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Chesapeake Utilities Corporation Reports Second Quarter 2019 Results

August 8, 2019 at 8:00 AM EDT
- Chesapeake Utilities continues to generate strong financial and operational results
- Second quarter GAAP earnings increased to $0.50 per share* from $0.39, over prior year second quarter
- Year-to-date GAAP earnings increased to $2.25 per share from $2.03, over prior year
- Eastern Shore and Northwest Florida pipeline expansion projects contributed $3.7 million and $8.1 million in additional gross margin** during the second quarter and year-to-date
- December 2018 asset acquisitions of Marlin Gas Transport and Ohl contributed $1.1 million and $3.9 million in gross margin for the second quarter and year-to-date, respectively
- Future growth opportunities, including West Palm Beach expansion, Del Mar Energy Pathway and Callahan Intrastate Pipeline are expected to generate $9.9 million in incremental margin in 2020

DOVER, Del., Aug. 8, 2019 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced second quarter financial results. The Company's net income for the quarter ended June 30, 2019 was $8.3 million, compared to $6.4 million for the same quarter of 2018. Earnings per share ("EPS") for the quarter ended June 30, 2019 were $0.50, compared to $0.39 per share for the same quarter of 2018.  Higher earnings for the second quarter primarily reflect contributions from recently completed and ongoing pipeline expansion projects, organic growth in the natural gas distribution operations and lower operating expenses.  These increases were partially offset by lower results from Peninsula Energy Services Company, Inc. ("PESCO") and higher interest expense. The absence of a one-time non-recurring severance charge recorded in the second quarter of 2018, was offset by the impact of warmer weather in the second quarter of 2019.

For the six months ended June 30, 2019, the Company reported net income of $37.0 million, or $2.25 per share. This represents an increase of $3.7 million or $0.22 per share compared to the same period in 2018. Year-to-date earnings were impacted by the factors noted above, along with incremental margin from the acquisition of certain assets of Marlin Gas Transport, Inc. ("Marlin Gas Transport") and R. F. Ohl Fuel Oil, Inc. ("Ohl"), a Florida Public Service Commission ("PSC") regulatory order that enabled the Company to retain tax savings associated with lower federal tax rates resulting from the United States Tax Cuts and Jobs Act ("TCJA") in several natural gas distribution operations and continued growth in gross margin from Aspire Energy of Ohio ("Aspire Energy"). These increases were partially offset by lower results for PESCO, lower energy consumption due to warmer weather in the Company's service territories, and higher interest expense.  A detailed discussion of operating results begins on page 3.

"In the first half of 2019, we have delivered strong financial results to our shareholders driven by our organic growth initiatives and increased margin from the Marlin Gas Transport and Ohl assets we acquired at the end of 2018.  The unwavering commitment of our employees to provide safe, clean, reliable energy services while growing the footprint of our businesses and continually generating increased financial results is truly impressive," stated Jeffry M. Householder, President and Chief Executive Officer.  "As we move into the second half of 2019, I'm excited to continue working with such a determined group of employees in further expanding the footprint of our existing businesses and realizing new investment opportunities like the West Palm Beach expansion, Del-Mar Energy Pathway and our recently announced Callahan Intrastate Pipeline project," added Mr. Householder.

Significant Items Impacting Earnings

Results for the three and six months ended June 30, 2019 and 2018 were impacted by the following significant items:

For the Three Months Ended June 30,

2019

 

2018

(in thousands, except per share data)

Net Income

 

EPS

 

Net Income

 

EPS

Reported (GAAP) Earnings

$

8,304

   

$

0.50

   

$

6,387

   

$

0.39

 

Change in unrealized mark-to-market ("MTM") activity

(41)

   

   

(251)

   

(0.02)

 

Nonrecurring separation expenses associated with a former executive

   

   

1,421

   

0.09

 

Adjusted (Non-GAAP) Earnings**

$

8,263

   

$

0.50

   

$

7,557

   

$

0.46

 

Adjusted earnings for the second quarter of 2019 were $8.3 million, or $0.50 per share, an increase of 8.7 percent compared to $7.6 million, or $0.46 per share, for the second quarter of 2018.

For the Six Months Ended June 30,

2019

 

2018

(in thousands, except per share data)

Net Income

 

EPS

 

Net Income

 

EPS

Reported (GAAP) Earnings

$

36,968

   

$

2.25

   

$

33,241

   

$

2.03

 

Change in unrealized MTM activity

38

   

   

(4,229)

   

(0.26)

 

2018 portion of the retained tax savings for certain Florida natural gas distribution operations associated with the TCJA income tax rate reduction

(990)

   

(0.06)

   

   

 

Nonrecurring separation expenses associated with a former executive

   

   

1,421

   

0.09

 

Adjusted (Non-GAAP) Earnings

$

36,016

   

$

2.19

   

$

30,433

   

$

1.86

 

For the six months ended June 30, 2019, adjusted earnings were $36.0 million, or $2.19 per share, an increase of 17.7 percent compared to $30.4 million, or $1.86 per share, for the six months ended June 30, 2018.

*Unless otherwise noted, earnings per share information is presented on a diluted basis.

**This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin, adjusted earnings and adjusted EPS.  A "non-GAAP financial measure" is generally defined as a numerical measure of a company's historical or future performance that includes or excludes amounts, or that is subject to adjustments, so as to be different from the most directly comparable measure calculated or presented in accordance with GAAP.  Our management believes certain non-GAAP financial measures, when considered together with GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period.

The Company calculates "gross margin" by deducting the cost of sales from operating revenue.  Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP.  The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions.  It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses.  The Company's management uses gross margin in measuring its business units' performance. The Company calculates "adjusted earnings" by adjusting reported (GAAP) earnings to exclude the impact of certain significant non-cash items, including the impact of unrealized MTM gains (losses) and one-time charges, such as severance charges, and any prior year tax savings retained by our regulated businesses as a result of current year regulatory authorizations.  The Company calculates "adjusted EPS" by dividing adjusted earnings by the weighted average common shares outstanding.

Operating Results for the Quarters Ended June 30, 2019 and 2018

 

Consolidated Results

           
 

Three Months Ended

June 30,

       

(in thousands)

2019

 

2018

 

Change

 

Percent Change

Gross margin

$

70,110

   

$

67,261

   

$

2,849

   

4.2

%

Depreciation, amortization and property taxes

16,124

   

13,749

   

2,375

   

17.3

%

Other operating expenses

36,550

   

40,264

   

(3,714)

   

(9.2)

%

Operating income

$

17,436

   

$

13,248

   

$

4,188

   

31.6

%

Operating income during the second quarter of 2019 increased by $4.2 million, or 31.6 percent, compared to the same period in 2018. The increase in operating income primarily reflects strong performance by the Company's natural gas transmission and distribution operations and a $2.2 million decrease in operating expenses which excludes the one-time nonrecurring severance charge recorded in 2018 associated with a former company executive.  A $1.8 million decrease in operating income at PESCO partially offset these gains.  In addition, the absence of the one-time nonrecurring severance charge recorded in 2018 associated with a former company executive, largely offset lower gross margin due to the impact of warmer weather on the Delmarva Peninsula and Ohio operations.

Regulated Energy Segment

           
 

Three Months Ended
June 30,

       

(in thousands)

2019

 

2018

 

Change

 

Percent Change

Gross margin

$

55,086

   

$

50,494

   

$

4,592

   

9.1

%

Depreciation, amortization and property taxes

13,087

   

11,161

   

1,926

   

17.3

%

Other operating expenses

23,247

   

25,029

   

(1,782)

   

(7.1)

%

Operating income

$

18,752

   

$

14,304

   

$

4,448

   

31.1

%

Operating income for the Regulated Energy segment for the three months ended June 30, 2019 was $18.8 million, an increase of $4.4 million compared to the same period in 2018.  The increased operating income resulted primarily from increased gross margin of $4.6 million.  Depreciation, amortization, and property taxes expense increased by $1.9 million, and was offset by a decrease of $1.8 million in other operating expenses.

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

(in thousands)

 

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

$

3,680

 

Natural gas distribution growth (excluding service expansions)

867

 

Electric operations consumption growth

316

 

Florida Gas Reliability and Infrastructure Program ("GRIP")

310

 

TCJA impact primarily from retained tax savings from Florida natural gas distribution operations

255

 

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

231

 

Decreased customer consumption - primarily due to warmer weather

(1,159)

 

Other variances

92

 

Quarter-over-quarter increase in gross margin

$

4,592

 

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

(in thousands)

 

Outside services, regulatory, facilities and maintenance costs

$

(1,466)

 

Incentive compensation costs (including timing of accruals)

(328)

 

Payroll, benefits and other employee-related expenses(1)

(257)

 

Other variances

269

 

Quarter-over-quarter decrease in other operating expenses

$

(1,782)

 
 

(1) Since the Company self-insures for healthcare costs, benefits costs fluctuate depending upon filed claims.

Unregulated Energy Segment

           
 

Three Months Ended

June 30,

       

(in thousands)

2019

 

2018

 

Change

 

Percent Change

Gross margin

$

15,121

   

$

16,915

   

$

(1,794)

   

(10.6)

%

Depreciation, amortization and property taxes

3,003

   

2,553

   

450

   

17.6

%

Other operating expenses

13,466

   

13,872

   

(406)

   

(2.9)

%

Operating (loss) income

$

(1,348)

   

$

490

   

$

(1,838)

   

NMF

 
 

Non-Meaningful Figure (NMF)

Given the impact of PESCO on the Unregulated Energy segment, the Company continues to present the segment excluding PESCO's results:

 

Unregulated Energy Segment, excluding PESCO

           
 

Three Months Ended
June 30,

       

(in thousands)

2019

 

2018

 

Change

 

Percent Change

Gross margin

$

14,380

   

$

14,309

   

$

71

   

0.5

%

Depreciation, amortization and property taxes

2,850

   

2,399

   

451

   

18.8

%

Other operating expenses

11,805

   

12,108

   

(303)

   

(2.5)

%

Operating loss

$

(275)

   

$

(198)

   

$

(77)

   

38.9

%

Excluding PESCO, operating loss for the Unregulated Energy segment increased by $0.1 million for the three months ended June 30, 2019, compared to the same period in 2018. The increased operating loss was driven by $0.5 million in higher depreciation, amortization and property taxes, partially offset by a $0.1 million increase in gross margin and $0.3 million in lower other operating expenses.  While Marlin Gas Services, LLC ("Marlin Gas Services"), the Company's newly created subsidiary, generated an additional $1.0 million of margin for the segment, this was largely offset by warmer weather during the quarter which decreased customer consumption in the propane operations and Aspire Energy.

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

(in thousands)

   

Marlin Gas Services (assets acquired in December 2018)

 

$

1,030

 

Propane Operations

   

Ohl acquisition (assets acquired in December 2018)

 

112

 

Decreased customer consumption - primarily due to warmer weather

 

(818)

 

Decrease in retail and wholesale propane margins

 

(166)

 

Aspire Energy

   

Rate increases

 

203

 

Decreased customer consumption - primarily due to warmer weather

 

(104)

 

Other variances

 

(186)

 

Quarter-over-quarter increase in gross margin

 

$

71

 

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

(in thousands)

 

Operating expenses for Marlin Gas Services and Ohl (Assets acquired in December 2018) including costs to expand the future growth prospects for the businesses (1)

$

835

 

Outside services and facilities maintenance costs

(469)

 

Payroll, benefits and other employee-related expenses(2)

(361)

 

Incentive compensation costs (including timing of accruals)

(239)

 

Other variances

(69)

 

Quarter-over-quarter decrease in other operating expenses

$

(303)

 
 

(1) The Ohl and Marlin Gas Services other operating expenses have been aggregated and are excluded from the expense changes shown in the remainder of the table.

(2) Since the Company self-insures for healthcare costs, benefits costs fluctuate depending upon filed claims.

 

PESCO

           
 

Three Months Ended
June 30,

       

(in thousands)

2019

 

2018

 

Change

 

Percent Change

Gross margin

$

741

   

$

2,606

   

$

(1,865)

   

(71.6)

%

Depreciation, amortization and property taxes

153

   

154

   

(1)

   

(0.6)

%

Other operating expenses

1,661

   

1,764

   

(103)

   

(5.8)

%

Operating (loss) income

$

(1,073)

   

$

688

   

$

(1,761)

   

NMF

 

Operating income for PESCO decreased by $1.8 million for the three months ended June 30, 2019, compared to the same period in 2018.  The decline in operating income was driven by a $1.9 million decrease in PESCO's gross margin compared to the same period in 2018 resulting from the following:

(in thousands)

 

Increased supply costs

$

(742)

 

Absence of nonrecurring margin in 2018 associated with the Southeast portfolio

(642)

 

Net impact of PESCO's MTM activity

(302)

 

Other variances

(179)

 

Quarter-over-quarter decrease in gross margin for PESCO

$

(1,865)

 

Operating Results for the Six Months Ended June 30, 2019 and 2018

 

Consolidated Results

           
 

Six Months Ended June 30,

       

(in thousands)

2019

 

2018

 

Change

 

Percent Change

Gross margin

$

171,507

   

$

158,560

   

$

12,947

   

8.2

%

Depreciation, amortization and property taxes

31,628

   

27,447

   

4,181

   

15.2

%

Other operating expenses

78,450

   

77,459

   

991

   

1.3

%

Operating income

$

61,429

   

$

53,654

   

$

7,775

   

14.5

%

Operating income during the six months ended June 30, 2019 increased by $7.8 million, or 14.5 percent, compared to the same period in 2018.  The increase in operating income reflects continued strong growth across the Company, generated by organic growth within existing businesses, recent expansion investments, regulatory initiatives and rate/pricing mechanisms, the successful integration of the Ohl acquisition and strong performance of Marlin Gas Services.

Regulated Energy Segment

           
 

Six Months Ended June 30,

       

(in thousands)

2019

 

2018

 

Change

 

Percent Change

Gross margin

$

122,188

   

$

111,656

   

$

10,532

   

9.4

%

Depreciation, amortization and property taxes

25,618

   

22,317

   

3,301

   

14.8

%

Other operating expenses

48,801

   

48,324

   

477

   

1.0

%

Operating income

$

47,769

   

$

41,015

   

$

6,754

   

16.5

%

Operating income for the Regulated Energy segment for the six months ended June 30, 2019 was $47.8 million, an increase of $6.8 million or 16.5 percent, compared to the same period in 2018.  The increase in operating income resulted from $10.5 million in additional gross margin, offset by $3.3 million in higher depreciation, amortization and property taxes and a $0.5 million increase in other operating expenses. On February 25, 2019, the Florida PSC issued a final order regarding the treatment of the TCJA, allowing us to retain the savings associated with lower federal tax rates for certain of our natural gas distribution operations.  As a result, $1.3 million in reserves for customer refunds, recorded in 2018, were reversed in the first quarter of 2019.  Excluding the impact of the reversal, gross margin and operating income for the six months ended June 30, 2019 increased by $9.2 million and $5.4 million, or 8.2 percent and 13.2 percent, respectively.

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

(in thousands)

 

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

$

8,140

 

Natural gas distribution - customer growth (excluding service expansions)

2,253

 

2018 retained tax savings for certain Florida natural gas distribution operations

1,321

 

TCJA impact - primarily from the 2019 retained tax savings for certain Florida natural gas operations

810

 

Sandpiper's margin from natural gas conversions

614

 

Florida GRIP

534

 

Decreased customer consumption - primarily due to warmer weather

(2,841)

 

Other variances

(299)

 

Period-over-period increase in gross margin

$

10,532

 

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

(in thousands)

 

Payroll, benefits and other employee-related expenses(1)

$

1,619

 

Incentive compensation costs (including timing of accruals)

331

 

Outside services and regulatory costs

(1,070)

 

Facilities maintenance costs

(1,005)

 

Other variances

602

 

Period-over-period increase in other operating expenses

$

477

 
 

(1) Since the Company self-insures for healthcare costs, benefits costs fluctuate depending upon filed claims.

Unregulated Energy Segment

           
 

Six Months Ended June 30,

       

(in thousands)

2019

 

2018

 

Change

 

Percent Change

Gross margin

$

49,523

   

$

47,216

   

$

2,307

   

4.9

%

Depreciation, amortization and property taxes

5,942

   

5,059

   

883

   

17.5

%

Other operating expenses

29,953

   

27,983

   

1,970

   

7.0

%

Operating income

$

13,628

   

$

14,174

   

$

(546)

   

(3.9)

%

The Company continues to present the Unregulated Energy segment excluding PESCO's results:

 

Unregulated Energy Segment, excluding PESCO

           
 

Six Months Ended June 30,

       

(in thousands)

2019

 

2018

 

Change

 

Percent Change

Gross margin

$

46,922

   

$

43,435

   

$

3,487

   

8.0

%

Depreciation, amortization and property taxes

5,641

   

4,757

   

884

   

18.6

%

Other operating expenses

26,048

   

24,428

   

1,620

   

6.6

%

Operating income

$

15,233

   

$

14,250

   

$

983

   

6.9

%

Excluding PESCO, operating income for the Unregulated Energy segment increased by $1.0 million for the six months ended June 30, 2019, compared to the same period in 2018. The increase in operating income was driven by $3.5 million in additional gross margin, partially offset by $1.6 million in higher operating expenses and $0.9 million in higher depreciation and taxes.

The major components of the $3.5 million increase in gross margin are shown below:

(in thousands)

   

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

 

$

3,359

 

Propane Operations

   

Increased retail margins per gallon

 

1,159

 

Ohl acquisition (assets acquired in December 2018)

 

588

 

Decrease in customer consumption due to the absence of the 2018 Bomb Cyclone and warmer weather in 2019

 

(1,623)

 

Lower wholesale propane margins and sales

 

(534)

 

Aspire Energy

   

Rate increases

 

892

 

Customer consumption growth

 

200

 

Other variances

 

(554)

 

Period-over-period increase in gross margin

 

$

3,487

 

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

(in thousands)

 

Operating expenses for Marlin Gas Services and Ohl (Assets acquired in December 2018) including costs to expand the future growth prospects for the businesses (1)

$

1,689

 

Incentive compensation costs (including timing of accruals)

255

 

Outside services

117

 

Facilities maintenance costs

(336)

 

Payroll, benefits and other employee-related expenses(2)

(39)

 

Other variances

(66)

 

Period-over-period increase in other operating expenses

$

1,620

 
 

(1) The Ohl and Marlin Gas Services other operating expenses have been aggregated and are excluded from the expense changes shown in the remainder of the table.

(2) Since the Company self-insures for healthcare costs, benefits costs fluctuate depending upon filed claims.

 

PESCO

           
 

Six Months Ended June 30,

       

(in thousands)

2019

 

2018

 

Change

 

Percent Change

Gross margin

$

2,601

   

$

3,781

   

$

(1,180)

   

(31.2)

%

Depreciation, amortization and property taxes

301

   

302

   

(1)

   

(0.3)

%

Other operating expenses

3,905

   

3,555

   

350

   

9.8

%

Operating loss

$

(1,605)

   

$

(76)

   

$

(1,529)

   

NMF

 

For the six months ended June 30, 2019, PESCO's gross margin decreased by $1.2 million compared to the same period in 2018.  Lower gross margin from PESCO for the six months ended June 30, 2019 resulted from the following:

(in thousands)

 

Net impact of extraordinary costs associated with the 2018 Bomb Cyclone for the Mid-Atlantic wholesale portfolio (1)

$

5,545

 

Net impact of PESCO's MTM activity

(5,892)

 

Absence of nonrecurring margin in 2018 associated with the Southeast portfolio

(642)

 

Other variances

(191)

 

Period-over-period decrease in gross margin for PESCO

$

(1,180)

 
 

(1) The 2018 Bomb Cyclone refers to the high-intensity winter storms in early January 2018 that impacted the Mid-Atlantic region and had a residual impact on our businesses through the month of February.  The exceedingly high demand and associated impacts on pipeline capacity and gas supply in the Mid-Atlantic region created significant, unusual costs for PESCO. While such concerted impacts are not expected to occur frequently, our management revisited and refined its risk management strategies and implemented additional controls.

Forward-Looking Statements

Matters included in this release may include forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements. Please refer to the Safe Harbor for Forward-Looking Statements in the Company's 2018 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.

Conference Call

Chesapeake Utilities will host a conference call on Friday, August 9, 2019 at 10:30 a.m. Eastern Time to discuss the Company's financial results for the three and six months ended June 30, 2019.  To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2019 Second Quarter Results Conference Call.  To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, use the link CPK - Conference Call Audio Replay, or visit the Investors/Events and Presentations section of Company's website at www.chpk.com.

About Chesapeake Utilities Corporation

Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its Investor Relations (IR) App.

Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.

For more information, contact:

Beth W. Cooper
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary
302.734.6799

Financial Summary
(in thousands, except per share data)

       
 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2019

 

2018

 

2019

 

2018

Gross Margin

             

  Regulated Energy segment

$

55,086

   

$

50,494

   

$

122,188

   

$

111,656

 

  Unregulated Energy segment

15,121

   

16,915

   

49,523

   

47,216

 

  Other businesses and eliminations

(97)

   

(148)

   

(204)

   

(312)

 

 Total Gross Margin

$

70,110

   

$

67,261

   

$

171,507

   

$

158,560

 
               

Operating Income (Loss)

             

   Regulated Energy segment

$

18,752

   

$

14,304

   

$

47,769

   

$

41,015

 

   Unregulated Energy segment

(1,348)

   

490

   

13,628

   

14,174

 

   Other businesses and eliminations

32

   

(1,546)

   

32

   

(1,535)

 

 Total Operating Income (Loss)

17,436

   

13,248

   

61,429

   

53,654

 
               

Other expense, net

(316)

   

(262)

   

(361)

   

(194)

 

Interest Charges

5,655

   

3,881

   

11,365

   

7,545

 

Pre-tax Income

11,465

   

9,105

   

49,703

   

45,915

 

Income Taxes

3,161

   

2,718

   

12,735

   

12,674

 

 Net Income

$

8,304

   

$

6,387

   

$

36,968

   

$

33,241

 
               

Earnings Per Share of Common Stock

             

Basic

$

0.51

   

$

0.39

   

$

2.26

   

$

2.03

 

Diluted

$

0.50

   

$

0.39

   

$

2.25

   

$

2.03

 

Financial Summary Highlights

Key variances, between the three months ended June 30, 2018 and 2019, included:

             

(in thousands, except per share data)

 

Pre-tax
Income

 

Net
Income

 

Earnings
Per Share

Second Quarter of 2018 Reported Results

 

$

9,105

   

$

6,387

   

$

0.39

 
             

Adjusting for Unusual Items:

           

Nonrecurring separation expenses associated with a former executive

 

1,548

   

1,421

   

0.09

 

Decreased customer consumption - primarily due to warmer weather

 

(2,081)

   

(1,507)

   

(0.09)

 

Net impact of PESCO's MTM activity

 

(302)

   

(210)

   

(0.02)

 
   

(835)

   

(296)

   

(0.02)

 
             

Increased (Decreased) Gross Margins:

           

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

 

3,680

   

2,666

   

0.16

 

Margin contribution from Marlin Gas Services (acquired assets of Marlin Gas Transport in December 2018) and Ohl acquisition (assets acquired in December 2018)*

 

1,142

   

827

   

0.05

 

Natural gas distribution growth (excluding service expansions)

 

867

   

628

   

0.04

 

Florida GRIP*

 

310

   

225

   

0.01

 

TCJA impact - primarily from the 2019 retained tax savings for certain Florida natural gas operations*

 

255

   

185

   

0.01

 

Sandpiper's margin from natural gas conversions

 

231

   

167

   

0.01

 

Aspire Energy rate increases

 

203

   

147

   

0.01

 

Other margin change for PESCO operations

 

(1,563)

   

(1,132)

   

(0.07)

 
   

5,125

   

3,713

   

0.22

 
             

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

           

Depreciation, asset removal and property tax costs due to growth investments

 

(2,055)

   

(1,488)

   

(0.09)

 

Operating expenses for Marlin Gas Services and Ohl (Assets acquired in December 2018) including costs to expand the future growth prospects for the businesses

 

(1,155)

   

(837)

   

(0.05)

 

Outside services, regulatory, and facilities maintenance costs

 

1,866

   

1,351

   

0.08

 

Payroll, benefits and other employee-related expenses

 

678

   

491

   

0.03

 

Incentive compensation costs (including timing of accruals)

 

512

   

371

   

0.03

 
   

(154)

   

(112)

   

 
             

Change in effective tax rate

 

   

(100)

   

(0.01)

 

Interest charges

 

(1,774)

   

(1,285)

   

(0.08)

 

Net other changes

 

(2)

   

(3)

   

 
   

(1,776)

   

(1,388)

   

(0.09)

 
             

Second Quarter of 2019 Reported Results

 

$

11,465

   

$

8,304

   

$

0.50

 
 

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

  Key variances, between the six months ended June 30, 2018 and 2019, included:

(in thousands, except per share data)

 

Pre-tax
Income

 

Net
Income

 

Earnings
Per Share

Six Month Ended June 30, 2018 Reported Results

 

$

45,915

   

$

33,241

   

$

2.03

 
             

Adjusting for Unusual Items:

           

Nonrecurring separation expenses associated with a former executive

 

1,548

   

1,421

   

0.09

 

2018 retained tax savings for certain Florida natural gas operations*

 

1,321

   

990

   

0.06

 

Net impact of PESCO's MTM activity

 

(5,892)

   

(4,267)

   

(0.26)

 

Decreased customer consumption - primarily due to warmer weather

 

(4,264)

   

(3,171)

   

(0.19)

 
   

(7,287)

   

(5,027)

   

(0.30)

 

Increased (Decreased) Gross Margins:

           

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

 

8,140

   

6,055

   

0.37

 

Absence of the 2018 Bomb Cyclone and capacity constraints cost for PESCO

 

5,545

   

4,124

   

0.25

 

Margin contribution from Marlin Gas Services (acquired assets of Marlin Gas Transport) and Ohl acquisition (assets acquired in December 2018)*

 

3,947

   

2,936

   

0.18

 

Natural gas distribution growth (excluding service expansions)

 

2,253

   

1,675

   

0.10

 

Higher propane retail margins per gallon

 

1,159

   

862

   

0.05

 

Aspire Energy rate increases

 

892

   

664

   

0.04

 

TCJA impact - primarily from the 2019 retained tax savings for certain Florida natural gas operations*

 

810

   

602

   

0.04

 

Sandpiper's margin from natural gas conversions

 

614

   

456

   

0.03

 

Florida GRIP*

 

534

   

397

   

0.02

 

Other margin change for PESCO operations

 

(832)

   

(619)

   

(0.04)

 

Wholesale propane margins and sales

 

(534)

   

(398)

   

(0.02)

 
   

22,528

   

16,754

   

1.02

 

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

           

Depreciation, asset removal and property tax costs due to new capital investments

 

(3,559)

   

(2,647)

   

(0.16)

 

Operating expenses for Marlin Gas Services and Ohl (Assets acquired in December 2018) including costs to expand the future growth prospects for the businesses

 

(2,312)

   

(1,720)

   

(0.10)

 

Payroll, benefits and other employee-related expenses

 

(1,568)

   

(1,166)

   

(0.07)

 

Incentive compensation costs (including timing of accruals)

 

(578)

   

(430)

   

(0.03)

 

Operating expenses to support PESCO

 

(349)

   

(259)

   

(0.02)

 

Facilities maintenance costs

 

1,201

   

893

   

0.05

 

Outside services and regulatory costs

 

952

   

708

   

0.04

 
   

(6,213)

   

(4,621)

   

(0.29)

 
             

Change in effective tax rate

   

516

   

0.03

 

Interest Charges

 

(3,820)

   

(2,841)

   

(0.17)

 

Net other changes

 

(1,420)

   

(1,054)

   

(0.07)

 
   

(5,240)

   

(3,379)

   

(0.21)

 
             

Six Month Ended June 30, 2019 Reported Results

 

$

49,703

   

$

36,968

   

$

2.25

 
 

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

Recently Completed and Ongoing Major Projects and Initiatives
The Company constantly pursues and develops additional projects and initiatives to serve existing and new customers, further grow its businesses and earnings, with the intention to increase shareholder value. The following represent the major projects/initiatives recently completed and currently underway. In the future, the Company will add new projects and initiatives to this table once negotiations are substantially final and the associated earnings can be estimated.

   

Gross Margin for the Period

   

Three Months Ended

 

Six Months Ended

 

Year Ended

 

Estimate for

Project/Initiative

 

June 30,

 

June 30,

 

December 31,

 

Fiscal

in thousands

 

2019

 

2018

 

2019

 

2018

 

2018

 

2019

 

2020

Florida GRIP (1)

 

$

3,530

   

$

3,220

   

$

6,904

   

$

6,370

   

$

13,323

   

$

14,172

   

$

15,491

 

2017 Eastern Shore System Expansion -  including interim services

 

3,645

   

859

   

8,445

   

3,117

   

9,103

   

16,183

   

15,799

 

Northwest Florida Expansion (including related natural gas distribution services)

 

1,691

   

1,147

   

3,289

   

1,152

   

4,350

   

6,500

   

6,500

 

Western Palm Beach County, Florida Expansion

 

161

   

   

322

   

   

54

   

676

   

4,581

 

Marlin Gas Services

 

1,030

   

   

3,359

   

   

110

   

5,400

   

6,300

 

Ohl Propane Acquisition

 

112

   

   

588

   

   

   

1,200

   

1,236

 

Del-Mar Energy Pathway - including interim services

 

189

   

   

353

   

   

   

725

   

3,039

 

Callahan Intrastate Pipeline

 

   

   

   

   

   

   

2,250

 

Tax benefit retained by certain Florida entities(2)

 

249

   

   

2,329

   

   

   

3,039

   

1,879

 

Total

 

$

10,607

   

$

5,226

   

$

25,589

   

$

10,639

   

$

26,940

   

$

47,895

   

$

57,075

 
 

(1) All periods shown have been adjusted to reflect the lower customer rates as a result of the TCJA.  Lower customer rates are offset by the corresponding decrease in federal income tax expense and have no negative impact on net income.

(2) The amount disclosed for the six months ended 2019 includes tax savings of $1.3 million for the year ended December 31, 2018.  The tax savings were recorded in the first quarter of 2019 due to an order by the Florida PSC allowing reversal of a TCJA refund reserve, recorded in 2018, which increased gross margin for the six months ended by that amount.

Major Projects and Initiatives

Florida GRIP
Florida GRIP is a natural gas pipe replacement program approved by the Florida PSC that allows automatic recovery, through rates, of costs associated with the replacement of mains and services. Since the program's inception in August 2012, the Company has invested $135.2 million of capital expenditures to replace 298 miles of qualifying distribution mains, including $7.9 million of new pipes during the first six months of 2019. GRIP generated additional gross margin of $0.3 million and $0.5 million for the three and six months ended June 30, 2019, respectively, compared to the same periods in 2018.

2017 Eastern Shore System Expansion
Eastern Shore has substantially completed the construction of a system expansion project that increased its capacity by 26 percent. Two remaining segments are expected to be placed into service in various phases during the third quarter of 2019. The project generated $2.8 million and $5.3 million in incremental gross margin during the three and six months ended June 30, 2019, respectively, compared to the same periods in 2018.  The project is expected to produce gross margin of approximately $16.2 million in 2019; $15.8 million annually from 2020 through 2022; and $13.2 million annually thereafter based on current customer capacity commitments.

Northwest Florida Expansion
In May 2018, Peninsula Pipeline completed construction of transmission lines, and our Florida natural gas division completed construction of lateral distribution lines, to serve customers in Northwest Florida. The project generated incremental gross margin of $0.5 million and $2.1 million for the three and six months ended June 30, 2019, respectively, compared to the same periods in 2018. The estimated annual gross margin from this project is $6.5 million for 2019 and beyond, with the opportunity for additional margin as the remaining capacity is sold.

Western Palm Beach County, Florida Expansion
Peninsula Pipeline is constructing four transmission lines to bring natural gas to the Company's distribution system in West Palm Beach, Florida. The first phase of this project was placed into service in December 2018 and generated $0.2 million and $0.3 million in additional gross margin for the three and six months ended June 30, 2019, respectively. The Company expects to complete the remainder of the project in phases through early 2020, and estimates that it will generate gross margin of $0.7 million in 2019 and $4.6 million annually thereafter.

Marlin Gas Services
In December 2018, the Company acquired certain operating assets of Marlin Gas Transport, a supplier of mobile compressed natural gas distribution and pipeline solutions, and created Marlin Gas Services, a new subsidiary which offers compressed natural gas solutions to supply interruption scenarios and provides other unique applications where pipeline supplies are unavailable or inadequate to meet customer requirements. Marlin Gas Services generated $1.0 million and $3.4 million of gross margin for the three and six months ended June 30, 2019, respectively.  The Company estimates that Marlin Gas Services will generate additional gross margin of approximately $5.4 million in 2019 and $6.3 million in 2020, and expects gross margin to grow beyond 2020 as Marlin Gas Services continues to actively expand the territories it serves as well as leverages its patented technology to potentially serve liquefied natural gas transportation needs.

Ohl Propane Acquisition
In December 2018, Sharp acquired certain propane customers and operating assets of Ohl.  Located between two of Sharp's existing districts, Ohl provided propane distribution service to approximately 2,500 residential and commercial customers in Pennsylvania.  The customers and assets acquired from Ohl have been assimilated into Sharp. The operations acquired from Ohl generated $0.1 million and $0.6 million of incremental gross margin for the three and six months ended June 30, 2019, respectively.  The Company estimates that this acquisition will generate additional gross margin of approximately $1.2 million for Sharp in 2019, with the potential for additional growth in future years.

Del-Mar Energy Pathway
In September 2018, Eastern Shore filed for FERC authorization to construct the Del-Mar Energy Pathway project to provide an additional 14,300 dekatherms per day of capacity to four customers.  The project will provide additional natural gas transmission pipeline infrastructure in eastern Sussex County, Delaware, and it will represent the first extension of Eastern Shore's pipeline system into Somerset County, Maryland. Interim services in advance of this project generated $0.2 million and $0.4 million for the three and six months ended June 30, 2019, respectively.  The estimated annual gross margin from this project is approximately $0.7 million in 2019, $3.0 million in 2020, $4.6 million in 2021 and $5.1 million annually thereafter.  Eastern Shore anticipates that this project will be fully in-service by mid-2021, contingent upon FERC issuing authorization for the project in the third quarter of 2019.

Callahan Intrastate Pipeline
In May 2018, Peninsula Pipeline announced its plan to construct a jointly owned intrastate transmission pipeline with Seacoast Gas Transmission in Nassau County, Florida.  The 26-mile pipeline, having an initial capacity of 148,000 dekatherms per day, will serve growing demand in both Nassau and Duval counties, Florida.  The project is expected to be placed in-service during the third quarter of 2020 and will generate gross margin for Peninsula Pipeline of $2.3 million in 2020 and $6.0 million annually thereafter.

Regulatory Initiatives

Florida Tax Savings Related to TCJA
In February 2019, the Florida PSC issued orders authorizing certain of the Company's natural gas distribution operations to retain a portion of the tax savings associated with the lower federal tax rates resulting from the TCJA.  In accordance with the PSC orders, the Company recognized $1.3 million in margin during the first quarter of 2019, reflecting the reversal of reserves recorded during 2018.  The Company expects the annual savings beginning in 2019 to continue in future years, and recognized additional margin of $0.2 million and $1.0 million during the three and six months ended June 30, 2019, respectively.

Other major factors influencing gross margin

Weather and Consumption
Weather conditions accounted for a $2.1 million decrease in gross margin during the second quarter of 2019, compared to the same period in 2018.  For the second quarter, period-over-period heating degree-days ("HDD") declined 42 percent on the Delmarva Peninsula and 19 percent in the Company's Ohio service territory.  For the six months ended June 30, 2019, weather conditions accounted for a $4.3 million decrease in gross margin.  Lower period-over-period HDD's in all of our service territories and extreme conditions due to the "Bomb Cyclone" in early 2018 reduced consumption in the first six months of 2019 compared to the same period in 2018 impacting both our Regulated and Unregulated Energy segments.  The following table summarizes HDD and cooling degree day ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three and six months ended June 30, 2019 and 2018.

 

Three Months Ended

     

Six Months Ended

   
 

June 30,

     

June 30,

   
 

2019

 

2018

 

Variance

 

2019

 

2018

 

Variance

Delmarva

                     

Actual HDD

247

   

424

   

(177)

   

2,569

   

2,719

   

(150)

 

10-Year Average HDD ("Normal")

400

   

423

   

(23)

   

2,749

   

2,785

   

(36)

 

Variance from Normal

(153)

   

1

       

(180)

   

(66)

     

Florida

                     

Actual HDD

18

   

17

   

1

   

379

   

507

   

(128)

 

10-Year Average HDD ("Normal")

14

   

16

   

(2)

   

532

   

533

   

(1)

 

Variance from Normal

4

   

1

       

(153)

   

(26)

     

Ohio

                     

Actual HDD

535

   

662

   

(127)

   

3,531

   

3,652

   

(121)

 

10-Year Average HDD ("Normal")

607

   

614

   

(7)

   

3,652

   

3,683

   

(31)

 

Variance from Normal

(72)

   

48

       

(121)

   

(31)

     

Florida

                     

Actual CDD

1,086

   

952

   

134

   

1,220

   

1,091

   

129

 

10-Year Average CDD ("Normal")

975

   

969

   

6

   

1,072

   

1,058

   

14

 

Variance from Normal

111

   

(17)

       

148

   

33

     

Natural Gas Distribution Margin Growth

New customer growth in the Company's natural gas distribution operations generated $0.9 million and $2.3 million of additional margin for the three and six months ended June 30, 2019, respectively.  The details for the three and six months ended June 30, 2019 are provided in the following table:

   

Three Months Ended

 

Six Months Ended

(in thousands)

 

June 30, 2019

 

June 30, 2019

Customer Growth:

       

Residential

 

$

446

   

$

1,085

 

Commercial and industrial

 

421

   

1,168

 

Total Customer Growth

 

$

867

   

$

2,253

 

The additional margin from new customers reflects an increase of approximately 3.7 percent and 3.8 percent for the three and six months ended June 30, 2019, respectively, in the average number of residential customers served on the Delmarva Peninsula, and approximately 3.8 percent and 3.5 percent growth in new residential customers served in Florida as well as an increase in the number of commercial and industrial customers served.

Capital Investment Growth and Financing

The Company's capital expenditures were $72.9 million for the six months ended June 30, 2019.  The following table shows the 2019 capital expenditure forecast of $177.8 million by segment and by business line:

 

2019

(dollars in thousands)

 

Regulated Energy:

 

Natural gas distribution

$

64,143

 

Natural gas transmission

66,787

 

Electric distribution

5,949

 

Total Regulated Energy

136,879

 

Unregulated Energy:

 

Propane distribution

11,870

 

Energy transmission

8,345

 

Other unregulated energy

11,000

 

Total Unregulated Energy

31,215

 

Other:

 

Corporate and other businesses

9,705

 

Total Other

9,705

 

Total 2019 Forecasted Capital Expenditures

$

177,799

 

The capital expenditure projection is subject to continuous review and modification. Actual capital requirements may vary from the above estimates due to a number of factors, including changing economic conditions, customer growth in existing areas, regulation, new growth or acquisition opportunities and availability of capital. Historically, actual capital expenditures have typically lagged behind the budgeted amounts.

Impact of Hurricane Michael
In October 2018, Hurricane Michael passed through Florida Public Utilities Company's ("FPU") electric distribution service territory in Northwest Florida. The hurricane caused widespread and severe damage to FPU's infrastructure, resulting in 100 percent of its Northwest Florida customers losing electrical service. FPU, after exerting extraordinary hurricane restoration efforts, restored service to those customers who were able to accept it.  FPU expended more than $65.0 million to restore service, which has been recorded as new plant and equipment, charged against FPU's accumulated depreciation or charged against FPU's storm reserve. In conjunction with the hurricane-related expenditures, the Company executed two 13-month unsecured term loans as temporary financing, each in the amount of $30.0 million. The interest cost associated with these loans is LIBOR plus 75 basis points. One of the term loans was executed in December 2018; the other was executed in January 2019. While there is a short-term negative impact, the storm is not expected to have a significant impact going forward, assuming recovery is granted through the regulatory process.  On August 7, 2019, the Company filed the necessary regulatory filings seeking recovery of the restoration costs incurred, including eligible financing costs.  FPU's results for the six months ended June 30, 2019 included interest expense of $0.5 million, or $0.4 million on an after-tax basis, associated with the intermediate term loans discussed above.

The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. The Company's equity to total capitalization ratio, including short term borrowings, was 45 percent as of June 30, 2019. Excluding the funds expended for Hurricane Michael restoration activities, the Company's equity to total capitalization ratio, including short-term borrowings, would have been approximately 48 percent.  The Company seeks to align permanent financing with the in-service dates of its capital projects.  The Company may utilize more temporary short-term debt, when the financing cost is attractive, as a bridge to the permanent long-term financing.

Chesapeake Utilities Corporation and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(in thousands, except shares and per share data)

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2019

 

2018

 

2019

 

2018

Operating Revenues

             

Regulated Energy

$

73,403

   

$

70,504

   

$

177,021

   

$

179,897

 

Unregulated Energy and other

57,500

   

66,160

   

181,498

   

196,123

 

Total Operating Revenues

130,903

   

136,664

   

358,519

   

376,020

 

Operating Expenses

             

Regulated Energy cost of sales

18,317

   

20,010

   

54,833

   

68,241

 

Unregulated Energy and other cost of sales

42,476

   

49,393

   

132,179

   

149,219

 

Operations

32,696

   

36,281

   

69,839

   

68,983

 

Maintenance

3,600

   

3,619

   

7,280

   

7,211

 

Gain from a settlement

(130)

   

(130)

   

(130)

   

(130)

 

Depreciation and amortization

11,609

   

9,839

   

22,684

   

19,543

 

Other taxes

4,899

   

4,404

   

10,405

   

9,299

 

Total operating expenses

113,467

   

123,416

   

297,090

   

322,366

 

Operating Income

17,436

   

13,248

   

61,429

   

53,654

 

Other expense, net

(316)

   

(262)

   

(361)

   

(194)

 

Interest charges

5,655

   

3,881

   

11,365

   

7,545

 

Income Before Income Taxes

11,465

   

9,105

   

49,703

   

45,915

 

Income taxes

3,161

   

2,718

   

12,735

   

12,674

 

Net Income

$

8,304

   

$

6,387

   

$

36,968

   

$

33,241

 

Weighted Average Common Shares Outstanding:

             

Basic

16,401,028

   

16,369,641

   

16,393,022

   

16,360,540

 

Diluted

16,445,743

   

16,417,082

   

16,439,333

   

16,410,061

 

Earnings Per Share of Common Stock:

             

Basic

$

0.51

   

$

0.39

   

$

2.26

   

$

2.03

 

Diluted

$

0.50

   

$

0.39

   

$

2.25

   

$

2.03

 

Chesapeake Utilities Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

 

Assets

 

June 30, 2019

 

December 31, 2018

(in thousands, except shares and per share data)

       

 Property, Plant and Equipment

       

Regulated Energy

 

$

1,380,591

   

$

1,297,416

 

Unregulated Energy

 

245,738

   

237,682

 

Other businesses and eliminations

 

30,347

   

34,585

 

 Total property, plant and equipment

 

1,656,676

   

1,569,683

 

 Less:  Accumulated depreciation and amortization

 

(321,284)

   

(294,295)

 

 Plus:  Construction work in progress

 

85,630

   

108,584

 

 Net property, plant and equipment

 

1,421,022

   

1,383,972

 

 Current Assets

       

Cash and cash equivalents

 

7,254

   

6,089

 

Trade and other receivables (less allowance for uncollectible accounts of $1,190 and $1,108, respectively)

 

48,908

   

85,404

 

Accrued revenue

 

12,724

   

27,499

 

Propane inventory, at average cost

 

5,143

   

9,791

 

Other inventory, at average cost

 

7,778

   

7,127

 

Regulatory assets

 

6,842

   

4,796

 

Storage gas prepayments

 

4,143

   

6,603

 

Income taxes receivable

 

10,984

   

15,300

 

Prepaid expenses

 

5,873

   

10,079

 

Derivative assets, at fair value

 

10,571

   

13,165

 

Other current assets

 

4,022

   

5,684

 

 Total current assets

 

124,242

   

191,537

 

 Deferred Charges and Other Assets

       

Goodwill

 

25,785

   

25,837

 

Other intangible assets, net

 

5,611

   

6,207

 

Investments, at fair value

 

8,821

   

6,711

 

Operating lease right-of-use assets (1)

 

12,404

   

 

Regulatory assets

 

76,945

   

72,422

 

Other assets

 

6,212

   

6,985

 

 Total deferred charges and other assets

 

135,778

   

118,162

 

Total Assets

 

$

1,681,042

   

$

1,693,671

 
 

(1) During the first quarter of 2019, the Company adopted a new lease accounting standard, resulting in additional assets and liabilities (both current and non-current portions) which total $12.4 million at June 30, 2019.

Chesapeake Utilities Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

Capitalization and Liabilities

 

June 30, 2019

 

December 31, 2018

(in thousands, except shares and per share data)

       

 Capitalization

       

 Stockholders' equity

       

Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding

 

$

   

$

 

Common stock, par value $0.4867 per share (authorized 50,000,000 shares)

 

7,984

   

7,971

 

 Additional paid-in capital

 

256,385

   

255,651

 

 Retained earnings

 

285,762

   

261,530

 

 Accumulated other comprehensive loss

 

(5,747)

   

(6,713)

 

 Deferred compensation obligation

 

4,694

   

3,854

 

 Treasury stock

 

(4,694)

   

(3,854)

 

 Total stockholders' equity

 

544,384

   

518,439

 

 Long-term debt, net of current maturities

 

275,924

   

316,020

 

 Total capitalization

 

820,308

   

834,459

 

 Current Liabilities

       

Current portion of long-term debt

 

75,600

   

11,935

 

Short-term borrowing

 

301,226

   

294,458

 

Accounts payable

 

50,645

   

129,804

 

Customer deposits and refunds

 

29,839

   

34,155

 

Accrued interest

 

2,073

   

2,317

 

Dividends payable

 

6,644

   

6,060

 

Accrued compensation

 

8,699

   

13,923

 

Regulatory liabilities

 

10,168

   

7,883

 

Derivative liabilities, at fair value

 

10,994

   

14,871

 

Other accrued liabilities (1)

 

16,527

   

12,828

 

 Total current liabilities

 

512,415

   

528,234

 

 Deferred Credits and Other Liabilities

       

Deferred income taxes

 

164,421

   

156,820

 

Regulatory liabilities

 

133,858

   

135,039

 

Environmental liabilities

 

6,994

   

7,638

 

Other pension and benefit costs

 

29,675

   

28,513

 

Operating lease - liabilities (1)

 

10,710

   

 

Deferred investment tax credits and other liabilities

 

2,661

   

2,968

 

 Total deferred credits and other liabilities

 

348,319

   

330,978

 

Total Capitalization and Liabilities

 

$

1,681,042

   

$

1,693,671

 
 

(1) During the first quarter of 2019, the Company adopted a new lease accounting standard, resulting in additional assets and liabilities (both current and non-current portions) which total $12.4 million at June 30, 2019.

Chesapeake Utilities Corporation and Subsidiaries

Distribution Utility Statistical Data (Unaudited)

   

For the Three Months Ended June 30, 2019

 

For the Three Months Ended June 30, 2018

   

Delmarva NG Distribution

 

Chesapeake Utilities Florida NG Division

 

FPU NG Distribution

 

FPU Electric Distribution

 

Delmarva NG Distribution

 

Chesapeake Utilities Florida NG Division

 

FPU NG Distribution

 

FPU Electric Distribution

Operating Revenues

(in thousands)

                           

  Residential

 

$

10,444

   

$

1,511

   

$

7,457

   

$

10,801

   

$

14,007

   

$

1,459

   

$

7,713

   

$

9,814

 

  Commercial

 

6,353

   

1,587

   

6,633

   

9,807

   

7,752

   

1,524

   

6,809

   

9,709

 

  Industrial

 

1,773

   

3,122

   

6,062

   

416

   

1,987

   

2,854

   

5,218

   

371

 

  Other (1)

 

(3,647)

   

795

   

(1,489)

   

(560)

   

(3,496)

   

480

   

(1,459)

   

(1,532)

 

Total Operating Revenues

 

$

14,923

   

$

7,015

   

$

18,663

   

$

20,464

   

$

20,250

   

$

6,317

   

$

18,281

   

$

18,362

 
                                 

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

                       

  Residential

 

558,159

   

83,315

   

317,025

   

72,358

   

759,202

   

85,526

   

329,284

   

66,682

 

  Commercial

 

673,689

   

1,143,877

   

426,555

   

79,540

   

711,690

   

1,134,555

   

432,192

   

73,276

 

  Industrial

 

1,216,120

   

7,065,699

   

1,226,774

   

3,173

   

1,308,129

   

7,024,154

   

1,245,950

   

3,540

 

  Other

 

60,515

   

   

634,071

   

   

17,759

   

   

463,846

   

1,907

 

Total

 

2,508,483

   

8,292,891

   

2,604,425

   

155,071

   

2,796,780

   

8,244,235

   

2,471,272

   

145,405

 
                                 

Average Customers

                           

  Residential

 

73,666

   

17,205

   

57,504

   

24,530

   

71,038

   

16,391

   

55,580

   

24,714

 

  Commercial(2)

 

7,085

   

1,544

   

3,937

   

7,228

   

6,994

   

1,517

   

3,932

   

7,493

 

  Industrial(2)

 

168

   

17

   

2,435

   

2

   

155

   

16

   

2,284

   

2

 

  Other

 

16

   

   

12

   

   

4

   

   

11

   

 

Total

 

80,935

   

18,766

   

63,888

   

31,760

   

78,191

   

17,924

   

61,807

   

32,209

 
                                 
   

For the Six Months Ended June 30, 2019

 

For the Six Months Ended June 30, 2018

   

Delmarva NG Distribution

 

Chesapeake Utilities Florida NG Division

 

FPU NG Distribution

 

FPU Electric Distribution

 

Delmarva NG Distribution

 

Chesapeake Utilities Florida NG Division

 

FPU NG Distribution

 

FPU Electric Distribution

Operating Revenues

(in thousands)

                           

  Residential

 

$

40,414

   

$

3,297

   

$

18,177

   

$

20,661

   

$

49,321

   

$

3,219

   

$

18,888

   

$

21,346

 

  Commercial

 

19,494

   

3,325

   

14,336

   

17,622

   

23,582

   

3,246

   

15,135

   

18,866

 

  Industrial

 

4,162

   

6,387

   

12,060

   

1,026

   

4,293

   

4,725

   

11,590

   

771

 

  Other (1)

 

(4,468)

   

1,906

   

(2,123)

   

(4,467)

   

(5,239)

   

990

   

(4,119)

   

(3,880)

 

Total Operating Revenues

 

$

59,602

   

$

14,915

   

$

42,450

   

$

34,842

   

$

71,957

   

$

12,180

   

$

41,494

   

$

37,103

 
                                 

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

                       

  Residential

 

2,778,534

   

216,187

   

822,351

   

137,869

   

2,999,757

   

226,285

   

852,346

   

145,210

 

  Commercial

 

2,327,009

   

2,392,641

   

930,601

   

141,369

   

2,417,116

   

2,374,462

   

967,736

   

141,015

 

  Industrial

 

2,727,428

   

14,399,549

   

2,574,011

   

10,923

   

2,817,168

   

10,089,859

   

2,550,480

   

8,060

 

  Other

 

78,374

   

   

1,189,462

   

   

30,292

   

   

984,353

   

3,803

 

Total

 

7,911,345

   

17,008,377

   

5,516,425

   

290,161

   

8,264,333

   

12,690,606

   

5,354,915

   

298,088

 
                                 

Average Customers

                           

  Residential

 

73,821

   

17,097

   

57,166

   

24,455

   

71,136

   

16,307

   

55,430

   

24,679

 

  Commercial(2)

 

7,116

   

1,537

   

3,917

   

7,230

   

7,009

   

1,509

   

3,930

   

7,487

 

  Industrial(2)

 

168

   

17

   

2,425

   

2

   

154

   

16

   

2,268

   

2

 

  Other

 

12

   

   

12

   

   

5

   

   

14

   

 

Total

 

81,117

   

18,651

   

63,520

   

31,687

   

78,304

   

17,832

   

61,642

   

32,168

 
 

(1)  Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges, fees for billing services provided to third parties, and adjustments or changes in taxes, such as the TCJA, which are passed through to customers. This amount also includes the reserve for estimated customer refunds associated with the TCJA.

(2)  Certain volumes and customers have been reclassified when compared to the prior year for consistency with current year presentation.

SOURCE Chesapeake Utilities Corporation

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