection activities in 2018 to comply with the Company's integrity management program

(733)

 

Other variances

216

 

Quarter-over-quarter increase in other operating expenses

$

2,669

 

Unregulated Energy Segment

 

Three Months Ended
December 31,

       

(in thousands)

2019

 

2018

 

Change

 

Percent
Change

Gross margin

$

25,926

   

$

22,560

   

$

3,366

   

14.9

%

Depreciation, amortization and property taxes

3,056

   

2,496

   

560

   

22.4

%

Other operating expenses

14,249

   

13,459

   

790

   

5.9

%

Operating income

$

8,621

   

$

6,605

   

$

2,016

   

30.5

%

Operating income for the Unregulated Energy segment increased by $2.0 million for the three months ended December 31, 2019, compared to the same period in 2018. The increase in operating income reflects a $3.4 million increase in gross margin offset by $0.8 million in higher other operating expenses and $0.6 million in higher depreciation, amortization and property taxes.

The major components of the increase in gross margin are shown below:

(in thousands)

 

Margin Impact

Marlin Gas Services (acquired assets of Marlin Gas Transport in December 2018)

 

$

947

 

Propane Operations:

   

Increased retail margins per gallon for certain customer classes

 

1,513

 

Ohl acquisition (assets acquired in December 2018)

 

517

 

Boulden acquisition (assets acquired in December 2019)

 

329

 

Other variances

 

60

 

Quarter-over-quarter increase in gross margin

 

$

3,366

 

The major components of the increase in other operating expenses are as follows:

(in thousands)

 

Other Operating
Expenses

Operating expenses for Unregulated Energy acquisitions

 

$

859

 

Other variances

 

(69)

 

Quarter-over-quarter increase in other operating expenses

 

$

790

 

Divestiture of PESCO

During the fourth quarter of 2019, the Company sold PESCO's assets and contracts in four separate transactions and accordingly, has exited the natural gas marketing business. As a result of the sales agreements, the Company began to report PESCO as discontinued operations during the third quarter of 2019 and excluded PESCO's performance from continuing operations for all periods presented and classified its assets and liabilities as held for sale where applicable.

The Company received a total of $22.9 million in cash consideration from the buyers inclusive of working capital of $8.0 million. The Company recognized a pre-tax gain of $7.3 million ($5.4 million after tax) in connection with the closing of these transactions during the fourth quarter of 2019. The final working capital true up, and the sale of certain contracts, is expected to be completed in the first quarter of 2020.

Conference Call

Chesapeake Utilities will host a conference call on Thursday, February 27, 2020 at 4:15 p.m. Eastern Time to discuss the Company's financial results for the year and quarter ended December 31, 2019.   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, 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 operations; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at 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, and Assistant Corporate Secretary
302.734.6799

Financial Summary

(in thousands, except per-share data)

   
         
   

Year Ended

 

Quarter Ended

   

December 31,

 

December 31,

   

2019

 

2018

 

2019

 

2018

Gross Margin

               

  Regulated Energy segment

 

$

240,203

   

$

223,453

   

$

63,054

   

$

60,528

 

  Unregulated Energy segment

 

85,266

   

77,196

   

25,926

   

22,560

 

  Other businesses and eliminations

 

(365)

   

(503)

   

(80)

   

(107)

 

 Total Gross Margin

 

$

325,104

   

$

300,146

   

$

88,900

   

$

82,981

 
                 

Operating Income

               

  Regulated Energy segment

 

$

86,584

   

$

79,215

   

$

21,274

   

$

22,285

 

  Unregulated Energy segment

 

19,939

   

17,124

   

8,621

   

6,605

 

  Other businesses and eliminations

 

(236)

   

(1,496)

   

(253)

   

(17)

 

 Total Operating Income

 

$

106,287

   

$

94,843

   

$

29,642

   

$

28,873

 

Other expense, net

 

(1,830)

   

(603)

   

(1,108)

   

(434)

 

Interest Charges

 

22,224

   

16,146

   

5,642

   

4,383

 

Income from Continuing Operations Before Income Taxes

 

82,233

   

78,094

   

22,892

   

24,056

 

Income Taxes on Continuing Operations

 

21,091

   

21,232

   

5,723

   

6,260

 

Income from Continuing Operations

 

61,142

   

56,862

   

17,169

   

17,796

 

Income/(Loss) from Discontinued Operations, Net of tax

 

(1,391)

   

(282)

   

(9)

   

5

 

Gain on sale of Discontinued Operations, Net of tax

 

5,402

   

   

5,402

   

 

Net Income

 

$

65,153

   

$

56,580

   

$

22,562

   

$

17,801

 
                 

Basic Earnings Per Share of Common Stock:

               

   Earnings Per Share from Continuing Operations

 

$

3.73

   

$

3.48

   

$

1.05

   

$

1.09

 

   Earnings/(Loss) Per Share from Discontinued Operations

 

0.24

   

(0.02)

   

0.33

   

 

Basic Earnings per Share of Common Stock

 

$

3.97

   

$

3.46

   

$

1.38

   

$

1.09

 
                 

Diluted Earnings Per Share of Common Stock:

               

Earnings Per Share from Continuing Operations

 

$

3.72

   

$

3.47

   

$

1.04

   

$

1.08

 

Earnings/(Loss) Per Share from Discontinued Operations

 

0.24

   

(0.02)

   

0.33

   

 

Diluted Earnings Per Share of Common Stock

 

$

3.96

   

$

3.45

   

$

1.37

   

$

1.08

 

 

 

Financial Summary Highlights

         
           

Key variances in continuing operations for the year ended December 31, 2019 included:

         
           

(in thousands, except per share data)

Pre-tax
Income

 

Net
Income

 

Earnings
Per Share

Year ended December 31, 2018 Reported Results from Continuing Operations

$

78,094

   

$

56,862

   

$

3.47

 

Adjusting for unusual items:

         

Decreased customer consumption - primarily due to warmer weather

(4,852)

   

(3,607)

   

(0.22)

 

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

 

Lower wholesale propane margins due to non-recurring impact of the 2018
Bomb Cyclone

(866)

   

(644)

   

(0.04)

 

Pension settlement expense associated with the de-risking of the Chesapeake
Utilities Pension Plan (1)

(693)

   

(515)

   

(0.03)

 
 

(3,542)

   

(2,355)

   

(0.14)

 

Increased (Decreased) Gross Margins:

         

Eastern Shore and Peninsula Pipeline service expansions (including related
Florida natural gas distribution operation expansions)*

12,600

   

9,369

   

0.57

 

Margin contribution from Unregulated Energy acquisitions*

6,830

   

5,078

   

0.31

 

Natural gas distribution growth (excluding service expansions)

4,718

   

3,508

   

0.21

 

Increased retail propane margins

3,229

   

2,401

   

0.15

 

Retained tax savings for certain Florida natural gas operations in 2019
associated with TCJA*

1,023

   

760

   

0.05

 

Sandpiper's margin primarily from natural gas conversions

983

   

731

   

0.04

 

Higher Aspire Energy margins from rate increases

518

   

385

   

0.02

 

Florida GRIP*

508

   

378

   

0.02

 

Higher Eight Flags margin from increased production

418

   

311

   

0.02

 
 

30,827

   

22,921

   

1.39

 

(Increased) Decreased Other Operating Expenses (Excluding Cost of Sales):

         

Depreciation, amortization and property tax costs due to new capital investments

(5,727)

   

(4,258)

   

(0.26)

 

Operating expenses for Unregulated Energy acquisitions

(4,636)

   

(3,447)

   

(0.21)

 

Payroll, benefits and other employee-related expenses

(4,204)

   

(3,126)

   

(0.19)

 

Insurance expense (non-health) - both insured and self-insured components

(2,267)

   

(1,685)

   

(0.10)

 

Stock compensation expense associated with leadership transitions during 2019

(1,114)

   

(828)

   

(0.05)

 

Vehicle expenses due to additional fleet to support growth

(309)

   

(230)

   

(0.01)

 

Timing of excavation and inspection activities in 2018 to comply with the
Company's integrity management program

1,733

   

1,289

   

0.08

 

Facilities and maintenance costs due to consolidation of facilities

581

   

432

   

0.03

 
 

(15,943)

   

(11,853)

   

(0.71)

 

Other income tax effects

   

816

   

0.05

 

Interest Charges

(6,078)

   

(4,519)

   

(0.27)

 

Net Other Changes

(1,125)

   

(730)

   

(0.07)

 

Year ended December 31, 2019 Reported Results from Continuing Operations

$

82,233

   

$

61,142

   

$

3.72

 

 

(1) 

In the fourth quarter of 2019, the Company executed a de-risking strategy for its Pension Plan. This amount reflects a portion of the cost of the pension settlement that was charged to expense as it was deemed not recoverable through the regulatory process.

   

*

See the Major Projects and Initiatives table later in this press release.

 

Key variances in continuing operations for the fourth quarter ended December 31, 2019 included:

       
             

(in thousands, except per share)

 

Pre-tax
Income

 

Net
Income

 

Earnings
Per Share

Fourth Quarter 2018 Reported Results from Continuing Operations

 

$

24,056

   

$

17,796

   

$

1.08

 
             

Adjusting for Unusual items:

           

Pension settlement expense associated with the de-risking of the Chesapeake
Utilities Pension Plan (1)

 

(693)

   

(520)

   

(0.03)

 
             

Increased (Decreased) Gross Margins:

           

Eastern Shore and Peninsula Pipeline service expansions (including new service in
Northwest Florida for related Florida natural gas distribution operations)*

 

2,128

   

1,596

   

0.10

 

Margin contributions from Unregulated Energy acquisitions*

 

1,794

   

1,345

   

0.08

 

Increased retail propane margins

 

1,513

   

1,135

   

0.07

 

Natural gas growth (excluding service expansions)

 

875

   

656

   

0.04

 

Increased margin primarily from the storm recovery surcharge (associated with
Hurricanes Irma and Matthew) for Florida electric distribution operations

 

596

   

447

   

0.03

 

Florida GRIP*

 

118

   

88

   

0.01

 
   

7,024

   

5,267

   

0.33

 

(Increased) Decreased Other Operating Expenses (Excluding Cost of Sales):

           

Payroll, benefits and other employee-related expenses

 

(1,829)

   

(1,371)

   

(0.08)

 

Operating expenses for Unregulated Energy acquisitions

 

(1,269)

   

(952)

   

(0.06)

 

Stock compensation expense associated with leadership transitions during 2019

 

(1,114)

   

(836)

   

(0.05)

 

Insurance expense (non-health) - both insured and self-insured components

 

(1,044)

   

(783)

   

(0.05)

 

Depreciation, amortization and property tax costs due to new capital investments

 

(1,016)

   

(762)

   

(0.05)

 

Timing of excavation and inspection activities in 2018 to comply with the
Company's integrity management program

 

733

   

550

   

0.03

 
   

(5,539)

   

(4,154)

   

(0.26)

 

Interest Charges

 

(1,259)

   

(944)

   

(0.06)

 

Other income tax effects

 

   

83

   

0.01

 

Net Other Changes

 

(697)

   

(359)

   

(0.03)

 

Fourth Quarter 2019 Reported Results from Continuing Operations

 

$

22,892

   

$

17,169

   

$

1.04

 

 

(1) 

In the fourth quarter of 2019, the Company executed a de-risking strategy for its Pension Plan. This amount reflects a portion of the cost of the pension settlement that was charged to expense as it was deemed not recoverable through the regulatory process.

   

*

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, 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 of increasing 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 substantially finalized and the associated earnings can be estimated.

 

Gross Margin for the Period

 

Year Ended December 31,

 

Estimate for Fiscal

(in thousands)

 

2018

 

2019

 

2020

 

2021

Expansions:

             

2017 Eastern Shore System Expansion - 
including interim services

$

9,103

   

$

16,434

   

$

15,799

   

$

15,799

 

Northwest Florida Expansion (including related
natural gas distribution services)

4,350

   

6,516

   

6,500

   

6,500

 

Western Palm Beach County, Florida Expansion

54

   

2,139

   

5,047

   

5,227

 

Del-Mar Energy Pathway - including interim services

   

731

   

2,512

   

4,100

 

Auburndale

   

283

   

679

   

679

 

Callahan Intrastate Pipeline

   

   

3,219

   

6,400

 

Guernsey Power Station

   

   

   

1,400

 

Total Expansions

13,507

   

26,103

   

33,756

   

40,105

 

Acquisitions:

             

Marlin Gas Services

110

   

5,410

   

6,400

   

7,000

 

Ohl Propane

   

1,200

   

1,236

   

1,250

 

Boulden Propane

   

329

   

4,000

   

4,200

 

Elkton Gas Company

   

   

TBD (4)

   

TBD

 

Total Acquisitions

110

   

6,939

   

11,636

   

12,450

 

Regulatory Initiatives:

             

Florida GRIP(1) (2)

13,020

   

13,528

   

14,858

   

15,831

 

Tax benefit retained by certain Florida entities(3)

   

2,740

   

1,400

   

1,500

 

Hurricane Michael regulatory proceeding

   

   

TBD

   

TBD

 

Total Regulatory Initiatives

13,020

   

16,268

   

16,258

   

17,331

 
               

Total

$

26,637

   

$

49,310

   

$

61,650

   

$

69,886

 

 

(1)

All periods shown have been adjusted to reflect 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)

For the year ended December 31, 2019, the Company recorded a reduction in depreciation expense totaling $1.3 million as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. For the year ended December 31, 2019, the Company also recorded $0.6 million in lower GRIP margin due to a concurrent reduction in surcharge collected from customers as a result of the reduced depreciation rates.

(3)

The amount disclosed for the year ended December 31, 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 year ended December 31, 2019 by that amount.

(4)

The amount of margin to be generated by Elkton Gas Company in 2020 will depend, largely, on the date the acquisition closes.  Further guidance will be provided during 2020 as the timing becomes certain.

 

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 $7.3 million in incremental gross margin for the year ended December 31, 2019 compared 2018. The project is expected to produce gross margin of approximately $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 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 $2.2 million for the year ended December 31, 2019 compared to 2018. The estimated annual gross margin from this project is $6.5 million for 2020 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 incremental gross margin of $2.1 million for the year ended December 31, 2019 compared to 2018.  The Company expects to complete the remainder of the project in phases through early 2020, and estimates that the project will generate gross margin of $5.0 million in 2020 and $5.2 million annually thereafter.

Del-Mar Energy Pathway
In December 2019, the FERC 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 provide an additional 14,300 Dekatherms per day ("Dts/d") of firm service to four customers, will provide additional natural gas transmission pipeline infrastructure in eastern Sussex County, Delaware, and will represent the first extension of Eastern Shore's pipeline system into Somerset County, Maryland. Interim services in advance of this project generated gross margin of $0.7 million for the year ended December 31, 2019.  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 constructed pipeline facilities in Polk County, Florida. Peninsula Pipeline will provide 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 $0.3 million for the year ended December 31, 2019 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 in Nassau County, Florida with Seacoast Gas Transmission.  The 26-mile pipeline, having an initial capacity of 148,000 Dts/d, 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 for Peninsula Pipeline 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, LLC 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 third quarter of 2020. This project is expected to produce gross margin of approximately $1.4 million annually once placed into service in the first quarter of 2021.

Acquisitions

Marlin Gas Services
In December 2018, Marlin Gas Services, the Company's wholly-owned subsidiary, acquired certain operating assets of Marlin Gas Transport, a supplier of mobile compressed natural gas and pipeline solutions, primarily to utilities and pipelines.  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. Marlin Gas Services generated incremental gross margin of $5.3 million for the year ended December 31, 2019 compared to 2018.  The Company estimates that Marlin Gas Services will generate annual gross margin of approximately $6.4 million in 2020 and $7.0 million in 2021 and beyond.  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 supply sources to various pipeline interconnection points.

Ohl Propane
In December 2018, Sharp Energy, Inc. ("Sharp") acquired 2,500 residential and commercial propane customers and operating assets located between two of Sharp's existing districts in Pennsylvania from Ohl.   These customers and assets have been assimilated into Sharp and generated $1.2 million of incremental gross margin for the year ended December 31, 2019 compared to 2018.

Boulden Propane
In December 2019, Sharp 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 of incremental gross margin for the year ended December 31, 2019.  The Company estimates that this acquisition will generate additional 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 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 Chesapeake's existing franchise territory in Cecil County.  The acquisition is expected to close in the second half 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 $143.9 million of capital expenditures to replace 303 miles of qualifying distribution mains, including $16.7 million and $13.3 million of new pipes during 2019 and 2018, respectively.  GRIP generated additional gross margin of $0.5 million for the year ended 2019 compared to 2018.

For the year ended December 31, 2019, the Company recorded a reduction in depreciation expense totaling $1.3 million as a result of a Florida PSC approved depreciation study that lowered annual depreciation rates. For the year ended December 31, 2019, the Company also recorded $0.6 million in lower GRIP margin due to a concurrent reduction in surcharges collected from customers as a result of the reduced depreciation rates.

Florida Tax Savings Related to the 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 $1.0 million for the year ended December 31, 2019.

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 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. The Company has proposed an overall return component on both the plant 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 in November 2019 and interim rate increases were implemented effective January 2020.  FPU continues to work with the Florida PSC and expects to reach a final ruling in the second half of 2020.

Weather and Consumption
Weather did not have a material impact on fourth quarter 2019 results, compared to the fourth quarter of 2018. For the full year, weather conditions accounted for decreased gross margin of $4.9 million in 2019 compared to 2018 and $3.4 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 year and quarter ended December 31, 2019 compared to the same periods in 2018.

HDD and CDD Information

 

For the Years Ended 
December 31,

 

For the Quarters Ended
December 31,

 

2019

 

2018

 

Variance

 

2019

 

2018

 

Variance

Delmarva

                     

Actual HDD

4,089

   

4,251

   

(162)

   

1,513

   

1,522

   

(9)

 

10-Year Average HDD ("Normal")

4,323

   

4,379

   

(56)

   

1,519

   

1,533

   

(14)

 

Variance from Normal

(234)

   

(128)

       

(6)

   

(11)

     
                       

Florida

                     

Actual HDD

619

   

780

   

(161)

   

240

   

273

   

(33)

 

10-Year Average HDD ("Normal")

792

   

800

   

(8)

   

260

   

267

   

(7)

 

Variance from Normal

(173)

   

(20)

       

(20)

   

6

     
                       

Ohio

                     

Actual HDD

5,498

   

5,845

   

(347)

   

1,967

   

2,138

   

(171)

 

10-Year Average HDD ("Normal")

5,983

   

5,823

   

160

   

2,133

   

2,048

   

85

 

Variance from Normal

(485)

   

22

       

(166)

   

90

     
                       

Florida

                     

Actual CDD

3,200

   

3,105

   

95

   

360

   

401

   

(41)

 

10-Year Average CDD ("Normal")

2,939

   

2,889

   

50

   

314

   

296

   

18

 

Variance from Normal

261

   

216

       

46

   

105

     

Natural Gas Distribution Growth
New customer growth for the Company's natural gas distribution operations generated $4.7 million of additional margin for the year ended December 31, 2019 compared to 2018.  The average number of residential customers served on the Delmarva Peninsula and in Florida increased by approximately 3.7 percent during 2019.  Growth in commercial and industrial customers also contributed additional margin during 2019. The details are provided in the following table:

 

Gross Margin Increase

(in thousands)

For the Year Ended December 31, 2019

 

Delmarva
Peninsula

 

Florida

Customer growth:

     

Residential

$

1,179

   

$

769

 

Commercial and industrial, excluding the impact of the Northwest Florida expansion project

664

   

2,106

 

Total customer growth

$

1,843

   

$

2,875

 

Capital Investment Growth and Associated Financing Plans

The Company's capital expenditures were $199.0 million (including the purchase of certain propane assets of Boulden) for 2019.  The following table shows total capital expenditures for the year ended December 31, 2019 by segment and by business line:

   

For the Year Ended
December 31,

(dollars in thousands)

 

2019

Regulated Energy:

   

Natural gas distribution

 

$

62,744

 

Natural gas transmission

 

62,000

 

Electric distribution

 

5,860

 

Total Regulated Energy

 

130,604

 

Unregulated Energy:

   

Propane distribution (1)

 

38,347

 

Energy transmission

 

11,206

 

Other unregulated energy

 

10,481

 

Total Unregulated Energy

 

60,034

 

Other:

   

Corporate and other businesses

 

8,348

 

Total 2019 Capital Expenditures

 

$

198,986

 

 

(1)

This amount includes $24.5 million for the acquisition of certain propane operating assets of Boulden completed in December 2019.

 

The following table shows a range of the expected 2020 capital expenditures by segment and by business line:

 

Estimate for Fiscal 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 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, 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. Through the first two years of the five-year forecast period, the Company has invested $482 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 43 percent as of December 31, 2019. 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)

For the Periods Ended December 31, 2019 and 2018

(in thousands, except shares and per share data)

 
   

Year Ended

 

Fourth Quarter

   

2019

 

2018

 

2019

 

2018

Operating Revenues

               

  Regulated Energy

 

$

343,006

   

$

345,281

   

$

91,405

   

$

92,614

 

  Unregulated Energy

 

154,150

   

161,904

   

45,903

   

55,886

 

Other businesses and eliminations

 

(17,552)

   

(16,869)

   

(5,335)

   

(14,286)

 

Total Operating Revenues

 

479,604

   

490,316

   

131,973

   

134,214

 

Operating Expenses

               

Regulated energy cost of sales

 

102,803

   

121,828

   

28,351

   

32,086

 

Unregulated energy and other cost of sales

 

51,697

   

68,342

   

14,722

   

19,147

 

  Operations

 

137,844

   

132,523

   

38,284

   

34,833

 

  Maintenance

 

15,679

   

14,387

   

4,479

   

3,968

 

Gain from a settlement

 

(130)

   

(130)

   

   

 

  Depreciation and amortization

 

45,423

   

40,220

   

11,812

   

10,481

 

  Other taxes

 

20,001

   

18,303

   

4,683

   

4,826

 

 Total operating expenses

 

373,317

   

395,473

   

102,331

   

105,341

 

Operating Income

 

106,287

   

94,843

   

29,642

   

28,873

 

Other expense, net

 

(1,830)

   

(603)

   

(1,108)

   

(434)

 

Interest charges

 

22,224

   

16,146

   

5,642

   

4,383

 

Income from Continuing Operations Before Income Taxes

 

82,233

   

78,094

   

22,892

   

24,056

 

Income Taxes on Continuing Operations

 

21,091

   

21,232

   

5,723

   

6,260

 

Income from Continuing Operations

 

61,142

   

56,862

   

17,169

   

17,796

 

Income/(Loss) from Discontinued Operations, Net of tax

 

(1,391)

   

(282)

   

(9)

   

5

 

Gain on sale of Discontinued Operations, Net of tax

 

5,402

   

   

5,402

   

 

Net Income

 

$

65,153

   

$

56,580

   

$

22,562

   

$

17,801

 
                 

Weighted Average Common Shares Outstanding:

               

Basic

 

16,398,443

   

16,369,616

   

16,403,776

   

16,378,545

 

Diluted

 

16,448,486

   

16,419,870

   

16,461,112

   

16,430,594

 
                 

Basic Earnings Per Share of Common Stock:

               

   Earnings Per Share from Continuing Operations

 

$

3.73

   

$

3.48

   

$

1.05

   

$

1.09

 

   Earnings/(Loss) from Discontinued Operations

 

0.24

   

(0.02)

   

0.33

   

 

Basic Earnings per Share of Common Stock

 

$

3.97

   

$

3.46

   

$

1.38

   

$

1.09

 
                 

Diluted Earnings Per Share of Common Stock:

               

Earnings Per Share from Continuing Operations

 

$

3.72

   

$

3.47

   

$

1.04

   

$

1.08

 

Earnings/(Loss) Per Share from Discontinued Operations

 

0.24

   

(0.02)

   

0.33

   

 

Diluted Earnings Per Share of Common Stock

 

$

3.96

   

$

3.45

   

$

1.37

   

$

1.08

 

 

 

Chesapeake Utilities Corporation and Subsidiaries

 

Consolidated Balance Sheets (Unaudited)

 
   

As of December 31,

Assets

 

2019

 

2018

(in thousands, except shares and per share data)

       

 Property, Plant and Equipment

       

 Regulated energy

 

$

1,441,473

   

$

1,297,416

 

 Unregulated energy

 

265,209

   

236,440

 

 Other

 

39,850

   

34,585

 

Total property, plant and equipment

 

1,746,532

   

1,568,441

 

Less:  Accumulated depreciation and amortization

 

(336,876)

   

(294,089)

 

Plus:  Construction work in progress

 

54,141

   

79,168

 

Net property, plant and equipment

 

1,463,797

   

1,353,520

 

Current Assets

       

Cash and cash equivalents

 

6,985

   

6,089

 

Accounts receivable (less allowance for uncollectible
accounts of $1,337 and $1,058, respectively)

 

49,562

   

53,837

 

Accrued revenue

 

20,846

   

22,640

 

Propane inventory, at average cost

 

5,824

   

9,791

 

Other inventory, at average cost

 

6,067

   

7,127

 

Regulatory assets

 

5,144

   

4,796

 

Storage gas prepayments

 

3,541

   

3,433

 

Income taxes receivable

 

20,050

   

15,300

 

Prepaid expenses

 

13,928

   

10,079

 

Derivative assets, at fair value

 

   

82

 

Other current assets

 

2,879

   

5,682

 

Current assets held for sale

 

   

52,681

 

Total current assets

 

134,826

   

191,537

 

Deferred Charges and Other Assets

       

Goodwill

 

32,668

   

21,568

 

Other intangible assets, net

 

8,129

   

3,850

 

Investments, at fair value

 

9,229

   

6,711

 

Operating lease right-of-use assets

 

11,563

   

 

Regulatory assets

 

73,407

   

72,422

 

Receivables and other deferred charges

 

49,579

   

36,401

 

Noncurrent assets held for sale

 

   

7,662

 

Total deferred charges and other assets

 

184,575

   

148,614

 

Total Assets

 

$

1,783,198

   

$

1,693,671

 

 

 

Chesapeake Utilities Corporation and Subsidiaries

 

 Consolidated Balance Sheets (Unaudited)

 
   

As of December 31,

Capitalization and Liabilities

 

2019

 

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

 

259,253

   

255,651

 

Retained earnings

 

300,607

   

261,530

 

Accumulated other comprehensive loss

 

(6,267)

   

(6,713)

 

Deferred compensation obligation

 

4,543

   

3,854

 

Treasury stock

 

(4,543)

   

(3,854)

 

Total stockholders' equity

 

561,577

   

518,439

 

Long-term debt, net of current maturities

 

440,168

   

316,020

 

Total capitalization

 

1,001,745

   

834,459

 

Current Liabilities

       

Current portion of long-term debt

 

45,600

   

11,935

 

Short-term borrowing

 

247,371

   

294,458

 

Accounts payable

 

54,068

   

98,681

 

Customer deposits and refunds

 

30,939

   

32,620

 

Accrued interest

 

2,554

   

2,317

 

Dividends payable

 

6,644

   

6,060

 

Accrued compensation

 

16,236

   

13,923

 

Regulatory liabilities

 

5,991

   

7,883

 

Derivative liabilities, at fair value

 

1,844

   

1,604

 

Other accrued liabilities

 

12,077

   

10,081

 

  Current liabilities held for sale

 

   

48,672

 

Total current liabilities

 

423,324

   

528,234

 

Deferred Credits and Other Liabilities

       

Deferred income taxes

 

180,656

   

156,820

 

Regulatory liabilities

 

127,744

   

135,039

 

Environmental liabilities

 

6,468

   

7,638

 

Other pension and benefit costs

 

30,569

   

28,513

 

Operating lease - liabilities

 

9,896

   

 

Deferred investment tax credits and other liabilities

 

2,796

   

2,968

 

Total deferred credits and other liabilities

 

358,129

   

330,978

 

Environmental and other commitments and contingencies (1)

       

Total Capitalization and Liabilities

 

$

1,783,198

   

$

1,693,671

 

 

(1)

Refer to Note 20 and 21 in the Company's Annual Report on Form 10-K for further information.

 

 

Chesapeake Utilities Corporation and Subsidiaries

Distribution Utility Statistical Data (Unaudited)

   

For the Three Months Ended December 31, 2019

 

For the Three Months Ended December 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

 

$

15,569

   

$

1,587

   

$

8,169

   

$

10,618

   

$

15,647

   

$

1,313

   

$

5,846

   

$

9,450

 

  Commercial

 

8,087

   

1,622

   

6,784

   

9,416

   

8,260

   

1,566

   

6,491

   

8,711

 

  Industrial

 

2,300

   

3,232

   

6,753

   

511

   

2,274

   

3,117

   

5,995

   

411

 

  Other (1)

 

5,425

   

769

   

356

   

(2,145)

   

5,426

   

883

   

3,901

   

298

 

Total Operating Revenues

 

$

31,381

   

$

7,210

   

$

22,062

   

$

18,400

   

$

31,607

   

$

6,879

   

$

22,233

   

$

18,870

 
                                 

Volumes (in Dts for natural gas and KWHs for electric)

                   

  Residential

 

918,892

   

92,584

   

355,510

   

71,039

   

962,407

   

90,091

   

327,226

   

65,844

 

  Commercial

 

977,449

   

1,157,869

   

439,246

   

76,916

   

947,924

   

1,192,733

   

417,254

   

69,464

 

  Industrial

 

1,410,990

   

7,095,966

   

1,280,375

   

9,546

   

1,518,671

   

6,577,922

   

1,220,219

   

3,350

 

  Other

 

82,532

   

   

802,196

       

23,313

   

   

919,192

   

1,686

 

Total

 

3,389,863

   

8,346,419

   

2,877,327

   

157,501

   

3,452,315

   

7,860,746

   

2,883,891

   

140,344

 
                                 

Average Customers

                           

  Residential

 

74,884

   

17,511

   

58,280

   

24,759

   

72,219

   

16,703

   

56,181

   

24,573

 

  Commercial

 

7,112

   

1,556

   

3,959

   

7,271

   

6,992

   

1,550

   

3,893

   

7,508

 

  Industrial

 

169

   

16

   

2,455

   

2

   

162

   

17

   

2,380

   

2

 

  Other

 

19

   

   

12

       

4

   

   

12

     

Total

 

82,184

   

19,083

   

64,706

   

32,032