UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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| Item 7.01 | Regulation FD Disclosure. |
On August 25 - 26, 2020, management from Chesapeake Utilities Corporation (the “Company”) will participate in a Virtual Road Show sponsored by Wells Fargo Securities, LLC. The Company will virtually join members of the investment firms in a series of scheduled meetings. The Company’s investor presentation includes certain forward-looking information. A copy of this investor presentation material is attached to this Current Report on Form 8-K (this “Report”) as Exhibit 99.1. The investor presentation material is also available in the “Investors” section of the Company’s website, sub-section “Events and Presentations” (www.chpk.com).
The information contained in this Item 7.01 and in Exhibit 99.1 attached to this Report is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of such section. Furthermore, such information shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.
| Item 9.01 | Financial Statements and Exhibits. |
| Exhibit Numbers |
Description | |
| 99.1 | Wells Fargo Virtual Road Show Presentation | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Chesapeake Utilities Corporation | ||||||
| August 25, 2020 | By: | /s/ Beth W. Cooper | ||||
| Name: | Beth W. Cooper | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
Exhibit 99.1 Commitment Growth Leadership Safety Sustainability Solutions Driven By Energy Strength Team Wells Fargo Service Virtual Road Show August 25-26, 2020 Performance Community ValueExhibit 99.1 Commitment Growth Leadership Safety Sustainability Solutions Driven By Energy Strength Team Wells Fargo Service Virtual Road Show August 25-26, 2020 Performance Community Value
Forward Looking Statements and Other Disclosures Safe Harbor Statement: Some of the Statements in this document concerning future Company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements. You should refer to the additional information contained in ChesapeakeUtilities’ 2019 Annual Report on Form 10-K, the Form 10-Q for the quarter ended March 31, 2020 filed with the SEC and other SEC filings concerning factors that could cause those results to be different than contemplated intoday’s discussion. REG D Disclosure:Today’s discussion includes certain non-GAAP financial measures as defined under SEC Regulation D. Although non-GAAP measures are not intended to replace GAAP measures for evaluation ofChesapeake’s performance, Chesapeake believes that portions of the presentation, which include certain non-GAAP financial measures, provide a helpful comparison for aninvestor’s evaluation purposes. Gross Margin (non-GAAP measure): Gross Margin is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electric and propane distribution operations and the cost of labor spent on different revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. COVID-19 Impact: At this time, we cannot fully quantify the impact that the Coronavirus Disease 2019 (“COVID-19”) will have on the economy, and more particularly, on Chesapeake Utilities Corporation (“ChesapeakeUtilities” or the“Company”). The earnings and capital estimates we have included herein do not reflect any estimates of the potential impact. For the second quarter and year-to-date we have provided financial accounting estimates of the short-term impact of COVID-19. As we gain further clarity on the disruption to our operations caused by COVID-19, including the impact on our projected gross margin, EPS estimates, timing of capital expenditures, etc., we will update our guidance as necessary. Please note that Chesapeake Utilities Corporation (NYSE: CPK) is not affiliated with Chesapeake Energy (NYSE: CHK), an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma. 2Forward Looking Statements and Other Disclosures Safe Harbor Statement: Some of the Statements in this document concerning future Company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements. You should refer to the additional information contained in ChesapeakeUtilities’ 2019 Annual Report on Form 10-K, the Form 10-Q for the quarter ended March 31, 2020 filed with the SEC and other SEC filings concerning factors that could cause those results to be different than contemplated intoday’s discussion. REG D Disclosure:Today’s discussion includes certain non-GAAP financial measures as defined under SEC Regulation D. Although non-GAAP measures are not intended to replace GAAP measures for evaluation ofChesapeake’s performance, Chesapeake believes that portions of the presentation, which include certain non-GAAP financial measures, provide a helpful comparison for aninvestor’s evaluation purposes. Gross Margin (non-GAAP measure): Gross Margin is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electric and propane distribution operations and the cost of labor spent on different revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. COVID-19 Impact: At this time, we cannot fully quantify the impact that the Coronavirus Disease 2019 (“COVID-19”) will have on the economy, and more particularly, on Chesapeake Utilities Corporation (“ChesapeakeUtilities” or the“Company”). The earnings and capital estimates we have included herein do not reflect any estimates of the potential impact. For the second quarter and year-to-date we have provided financial accounting estimates of the short-term impact of COVID-19. As we gain further clarity on the disruption to our operations caused by COVID-19, including the impact on our projected gross margin, EPS estimates, timing of capital expenditures, etc., we will update our guidance as necessary. Please note that Chesapeake Utilities Corporation (NYSE: CPK) is not affiliated with Chesapeake Energy (NYSE: CHK), an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma. 2
Driven by Energy. Delivering Energy Annual Five Year Performance thru June 30, 2020 Shareholder Return Return 11.3% on Equity Earnings 11.7% Retention Dividend 56.9% Growth EPS 8.9% Growth Cap Ex/Total 8.4% Capitalization 21.7% 3Driven by Energy. Delivering Energy Annual Five Year Performance thru June 30, 2020 Shareholder Return Return 11.3% on Equity Earnings 11.7% Retention Dividend 56.9% Growth EPS 8.9% Growth Cap Ex/Total 8.4% Capitalization 21.7% 3
Business Overview Diversified Energy Delivery Business Natural Gas Transmission Delaware, Maryland, Pennsylvania, Florida Midstream Natural Gas Distribution 38% Delaware, Maryland, Florida 81% Electric Distribution Florida Propane Distribution and AutoGas Delaware, Maryland, Pennsylvania, Virginia, Florida Downstream Marlin Mobile CNG and RNG Utility Services (Virtual Pipeline) 62% Eight Flags Combined Heat & Power 19% Eastern United States Natural Gas Transportation Ohio Operating Income from Continuing Operations For the Year Ended December 31, (in thousands) 2019 2018 2017 2016 2015 Regulated Energy $ 86,584 $ 79,215 $ 74,584 $ 71,515 $ 62,137 Unregulated Energy 19,939 1 7,124 1 4,941 11,732 14,244 Other businesses and eliminations (236) (1,496) 205 402 418 Total Operating Income from 4 Continuing Operations $ 106,287 $ 94,843 $ 89,730 $ 83,649 $ 76,799 Unregulated Energy Regulated EnergyBusiness Overview Diversified Energy Delivery Business Natural Gas Transmission Delaware, Maryland, Pennsylvania, Florida Midstream Natural Gas Distribution 38% Delaware, Maryland, Florida 81% Electric Distribution Florida Propane Distribution and AutoGas Delaware, Maryland, Pennsylvania, Virginia, Florida Downstream Marlin Mobile CNG and RNG Utility Services (Virtual Pipeline) 62% Eight Flags Combined Heat & Power 19% Eastern United States Natural Gas Transportation Ohio Operating Income from Continuing Operations For the Year Ended December 31, (in thousands) 2019 2018 2017 2016 2015 Regulated Energy $ 86,584 $ 79,215 $ 74,584 $ 71,515 $ 62,137 Unregulated Energy 19,939 1 7,124 1 4,941 11,732 14,244 Other businesses and eliminations (236) (1,496) 205 402 418 Total Operating Income from 4 Continuing Operations $ 106,287 $ 94,843 $ 89,730 $ 83,649 $ 76,799 Unregulated Energy Regulated Energy
Commitment to Employees, Customers and Communities Investors/Financial Employees Community • Premium pay to field employees through June • Chrome books for children of employees to do their school work • Reaffirm 2022 EPS target $4.70 to $4.90 and • Social distancing protocols in effect along with Capital investment target range of $750 personal protective equipment, where appropriate million to $1 billion 2018 thru 2022 • Employees working remotely as much as possible • Growth projects and business development • Company holiday in May activities continue as planned • Strong balance sheet and liquidity position Customers to provide adequate capital for growth • Dividend growth of 8.6% in 2020 driven by • Our distribution and transmission businesses EPS growth are considered essential businesses • Suspended service disconnects, waived late fees, extended payment terms, etc. • Proactively promoting budget programs and payment options to customers Communities • Everyday commitment to local communities • $238,000 in contributions to local organizations to aid in the fight against the COVID-19 impact • Chesapeake is matching employee donations to local community organizations Driven by Commitment 5Commitment to Employees, Customers and Communities Investors/Financial Employees Community • Premium pay to field employees through June • Chrome books for children of employees to do their school work • Reaffirm 2022 EPS target $4.70 to $4.90 and • Social distancing protocols in effect along with Capital investment target range of $750 personal protective equipment, where appropriate million to $1 billion 2018 thru 2022 • Employees working remotely as much as possible • Growth projects and business development • Company holiday in May activities continue as planned • Strong balance sheet and liquidity position Customers to provide adequate capital for growth • Dividend growth of 8.6% in 2020 driven by • Our distribution and transmission businesses EPS growth are considered essential businesses • Suspended service disconnects, waived late fees, extended payment terms, etc. • Proactively promoting budget programs and payment options to customers Communities • Everyday commitment to local communities • $238,000 in contributions to local organizations to aid in the fight against the COVID-19 impact • Chesapeake is matching employee donations to local community organizations Driven by Commitment 5
Delivering Solid Results in 2020 • Achieved strong second quarter results; solid year- to-date operating earnings across all business units • Operational savings and best practices performance improvements being implemented across functional distribution and transmission businesses in all regions • Progressing on key deliverables: • Boulden acquisition integrated with Sharp Energy • Renewable natural gas projects underway on Delmarva st • Elkton Gas acquisition completed July 31 • Pipeline expansion projects continue to move forward • Hurricane Michael regulatory proceeding ongoing • Major Projects margin contribution: • 2020 estimate $38 million • 2021 estimate $52 million 6Delivering Solid Results in 2020 • Achieved strong second quarter results; solid year- to-date operating earnings across all business units • Operational savings and best practices performance improvements being implemented across functional distribution and transmission businesses in all regions • Progressing on key deliverables: • Boulden acquisition integrated with Sharp Energy • Renewable natural gas projects underway on Delmarva st • Elkton Gas acquisition completed July 31 • Pipeline expansion projects continue to move forward • Hurricane Michael regulatory proceeding ongoing • Major Projects margin contribution: • 2020 estimate $38 million • 2021 estimate $52 million 6
Second Quarter Overview Earnings Per Share Second Quarter Year-to-Date 2020 2019 2019 2020 $ 0.66 $ 0.50 $ 2.42 $ 2.25 Strong performance for the first half of 2020 : • Continued growth in the Company's businesses • Addition of the Boulden acquisition • Retail propane margins per gallon • Expense management • Gains from property sales overcame milder weather and the impact of COVID-19 • Interim billings related to Hurricane Michael recovery have been deferred pending final regulatory approval Our diverse and engaged employees’ ability to execute during these challenging times is demonstrated by our strong performance and significant business achievements during the quarter. Generating increased performance quarter-over- quarter, as well as on a year-to-date basis, was a significant accomplishment in the midst of the COVID-19 pandemic. We have continued to remain extremely focused on employee and customer health and safety as we safely and reliably deliver our essential energy services during this global pandemic. 7Second Quarter Overview Earnings Per Share Second Quarter Year-to-Date 2020 2019 2019 2020 $ 0.66 $ 0.50 $ 2.42 $ 2.25 Strong performance for the first half of 2020 : • Continued growth in the Company's businesses • Addition of the Boulden acquisition • Retail propane margins per gallon • Expense management • Gains from property sales overcame milder weather and the impact of COVID-19 • Interim billings related to Hurricane Michael recovery have been deferred pending final regulatory approval Our diverse and engaged employees’ ability to execute during these challenging times is demonstrated by our strong performance and significant business achievements during the quarter. Generating increased performance quarter-over- quarter, as well as on a year-to-date basis, was a significant accomplishment in the midst of the COVID-19 pandemic. We have continued to remain extremely focused on employee and customer health and safety as we safely and reliably deliver our essential energy services during this global pandemic. 7
Key Business Factors: COVID–19 Impact • Chesapeake Utilities is an “essential business” to our customers and communities. As such, our operational activities and construction projects continue; all the while, we are adhering to safety guidelines and social distancing. • The Company’s pandemic response plan, which has included all employees who can to telework, and providing personal protective equipment (PPE) to those customers who have continued to operate in the field delivering our essential services. • For the three and six months ended June 30, 2020, respectively, the COVID-19 impacts were $2.5 million and $2.9 million, respectively • Primarily driven by reduced consumption of energy largely in the commercial and industrial Margin sector • COVID-19 margin decreases offset by higher residential use due to stay at home provisions • Additional expenses incurred in support of the ongoing delivery of or our essential services during these unprecedented times ($1.8 million for Second Quarter and Year-to-Date) • Personal protective equipment cost, premium pay for field operations and higher bad debt Expenses expense • COVID-19 related expenses offset by reduced travel cost and lower financing costs • As the COVID-19 pandemic is ongoing, the Company to date has not established regulatory assets associated with the incremental expense impact, as currently authorized by Maryland and Delaware PSCs Regulatory • In Florida, the PSC has decided not to address a Regulatory asset Statewide, but rather for each independent utility request with a petition. • No significant COVID-19 on our FERC Regulated interstate transmission line 8Key Business Factors: COVID–19 Impact • Chesapeake Utilities is an “essential business” to our customers and communities. As such, our operational activities and construction projects continue; all the while, we are adhering to safety guidelines and social distancing. • The Company’s pandemic response plan, which has included all employees who can to telework, and providing personal protective equipment (PPE) to those customers who have continued to operate in the field delivering our essential services. • For the three and six months ended June 30, 2020, respectively, the COVID-19 impacts were $2.5 million and $2.9 million, respectively • Primarily driven by reduced consumption of energy largely in the commercial and industrial Margin sector • COVID-19 margin decreases offset by higher residential use due to stay at home provisions • Additional expenses incurred in support of the ongoing delivery of or our essential services during these unprecedented times ($1.8 million for Second Quarter and Year-to-Date) • Personal protective equipment cost, premium pay for field operations and higher bad debt Expenses expense • COVID-19 related expenses offset by reduced travel cost and lower financing costs • As the COVID-19 pandemic is ongoing, the Company to date has not established regulatory assets associated with the incremental expense impact, as currently authorized by Maryland and Delaware PSCs Regulatory • In Florida, the PSC has decided not to address a Regulatory asset Statewide, but rather for each independent utility request with a petition. • No significant COVID-19 on our FERC Regulated interstate transmission line 8
Capital Expenditures Forecast Estimate for 2020 Forecast for Fiscal 2020 (dollars in thousands) Low High Regulated Energy: Natural gas distribution $ 75,000 $ 80,000 Natural gas transmission 70,000 80,000 Electric distribution 5,000 7,000 Total Regulated Energy 150,000 167,000 Unregulated Energy: Propane distribution 10,000 13,000 Energy transmission 10,000 15,000 Other unregulated energy 14,000 19,000 Total Unregulated Energy 34,000 25,000 Other: Corporate and other businesses 1,000 1,000 Total 2020 Capital Expenditures $ 185,000 $ 215,000 The Company's capital expenditures were $88.4 million for the six months ended June 30, 2020. We will continue to update this forecast as we move through the year, including any unexpected capital delays resulting from COVID-19. 9Capital Expenditures Forecast Estimate for 2020 Forecast for Fiscal 2020 (dollars in thousands) Low High Regulated Energy: Natural gas distribution $ 75,000 $ 80,000 Natural gas transmission 70,000 80,000 Electric distribution 5,000 7,000 Total Regulated Energy 150,000 167,000 Unregulated Energy: Propane distribution 10,000 13,000 Energy transmission 10,000 15,000 Other unregulated energy 14,000 19,000 Total Unregulated Energy 34,000 25,000 Other: Corporate and other businesses 1,000 1,000 Total 2020 Capital Expenditures $ 185,000 $ 215,000 The Company's capital expenditures were $88.4 million for the six months ended June 30, 2020. We will continue to update this forecast as we move through the year, including any unexpected capital delays resulting from COVID-19. 9
Recent and Current System Expansions Natural Gas Services to New Territories Projects Underway Recently Completed ESNG 2017 Northwest Florida System Expansion Expansion Project (Delmarva Del-Mar Energy West Palm Beach Peninsula Pathway County Expansion Expansion (Florida) Full Service Q4 Full Service Q3 2021 2020 Callahan Auburndale Expansion (FL) Expansion (FL) In Service June 2020 Guernsey Pipeline RNG Transportation Expansion (Ohio) (Delmarva) Partial Service Q4 2021 2021 Elkton LDC Natural Gas Acquisition 10Recent and Current System Expansions Natural Gas Services to New Territories Projects Underway Recently Completed ESNG 2017 Northwest Florida System Expansion Expansion Project (Delmarva Del-Mar Energy West Palm Beach Peninsula Pathway County Expansion Expansion (Florida) Full Service Q4 Full Service Q3 2021 2020 Callahan Auburndale Expansion (FL) Expansion (FL) In Service June 2020 Guernsey Pipeline RNG Transportation Expansion (Ohio) (Delmarva) Partial Service Q4 2021 2021 Elkton LDC Natural Gas Acquisition 10
Major Projects and Initiatives Gross Margin Contributions 11Major Projects and Initiatives Gross Margin Contributions 11
Elkton Gas Company Summary of Transaction Acquisition Completed • Chesapeake Utilities and South Jersey Industries completed the agreement for the acquisition of Elton Gas Company at a price of approximately $15 million on July 31, 2020. • Elkton Gas serves approximately 7,000 customers within a franchised area of Cecil County, Maryland contiguous to Chesapeake’s franchised service territory in Cecil County • Elkton Gas has been a customer of Chesapeake’s interstate transmission pipeline since 1959. • With the expanded presence in Cecil County, the gas distribution system can be serviced locally with Chesapeake personnel 12Elkton Gas Company Summary of Transaction Acquisition Completed • Chesapeake Utilities and South Jersey Industries completed the agreement for the acquisition of Elton Gas Company at a price of approximately $15 million on July 31, 2020. • Elkton Gas serves approximately 7,000 customers within a franchised area of Cecil County, Maryland contiguous to Chesapeake’s franchised service territory in Cecil County • Elkton Gas has been a customer of Chesapeake’s interstate transmission pipeline since 1959. • With the expanded presence in Cecil County, the gas distribution system can be serviced locally with Chesapeake personnel 12
Indicative RNG Scenario on the Delmarva Peninsula Across the CPK Value Chain Composting Plant Organic Fertilizer generates Raw Compost Fertilizer Landfill Renewable Natural Gas Poultry Farms processes (RNG) can be flared off, generate or processed and Chicken Waste & Waste Water cleaned and ultimately Biodigester distributed to residential LDC generates customers Processed Fertilizer and RNG Economic and Environmental Sustainability After processing and cleaning, RNG For Delmarva poultry industry and Chesapeake Bay Watershed can be transported by Marlin to See CPK press releases dated June 18 and July 7, 2020 regarding Eastern Shore Natural Gas pipelines, and ultimately distributed to new partnerships with Bioenergy DevCo and CleanBay Renewables Chesapeake LDC residential customers 13Indicative RNG Scenario on the Delmarva Peninsula Across the CPK Value Chain Composting Plant Organic Fertilizer generates Raw Compost Fertilizer Landfill Renewable Natural Gas Poultry Farms processes (RNG) can be flared off, generate or processed and Chicken Waste & Waste Water cleaned and ultimately Biodigester distributed to residential LDC generates customers Processed Fertilizer and RNG Economic and Environmental Sustainability After processing and cleaning, RNG For Delmarva poultry industry and Chesapeake Bay Watershed can be transported by Marlin to See CPK press releases dated June 18 and July 7, 2020 regarding Eastern Shore Natural Gas pipelines, and ultimately distributed to new partnerships with Bioenergy DevCo and CleanBay Renewables Chesapeake LDC residential customers 13
CPK’s Renewable Natural Gas Proposition Presents Multiple Investment Opportunities Distribution Transmission Marlin Operations Operations Potential investment Additional Interstate pipeline in gas processing transportation Investment interconnects for equipment which we equipment to receipt of renewable will seek to include support this growing Opportunity natural gas in rate base opportunity Tariff changes made No tariff changes by ESNG to accept Regulatory Unregulated Gas initially; will be part this pipeline quality Transport of the PGA. gas. PPC filing to be Actions done in the future. Multi-year contracts Multi-year contracts for receipt of gas into Multi-year contracts for processing and system and delivery to transport gas to Long-term Value receipt of gas into into distribution pipeline systems. distribution system. system. • As a result of the Bioenergy DevCo and CleanBay projects, the Company expects to generate $1.0 million in incremental margin in 2021 from renewable gas transportation. • These projects provide the opportunity for the Company to utilize renewable natural gas, and play an active role in the clean-up of poultry waste as well support the sustainability of agribusiness on Delmarva. • There are numerous profitable investment opportunities across the CPK value chain as we play a key role in ensuring a sustainable future for our local communities. 14CPK’s Renewable Natural Gas Proposition Presents Multiple Investment Opportunities Distribution Transmission Marlin Operations Operations Potential investment Additional Interstate pipeline in gas processing transportation Investment interconnects for equipment which we equipment to receipt of renewable will seek to include support this growing Opportunity natural gas in rate base opportunity Tariff changes made No tariff changes by ESNG to accept Regulatory Unregulated Gas initially; will be part this pipeline quality Transport of the PGA. gas. PPC filing to be Actions done in the future. Multi-year contracts Multi-year contracts for receipt of gas into Multi-year contracts for processing and system and delivery to transport gas to Long-term Value receipt of gas into into distribution pipeline systems. distribution system. system. • As a result of the Bioenergy DevCo and CleanBay projects, the Company expects to generate $1.0 million in incremental margin in 2021 from renewable gas transportation. • These projects provide the opportunity for the Company to utilize renewable natural gas, and play an active role in the clean-up of poultry waste as well support the sustainability of agribusiness on Delmarva. • There are numerous profitable investment opportunities across the CPK value chain as we play a key role in ensuring a sustainable future for our local communities. 14
Key Regulatory Initiatives Hurricane Michael Limited Proceeding • October 2018 Hurricane Michael – Northwest Florida • August 2019 FPU filed limited proceeding with Florida PSC • Fourth Quarter 2019 FPU and the Office of Public Counsel filed a request to approve interim rates • FPU continues to work with the • Requested recovery of storm related costs through a Florida PSC on Hurricanes Michael change in base rates and Dorian storm recovery • Requested certain storm related costs as a regulatory asset for costs not allowed through the storm reserve, as well as the recovery of plant investment • Interim rates were established in January 2020 and have been fully reserved pending final resolution of the proceeding 15Key Regulatory Initiatives Hurricane Michael Limited Proceeding • October 2018 Hurricane Michael – Northwest Florida • August 2019 FPU filed limited proceeding with Florida PSC • Fourth Quarter 2019 FPU and the Office of Public Counsel filed a request to approve interim rates • FPU continues to work with the • Requested recovery of storm related costs through a Florida PSC on Hurricanes Michael change in base rates and Dorian storm recovery • Requested certain storm related costs as a regulatory asset for costs not allowed through the storm reserve, as well as the recovery of plant investment • Interim rates were established in January 2020 and have been fully reserved pending final resolution of the proceeding 15
Capital Capacity to Support Future Growth Available Financing Capacity • $370 million bank lines of credit through (in thousands) October 2020 Stockholders' Equity Long-Term Debt Short-Term Debt * * • $95 million incremental liquidity if needed $1,500,000 through October 2020 $1,325,388 $1,294,716 • $90 million LTD funded Third Quarter 2020 $1,140,852 • 15 Years at Average 2.98% $302,005 $292,971 $944,079 $306,393• $310 million private placement shelf facilities $1,000,000 available for additional financing needs $805,010 $260,390 $430,106 $440,168 $689,692 $221,970 $316,020 Chesapeake seeks to align permanent $182,548 $197,395 $136,954 $500,000 financing with the in-service dates of its $149,006 capital projects $593,277 $561,577 $518,439 $486,294 $446,086 • $31.7 million increased equity year-to-date $358,138 $0 • $25.8 million earnings retention 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 6/30/20 • $ 4.1 million issued under stock plans • $ 1.8 million other comprehensive income Equity/Permanent 70.6% 76.5% 71.1% 62.1% 56.1% 58.0% Capitalization • $75 million ATM Program Filed 8/17/2020 Equity/Total 51.9% 55.4% 51.5% 45.4% 43.4% 44.8% Capitalization Target Equity to Total Capitalization Ratio **Short-term Debt Includes Current Portion of Long-Term Debt of 50% or Higher Green Line Shows 50% Equity to Total Capital Target 16Capital Capacity to Support Future Growth Available Financing Capacity • $370 million bank lines of credit through (in thousands) October 2020 Stockholders' Equity Long-Term Debt Short-Term Debt * * • $95 million incremental liquidity if needed $1,500,000 through October 2020 $1,325,388 $1,294,716 • $90 million LTD funded Third Quarter 2020 $1,140,852 • 15 Years at Average 2.98% $302,005 $292,971 $944,079 $306,393• $310 million private placement shelf facilities $1,000,000 available for additional financing needs $805,010 $260,390 $430,106 $440,168 $689,692 $221,970 $316,020 Chesapeake seeks to align permanent $182,548 $197,395 $136,954 $500,000 financing with the in-service dates of its $149,006 capital projects $593,277 $561,577 $518,439 $486,294 $446,086 • $31.7 million increased equity year-to-date $358,138 $0 • $25.8 million earnings retention 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 6/30/20 • $ 4.1 million issued under stock plans • $ 1.8 million other comprehensive income Equity/Permanent 70.6% 76.5% 71.1% 62.1% 56.1% 58.0% Capitalization • $75 million ATM Program Filed 8/17/2020 Equity/Total 51.9% 55.4% 51.5% 45.4% 43.4% 44.8% Capitalization Target Equity to Total Capitalization Ratio **Short-term Debt Includes Current Portion of Long-Term Debt of 50% or Higher Green Line Shows 50% Equity to Total Capital Target 16
ESG Stewardship • We remain steadfast in our commitment to environmental, social and governance stewardship. • The key to our success is our strong culture that fully engages all of our team members. • We are a responsible company that promotes safety, integrity, accountability and reliability • Our diverse, talented and hard-working team is the drive behind our strategic growth and our commitment to providing safe, reliable, sustainable and efficient energy solutions to customers. • Our corporate governance is the foundation of our processes and our decision-making throughout the Company, beginning with our Board of Directors and extending to every employee. • We continue to cultivate the Chesapeake Utilities’ sustainability story. 17ESG Stewardship • We remain steadfast in our commitment to environmental, social and governance stewardship. • The key to our success is our strong culture that fully engages all of our team members. • We are a responsible company that promotes safety, integrity, accountability and reliability • Our diverse, talented and hard-working team is the drive behind our strategic growth and our commitment to providing safe, reliable, sustainable and efficient energy solutions to customers. • Our corporate governance is the foundation of our processes and our decision-making throughout the Company, beginning with our Board of Directors and extending to every employee. • We continue to cultivate the Chesapeake Utilities’ sustainability story. 17
ESG At Our Core Women in Utilities Webinar – Be Extraordinary Measures to help keep employees, Everyday by Demonstrating Diversity. customers and communities safe and Equity, Diversity healthy during the COVID-19 pandemic. and Inclusion Council Promotes During these extraordinary times, we are honored to support our customers our Workplace and communities, including United Way, Salvation Army and Feeding America. Culture. Delivering Natural Gas To Somerset County, Maryland, To Support Environmentally Conscious Economic Growth The Somerset County Expansion Project will deliver natural gas service to Somerset County, Maryland. It will Partnering with CleanBay Renewables to Increase Sustainable extend natural gas service to the Energy in the Delmarva Community Eastern Correctional Institution and the We recently announced a new partnership with CleanBay Renewables Inc. (CleanBay), an University of Maryland Eastern Shore, enviro-tech company focused on the production of sustainable renewable natural gas, which will helping to improve eachfacility’s generate greenhouse gas credits associated with vehicular usage, and provide Chesapeake environmental profile while offering Utilities the opportunity to bring additional renewable natural gas to its Delmarva operations. significant economic benefits to the area. Residents and businesses along Next Steps in Our Sustainable Renewable Natural Gas Strategy the line will also have the choice to use We partnered with Bioenergy DevCo (BDC), a leading global developer of anaerobic digestion environmentally beneficial and less facilities that creates renewable energy and healthy soil products from organic material. The expensive natural gas service. joint project involves removing excess organics from poultry waste and converting it into Renewable Natural Gas. 18ESG At Our Core Women in Utilities Webinar – Be Extraordinary Measures to help keep employees, Everyday by Demonstrating Diversity. customers and communities safe and Equity, Diversity healthy during the COVID-19 pandemic. and Inclusion Council Promotes During these extraordinary times, we are honored to support our customers our Workplace and communities, including United Way, Salvation Army and Feeding America. Culture. Delivering Natural Gas To Somerset County, Maryland, To Support Environmentally Conscious Economic Growth The Somerset County Expansion Project will deliver natural gas service to Somerset County, Maryland. It will Partnering with CleanBay Renewables to Increase Sustainable extend natural gas service to the Energy in the Delmarva Community Eastern Correctional Institution and the We recently announced a new partnership with CleanBay Renewables Inc. (CleanBay), an University of Maryland Eastern Shore, enviro-tech company focused on the production of sustainable renewable natural gas, which will helping to improve eachfacility’s generate greenhouse gas credits associated with vehicular usage, and provide Chesapeake environmental profile while offering Utilities the opportunity to bring additional renewable natural gas to its Delmarva operations. significant economic benefits to the area. Residents and businesses along Next Steps in Our Sustainable Renewable Natural Gas Strategy the line will also have the choice to use We partnered with Bioenergy DevCo (BDC), a leading global developer of anaerobic digestion environmentally beneficial and less facilities that creates renewable energy and healthy soil products from organic material. The expensive natural gas service. joint project involves removing excess organics from poultry waste and converting it into Renewable Natural Gas. 18
Driving Our Actions Focus on Shareholder Value and Growth • High standards of safety and operational performance. • Optimize growth opportunities within rate, customer demand and market constraints • Maintain a regulated/ unregulated business mix designed to produce better than utility returns and an acceptable level of risk • New regulated and unregulated growth through greenfield projects, acquisitions and partnerships • Focus on business units, services and products that align with our core business strengths • Achieve Peer Group upper quartile performance in annual EPS, ROE, Dividend Growth and Total Shareholder Return • Continue to evolve Chesapeake’s organization structure, employee resources and development, operating practices and technology platforms to keep pace with the Strategic Growth Plan • Sustain our successful culture, our special sauce, including our positive relationships with employees, customers, communities we serve, regulatory bodies and investors 19Driving Our Actions Focus on Shareholder Value and Growth • High standards of safety and operational performance. • Optimize growth opportunities within rate, customer demand and market constraints • Maintain a regulated/ unregulated business mix designed to produce better than utility returns and an acceptable level of risk • New regulated and unregulated growth through greenfield projects, acquisitions and partnerships • Focus on business units, services and products that align with our core business strengths • Achieve Peer Group upper quartile performance in annual EPS, ROE, Dividend Growth and Total Shareholder Return • Continue to evolve Chesapeake’s organization structure, employee resources and development, operating practices and technology platforms to keep pace with the Strategic Growth Plan • Sustain our successful culture, our special sauce, including our positive relationships with employees, customers, communities we serve, regulatory bodies and investors 19
Capital Investment Guidance Continued Record Investment in Our Business to Drive Growth $350,000 Target 2018 – 2022 : $750 million - $1 billion $303,153 $300,000 $282,861 $250,000 $215,000* $250,000 Reach $1 billion $198,986 $200,000 $30,000* $150,000 $185,000* $100,000 $50,000 Reach $750 $53,153 $0 2018 2019 Budget 2020 Target 2021-2022 *We will continue to update this forecast as we move through the year, including any capital deployment delays resulting from COVID-19. Management reaffirms its five year capital expenditure guidance of $750 million to $1 billion. From 2018 through June 30, 2020, the Company has invested $570 million on new capital expenditures. 20 Capital Expenditures in thousandsCapital Investment Guidance Continued Record Investment in Our Business to Drive Growth $350,000 Target 2018 – 2022 : $750 million - $1 billion $303,153 $300,000 $282,861 $250,000 $215,000* $250,000 Reach $1 billion $198,986 $200,000 $30,000* $150,000 $185,000* $100,000 $50,000 Reach $750 $53,153 $0 2018 2019 Budget 2020 Target 2021-2022 *We will continue to update this forecast as we move through the year, including any capital deployment delays resulting from COVID-19. Management reaffirms its five year capital expenditure guidance of $750 million to $1 billion. From 2018 through June 30, 2020, the Company has invested $570 million on new capital expenditures. 20 Capital Expenditures in thousands
Reaffirm Current Earnings Guidance 2022 EPS Target Range of $4.70 - $4.90 $5.00 $4.90 On February 26, $0.20 2020, we updated our EPS guidance $4.55 based on our $4.50 current strategic $0.35 plan planned investments and growth prospects. $4.00 $4.70 We are continuing to monitor the COVID- $4.20 19 impacts and will $3.50 provide updates, as * $3.72 necessary, to our EPS target range. $3.00 2019 2022 Guidance: 2022 Guidance: Pre 2/26/20 Post 2/26/20 * 2019 EPS $3.72 from Continuing Operations 21Reaffirm Current Earnings Guidance 2022 EPS Target Range of $4.70 - $4.90 $5.00 $4.90 On February 26, $0.20 2020, we updated our EPS guidance $4.55 based on our $4.50 current strategic $0.35 plan planned investments and growth prospects. $4.00 $4.70 We are continuing to monitor the COVID- $4.20 19 impacts and will $3.50 provide updates, as * $3.72 necessary, to our EPS target range. $3.00 2019 2022 Guidance: 2022 Guidance: Pre 2/26/20 Post 2/26/20 * 2019 EPS $3.72 from Continuing Operations 21
Chesapeake Utilities Closing Remarks • Strong earnings for the second quarter despite the uncertain challenges of the COVID-19 pandemic. • Engaged in expense management across the Company and operational efficiency in this new business normal situation. • Excited about our recently completed Elkton Gas acquisition, and our commitment to renewable natural gas to support sustainability of the Delmarva agribusiness industry and improving the environmental health of the Chesapeake Bay. • Regulatory proceeding for Hurricane Michael is underway but not included in year-to-date results. • We affirm our strategic planning guidance for 2022: - Capital Expenditures Range - $750 million to $1 billion - Earnings per Share - $4.70 to $ 4.90. • Focused on employee and customer health and safety as we deliver our essential energy services • ease Please note CPK received seven ARC Awards for our 2019 Annual report, with some photos contained herein. 22Chesapeake Utilities Closing Remarks • Strong earnings for the second quarter despite the uncertain challenges of the COVID-19 pandemic. • Engaged in expense management across the Company and operational efficiency in this new business normal situation. • Excited about our recently completed Elkton Gas acquisition, and our commitment to renewable natural gas to support sustainability of the Delmarva agribusiness industry and improving the environmental health of the Chesapeake Bay. • Regulatory proceeding for Hurricane Michael is underway but not included in year-to-date results. • We affirm our strategic planning guidance for 2022: - Capital Expenditures Range - $750 million to $1 billion - Earnings per Share - $4.70 to $ 4.90. • Focused on employee and customer health and safety as we deliver our essential energy services • ease Please note CPK received seven ARC Awards for our 2019 Annual report, with some photos contained herein. 22
Thank You! Beth Cooper Thomas E. Mahn Executive Vice President, Vice President and CFO and Asst. Secretary Treasurer bcooper@chpk.com tmahn@chpk.com Joseph D. Steinmetz Michael Galtman Vice President and Vice President and Controller Chief Accounting Officer jsteinmetz@chpk.com mgaltman @chpk.comThank You! Beth Cooper Thomas E. Mahn Executive Vice President, Vice President and CFO and Asst. Secretary Treasurer bcooper@chpk.com tmahn@chpk.com Joseph D. Steinmetz Michael Galtman Vice President and Vice President and Controller Chief Accounting Officer jsteinmetz@chpk.com mgaltman @chpk.com
Appendix Long-Term Track Record Performance Metrics Driving Shareholder ReturnAppendix Long-Term Track Record Performance Metrics Driving Shareholder Return
Key Performance Metrics Financial Discipline Driving Growth and Performance Chesapeake Percentiles compared to Performance Metrics Chesapeake Results Performance Peer Group For periods ending 06/30/20 unless otherwise noted 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10 Year Capital Expenditures / Total Capitalization 13.9% 21.1% 21.7% 21.5% 68.2% 100.0% 100.0% 100.0% Earnings Per Share Growth (CAGR) 12.8% 17.3% 8.4% 9.2% 68.0% 99.3% 68.3% 87.4% Return on Equity 12.0% 12.4% 11.7% 11.9% 96.8% 100.0% 99.4% 96.2% Dividends Per Share Growth (CAGR) 8.6% 10.6% 8.9% 7.2% 94.2% 100.0% 91.8% 100.0% Earnings Retention Ratio 57.4% 58.9% 56.9% 55.6% 90.1% 100.0% 100.0% 100.0% Shareholder Return (CAGR) -9.9% 5.7% 11.3% 17.7% 92.9% 89.7% 72.9% 91.6% Top Quartile Above Median CPK is in the top quartile for 20/24 metrics (83%) and above the median for 24/24 metrics (100%). 25Key Performance Metrics Financial Discipline Driving Growth and Performance Chesapeake Percentiles compared to Performance Metrics Chesapeake Results Performance Peer Group For periods ending 06/30/20 unless otherwise noted 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10 Year Capital Expenditures / Total Capitalization 13.9% 21.1% 21.7% 21.5% 68.2% 100.0% 100.0% 100.0% Earnings Per Share Growth (CAGR) 12.8% 17.3% 8.4% 9.2% 68.0% 99.3% 68.3% 87.4% Return on Equity 12.0% 12.4% 11.7% 11.9% 96.8% 100.0% 99.4% 96.2% Dividends Per Share Growth (CAGR) 8.6% 10.6% 8.9% 7.2% 94.2% 100.0% 91.8% 100.0% Earnings Retention Ratio 57.4% 58.9% 56.9% 55.6% 90.1% 100.0% 100.0% 100.0% Shareholder Return (CAGR) -9.9% 5.7% 11.3% 17.7% 92.9% 89.7% 72.9% 91.6% Top Quartile Above Median CPK is in the top quartile for 20/24 metrics (83%) and above the median for 24/24 metrics (100%). 25
Continuing to Build for the Future Organic Growth Opportunities Supplemented with Targeted Acquisitions Historical Cap Ex & Acquisitions In Millions Cumulative Cap Ex since 2015: $1.037 Billion Cumulative Cap Ex since 2009: $1.568 Billion $300 $283 $250 $195 $191 $199 $200 $169 $154 $150 $108 $98 $100 $78 $49 $44 $50 $- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cap Ex Acquisitions 26 $ millionsContinuing to Build for the Future Organic Growth Opportunities Supplemented with Targeted Acquisitions Historical Cap Ex & Acquisitions In Millions Cumulative Cap Ex since 2015: $1.037 Billion Cumulative Cap Ex since 2009: $1.568 Billion $300 $283 $250 $195 $191 $199 $200 $169 $154 $150 $108 $98 $100 $78 $49 $44 $50 $- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cap Ex Acquisitions 26 $ millions
Growth in Earnings per Share 13 Years of Record Earnings st For Periods Ended December 31 Basic GAAP Earnings per Share $4.50 $3.97 $4.00 $3.56 $3.46 $3.50 $2.87 $3.00 $2.73 $2.48 $2.50 $2.27 $2.01 $1.93 $2.00 $1.83 $1.45 $1.50 $1.00 $0.50 $- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 27Growth in Earnings per Share 13 Years of Record Earnings st For Periods Ended December 31 Basic GAAP Earnings per Share $4.50 $3.97 $4.00 $3.56 $3.46 $3.50 $2.87 $3.00 $2.73 $2.48 $2.50 $2.27 $2.01 $1.93 $2.00 $1.83 $1.45 $1.50 $1.00 $0.50 $- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 27
Strong Track Record of Dividend Growth Driven by Earnings Growth $2.00 $1.76 $1.80 $1.62 $1.60 $1.48 $1.40 $1.30 $1.22 $1.15 $1.20 $1.08 $1.03 $0.97 $1.00 $0.92 $0.88 $0.80 $0.60 $0.40 $0.20 $- 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 On May 7, 2020, the Board of Directors increased the annualized dividend to $1.76 per share, an increase of 8.6%. The $0.14 per share increase aligns our five year EPS growth rate of 9.9% with our five year dividend growth rate of 8.9%. The latest increase represents the 17th consecutive year of dividend growth, and will result in Chesapeake having doubled its dividend over the last ten years. 28Strong Track Record of Dividend Growth Driven by Earnings Growth $2.00 $1.76 $1.80 $1.62 $1.60 $1.48 $1.40 $1.30 $1.22 $1.15 $1.20 $1.08 $1.03 $0.97 $1.00 $0.92 $0.88 $0.80 $0.60 $0.40 $0.20 $- 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 On May 7, 2020, the Board of Directors increased the annualized dividend to $1.76 per share, an increase of 8.6%. The $0.14 per share increase aligns our five year EPS growth rate of 9.9% with our five year dividend growth rate of 8.9%. The latest increase represents the 17th consecutive year of dividend growth, and will result in Chesapeake having doubled its dividend over the last ten years. 28
Solid Track Record of Higher Return on Equity (ROE) th Consistently Exceeding the Peer Median and 75 Percentile th * 10-Year Peer 75 Percentile – 10.08% * 10-Year Peer Median – 8.86% Return on Equity For the periods ending December 31, 2019 1 Year 3 Year 5 Year 10 Year CPK 12.01% 11.89% 11.84% 11.83% Peer Median 8.90% 10.04% 8.59% 8.86% Peer 75th Percentile 10.44% 10.63% 10.32% 10.08% * Normal Comparative Peer Group 29Solid Track Record of Higher Return on Equity (ROE) th Consistently Exceeding the Peer Median and 75 Percentile th * 10-Year Peer 75 Percentile – 10.08% * 10-Year Peer Median – 8.86% Return on Equity For the periods ending December 31, 2019 1 Year 3 Year 5 Year 10 Year CPK 12.01% 11.89% 11.84% 11.83% Peer Median 8.90% 10.04% 8.59% 8.86% Peer 75th Percentile 10.44% 10.63% 10.32% 10.08% * Normal Comparative Peer Group 29
December 31 Stock Price (except 8/24/2020) $1,375 $1,572 $1,332 $1,284 $1,092 $867 $725 $578 $436 $415 $395 $301 $215 Market Capitalization Increased Performance is Driving Increased Value $1,800 $95.83 $100 $90 $1,600 $83.39 $81.30 $78.55 $80 $1,400 $66.95 $70 $1,200 $56.75 $60 $1,000 $49.66 $50 $800 $40.01 $40 $30.27 $28.90 $600 $27.68 $30 $21.37 $20.99 $400 $20 $200 $10 $- $- Market Cap (in millions) Stock Price 30 As of December 31 (except 8/24/2020) Market Capitalization (in Millions)December 31 Stock Price (except 8/24/2020) $1,375 $1,572 $1,332 $1,284 $1,092 $867 $725 $578 $436 $415 $395 $301 $215 Market Capitalization Increased Performance is Driving Increased Value $1,800 $95.83 $100 $90 $1,600 $83.39 $81.30 $78.55 $80 $1,400 $66.95 $70 $1,200 $56.75 $60 $1,000 $49.66 $50 $800 $40.01 $40 $30.27 $28.90 $600 $27.68 $30 $21.37 $20.99 $400 $20 $200 $10 $- $- Market Cap (in millions) Stock Price 30 As of December 31 (except 8/24/2020) Market Capitalization (in Millions)
Chesapeake Peer Group Stock Price Analysis 08-21-2020 Closing Price 08-21-2020 Closing as a % of 12/31/19 Price as a % of 52- Closing Price Percentile week High Percentile Peer 1 116.62% 100.00% 97.58% 100.00% Peer 2 90.15% 92.30% 83.28% 92.30% CPK US Equity 86.84% 84.60% 82.16% 84.60% Peer 3 80.30% 61.50% 77.49% 76.90% Peer 4 81.61% 69.20% 74.08% 69.20% Peer 5 82.19% 76.90% 73.45% 61.50% Peer 6 70.89% 23.00% 69.90% 53.80% Peer 7 71.04% 30.70% 67.80% 46.10% Peer 8 70.00% 7.60% 67.30% 38.40% Peer 9 70.44% 15.30% 66.68% 30.70% Peer 10 74.56% 53.80% 66.37% 23.00% Peer 11 72.17% 38.40% 65.06% 15.30% Peer 12 74.51% 46.10% 62.03% 7.60% Peer 13 63.43% 0.00% 59.63% 0.00% 31Chesapeake Peer Group Stock Price Analysis 08-21-2020 Closing Price 08-21-2020 Closing as a % of 12/31/19 Price as a % of 52- Closing Price Percentile week High Percentile Peer 1 116.62% 100.00% 97.58% 100.00% Peer 2 90.15% 92.30% 83.28% 92.30% CPK US Equity 86.84% 84.60% 82.16% 84.60% Peer 3 80.30% 61.50% 77.49% 76.90% Peer 4 81.61% 69.20% 74.08% 69.20% Peer 5 82.19% 76.90% 73.45% 61.50% Peer 6 70.89% 23.00% 69.90% 53.80% Peer 7 71.04% 30.70% 67.80% 46.10% Peer 8 70.00% 7.60% 67.30% 38.40% Peer 9 70.44% 15.30% 66.68% 30.70% Peer 10 74.56% 53.80% 66.37% 23.00% Peer 11 72.17% 38.40% 65.06% 15.30% Peer 12 74.51% 46.10% 62.03% 7.60% Peer 13 63.43% 0.00% 59.63% 0.00% 31