[Part I](index=7&type=section&id=Part%20I) [Business](index=9&type=section&id=Item%201.%20Business) Chesapeake Utilities is a diversified energy company with Regulated and Unregulated segments, focusing on growth through strategic acquisitions and sustainable energy investments - The company's growth strategy focuses on optimizing existing businesses, pursuing pipeline expansions, growing transport services, and investing in sustainable energy[19](index=19&type=chunk)[23](index=23&type=chunk) - On November 30, 2023, Chesapeake completed the acquisition of Florida City Gas (FCG) for **$923.4 million**, adding approximately **120,000** natural gas customers[22](index=22&type=chunk) - As of December 31, 2023, the company had **1,281 employees**, with 196 represented by two labor unions[65](index=65&type=chunk) [Regulated Energy](index=9&type=section&id=Regulated%20Energy) Regulated Energy Segment Financials (2023) | Operations | Areas Served | Net Income (Loss) (in thousands) | Total Assets (in thousands) | | :--- | :--- | :--- | :--- | | **Natural Gas Distribution** | | | | | Delmarva Natural Gas | Delaware/Maryland | $9,256 | $407,089 | | Florida Natural Gas | Florida | $23,840 | $545,952 | | Florida City Gas | Florida | $(3,256) | $1,010,998 | | **Natural Gas Transmission** | | | | | Eastern Shore | Delaware/Maryland/Pennsylvania | $23,284 | $480,147 | | Peninsula Pipeline | Florida | $12,195 | $154,301 | | Aspire Energy Express | Ohio | $417 | $6,746 | | **Electric Distribution** | | | | | FPU | Florida | $3,727 | $176,348 | | **Total Regulated Energy** | | **$69,463** | **$2,781,581** | - The Florida PSC approved a permanent rate relief of approximately **$17.2 million** annually for the company's legacy natural gas distribution businesses[32](index=32&type=chunk) - In June 2023, the Florida PSC approved a **$23.3 million** total base revenue increase for FCG, with new rates effective May 1, 2023[33](index=33&type=chunk) [Unregulated Energy](index=16&type=section&id=Unregulated%20Energy) Unregulated Energy Segment Financials (2023) | Operations | Area Served | Net Income (Loss) (in thousands) | Total Assets (in thousands) | | :--- | :--- | :--- | :--- | | Propane Operations | DE, MD, VA, PA, NC, SC, FL | $13,587 | $191,164 | | Energy Transmission (Aspire Energy) | Ohio | $3,080 | $145,183 | | Energy Generation (Eight Flags) | Florida | $2,235 | $37,805 | | Marlin Gas Services | The Entire U.S. | $432 | $54,256 | | Sustainable investments and other | Various | $(1,697) | $48,994 | | **Total** | | **$17,637** | **$477,402** | - The propane operations sold **71.3 million gallons** in 2023 to approximately **84,886 customers** across multiple states[50](index=50&type=chunk) - Sustainable investments include renewable natural gas (RNG) projects, with a new dairy manure facility expected to begin injection in the first half of 2024[59](index=59&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company faces material financial, operational, and regulatory risks, including market instability, competition, cybersecurity threats, and challenges in integrating acquisitions - Financial risks include instability in financial markets impacting access to capital, fluctuations in propane prices, and increases in interest rates affecting debt costs[81](index=81&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk) - Operational risks are significant, including dependence on new construction, competition, earnings volatility due to weather, and cybersecurity threats[89](index=89&type=chunk)[91](index=91&type=chunk)[94](index=94&type=chunk)[100](index=100&type=chunk) - The company faces risks in integrating acquisitions, such as the recent FCG purchase, which could involve failing to realize anticipated benefits or difficulties in integrating systems[120](index=120&type=chunk)[121](index=121&type=chunk) - Regulatory, legal, and environmental risks include adverse decisions from regulatory bodies, compliance costs with safety and environmental laws, and potential impacts from climate change policies[123](index=123&type=chunk)[124](index=124&type=chunk)[127](index=127&type=chunk)[130](index=130&type=chunk) [Unresolved Staff Comments](index=30&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[133](index=133&type=chunk) [Cybersecurity](index=30&type=section&id=Item%201C.%20Cybersecurity) The company manages cybersecurity risks through a comprehensive program aligned with NIST frameworks, with no material incidents reported to date - The company's cybersecurity risk management program is based on frameworks established by the **National Institute of Standards and Technology (NIST)**[136](index=136&type=chunk) - Oversight is provided by the Board and its Audit Committee, with the Chief Information Officer leading the information security program[139](index=139&type=chunk) - As of the filing date, the company states there have not been any cybersecurity incidents that have **materially affected** its business, operations, or financial condition[137](index=137&type=chunk) [Properties](index=32&type=section&id=Item%202.%20Properties) The company's assets include over 10,700 miles of regulated energy pipelines and lines, and unregulated assets like 8.9 million gallons of propane storage Miles of Assets Operated by Regulated Energy Segment (as of Dec 31, 2023) | Operations | Miles | | :--- | :--- | | **Natural Gas Distribution** | | | Delmarva Natural Gas (Natural gas pipelines) | 2,075 | | FPU (Natural gas pipelines) | 3,154 | | Florida City Gas (Natural gas pipelines) | 3,860 | | **Natural Gas Transmission** | | | Eastern Shore | 517 | | Florida City Gas | 79 | | Peninsula Pipeline | 177 | | **Electric Distribution** | | | FPU | 906 | | **Total** | **10,785** | Key Assets of Unregulated Energy Segment (as of Dec 31, 2023) | Operations | Gallons or miles | | :--- | :--- | | **Propane distribution** | | | Propane storage capacity (gallons in millions) | 8.9 | | Underground propane distribution mains (miles) | 153 | | **Unregulated Energy Transmission (Aspire Energy)** | | | Natural gas pipelines (miles) | 2,800 | [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 20 of the Consolidated Financial Statements - For information on legal proceedings, the company refers to Note 20, Other Commitments and Contingencies, in the Consolidated Financial Statements[145](index=145&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[146](index=146&type=chunk) [Part II](index=33&type=section&id=Part%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=33&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock (CPK) trades on the NYSE, with 63 consecutive years of dividend payments and a five-year total stockholder return of 42% - The company's common stock (CPK) is traded on the New York Stock Exchange, with **1,974 holders of record** as of February 16, 2024[147](index=147&type=chunk) - The company has paid cash dividends for **63 consecutive years**, declaring a total of **$2.305 per share** in 2023[147](index=147&type=chunk) Five-Year Cumulative Total Stockholder Return | Year | Chesapeake Utilities | Industry Index | S&P 500 Index | | :--- | :--- | :--- | :--- | | **2018** | $100 | $100 | $100 | | **2019** | $120 | $119 | $131 | | **2020** | $138 | $99 | $156 | | **2021** | $189 | $114 | $200 | | **2022** | $156 | $122 | $164 | | **2023** | $142 | $121 | $207 | [Reserved](index=36&type=section&id=Item%206.%20Reserved) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The FCG acquisition significantly impacted financials, with GAAP net income decreasing due to transaction costs, though adjusted net income grew 9% - The acquisition of Florida City Gas (FCG) for **$923.4 million** was a key event, adding approximately **120,000 customers** and significantly impacting financial results[157](index=157&type=chunk)[159](index=159&type=chunk) - Key drivers for 2023 performance included positive contributions from rate cases and the FCG acquisition, offset by a **$13.6 million negative impact** from warmer weather[173](index=173&type=chunk) - Total capital expenditures were **$1.1 billion** in 2023, including **$926.7 million** for the FCG acquisition, with a 2024 forecast between **$300 million and $360 million**[236](index=236&type=chunk)[237](index=237&type=chunk) GAAP vs. Non-GAAP Earnings Per Share (Diluted) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | **Earnings Per Share - Diluted (GAAP)** | **$4.73** | **$5.04** | | FCG transaction-related expenses, net | $0.58 | — | | **Adjusted Earnings Per Share - Diluted (Non-GAAP)** | **$5.31** | **$5.04** | [Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks including interest rate, commodity price, and credit risk through various mitigation strategies like hedging and fuel cost recovery mechanisms - The company is exposed to interest rate risk, which can increase the cost of future debt, and uses interest rate swaps to mitigate this risk[274](index=274&type=chunk) - Commodity price risk is limited for regulated operations due to fuel cost recovery mechanisms but is managed in unregulated propane operations through storage and derivative contracts[275](index=275&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk) [Financial Statements and Supplementary Data](index=62&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2021-2023, along with an unqualified opinion from the independent auditor Consolidated Statement of Income Highlights | (in thousands) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Total operating revenues** | $670,604 | $680,704 | $569,968 | | **Operating Income** | $150,803 | $142,933 | $131,112 | | **Net Income** | $87,212 | $89,796 | $83,466 | Consolidated Balance Sheet Highlights | (in thousands) | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | $3,304,704 | $2,215,037 | | Net property, plant and equipment | $2,456,374 | $1,810,473 | | Goodwill | $508,174 | $46,213 | | **Total Liabilities** | $2,058,600 | $1,382,236 | | Long-term debt, net | $1,187,075 | $578,388 | | **Total stockholders' equity** | $1,246,104 | $832,801 | Consolidated Statement of Cash Flows Highlights | (in thousands) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | $203,482 | $158,882 | $150,504 | | **Net cash used in investing activities** | $(1,111,391) | $(136,448) | $(223,023) | | **Net cash provided by (used in) financing activities** | $906,609 | $(21,206) | $73,996 | [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](index=114&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None reported[540](index=540&type=chunk) [Controls and Procedures](index=114&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective, excluding the recently acquired Florida City Gas from the assessment - The CEO and CFO concluded that **disclosure controls and procedures were effective** as of December 31, 2023[541](index=541&type=chunk) - Management's report on internal control over financial reporting concluded that controls were effective, excluding the recently acquired Florida City Gas, which represented approximately **31% of total assets**[543](index=543&type=chunk)[546](index=546&type=chunk) [Other Information](index=115&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[549](index=549&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspection](index=115&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspection) This item is not applicable to the company - None[550](index=550&type=chunk) [Part III](index=115&type=section&id=Part%20III) [Directors, Executive Officers of the Registrant and Corporate Governance](index=115&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20of%20the%20Registrant%20and%20Corporate%20Governance) This section incorporates information by reference from the company's upcoming Proxy Statement regarding governance and its Code of Ethics - Information regarding directors, executive officers, and corporate governance is **incorporated by reference** from the company's Proxy Statement[552](index=552&type=chunk) - The company has adopted a **Code of Ethics** applicable to its principal executive and financial officers, which is available on its website[551](index=551&type=chunk) [Executive Compensation](index=115&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's upcoming Proxy Statement - Information required by this item is **incorporated by reference** from the company's Proxy Statement[552](index=552&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=115&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and equity compensation plans is incorporated by reference from the company's upcoming Proxy Statement - Information required by this item is **incorporated by reference** from the company's Proxy Statement[553](index=553&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=115&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's upcoming Proxy Statement - Information required by this item is **incorporated by reference** from the company's Proxy Statement[553](index=553&type=chunk) [Principal Accounting Fees and Services](index=115&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's upcoming Proxy Statement - Information required by this item is **incorporated by reference** from the company's Proxy Statement[554](index=554&type=chunk) [Part IV](index=116&type=section&id=Part%20IV) [Exhibits, Financial Statement Schedules](index=116&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Annual Report, including financial statements, schedules, and various exhibits - This section lists the financial statements, Schedule II (Valuation and Qualifying Accounts), and all exhibits filed with the Form 10-K[555](index=555&type=chunk)[556](index=556&type=chunk) [Form 10-K Summary](index=121&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no summary for its Form 10-K - None[563](index=563&type=chunk)

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) [Full Year 2023 Performance](index=1&type=section&id=Full%20Year%202023%20Performance) Fiscal year 2023 adjusted net income rose **8.9%** to **$97.8 million**, with adjusted EPS growing **5.4%** to **$5.31**, despite a **$0.54** per share weather impact | Metric | 2023 | 2022 | Growth | | :--- | :--- | :--- | :--- | | **GAAP EPS** | $4.73 | $5.04 | -6.1% | | **Adjusted EPS** | $5.31 | $5.04 | +5.4% | | **Adjusted Net Income** | $97.8M | $89.8M | +8.9% | - Full year earnings were negatively impacted by approximately **$0.54 per share** due to significantly warmer than normal temperatures[4](index=4&type=chunk) - Adjusted gross margin increased by **$33.9 million** for the year, driven by regulatory initiatives, natural gas organic growth, pipeline expansion projects, increased propane margins, and incremental margin from the FCG acquisition[4](index=4&type=chunk) - Earnings growth was partially offset by increased interest expense from higher rates on short-term borrowings and new debt and equity issued for the FCG acquisition[18](index=18&type=chunk) [Fourth Quarter 2023 Performance](index=1&type=section&id=Fourth%20Quarter%202023%20Performance) Fourth quarter 2023 adjusted net income reached **$33.1 million**, with adjusted EPS growing **11.6%** to **$1.64**, despite a **$0.14** per share negative impact from warmer weather | Metric | Q4 2023 | Q4 2022 | Growth | | :--- | :--- | :--- | :--- | | **GAAP EPS** | $1.26 | $1.47 | -14.3% | | **Adjusted EPS** | $1.64 | $1.47 | +11.6% | | **Adjusted Net Income** | $33.1M | $26.2M | +26.3% | - Fourth quarter earnings were negatively impacted by approximately **$0.14 per share** due to warmer than normal temperatures[4](index=4&type=chunk) - The quarter's earnings drivers were consistent with the full year, though partially offset by reduced customer consumption and lower adjusted gross margin from virtual pipeline services[19](index=19&type=chunk) [CEO Commentary and Business Outlook](index=2&type=section&id=CEO%20Commentary%20and%20Business%20Outlook) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) The CEO highlighted 2023 as the **17th consecutive year** of record earnings, driven by strong customer growth and the successful FCG acquisition, despite rising interest rates and warm weather - The company delivered its **17th consecutive year** of record earnings, excluding transaction costs related to the FCG acquisition[21](index=21&type=chunk) - Regulated natural gas distribution businesses gained customers at more than **twice the national average**[21](index=21&type=chunk) - The company reinforces its commitment to achieving its **2025 EPS guidance of $6.15-$6.35 per share**, supported by the FCG acquisition and strong performance in 2023[21](index=21&type=chunk) [Acquisition of Florida City Gas](index=2&type=section&id=Acquisition%20of%20Florida%20City%20Gas) [Acquisition Details](index=2&type=section&id=Acquisition%20Details) Chesapeake Utilities completed the acquisition of Florida City Gas (FCG) for **$923.4 million** in cash on November 30, 2023, adding approximately **120,000** customers in Florida - The acquisition of FCG was completed on November 30, 2023, for **$923.4 million** in cash[22](index=22&type=chunk) - FCG serves approximately **120,000 residential and commercial natural gas customers** across eight counties in Florida[22](index=22&type=chunk) - In June 2023, FCG received approval for a **$23.3 million** total increase in base revenue from the Florida Public Service Commission, with new rates effective May 1, 2023[22](index=22&type=chunk) [Capital Investment and Earnings Guidance](index=2&type=section&id=Capital%20Investment%20and%20Earnings%20Guidance) [Earnings Guidance](index=2&type=section&id=Earnings%20Guidance) The company introduced **2024 EPS guidance** of **$5.33-$5.45** and reaffirmed **2025** (**$6.15-$6.35**) and **2028** (**$7.75-$8.00**) EPS guidance, implying an approximate **8%** growth rate from 2025 | Period | EPS Guidance Range | | :--- | :--- | | **2024** | $5.33 - $5.45 | | **2025** | $6.15 - $6.35 (Reaffirmed) | | **2028** | $7.75 - $8.00 (Reaffirmed) | [Capital Expenditure Guidance](index=2&type=section&id=Capital%20Expenditure%20Guidance) Chesapeake Utilities affirmed **2024 capital expenditure guidance** of **$300 million to $360 million** and maintained its **$1.5 billion to $1.8 billion** five-year guidance through 2028 | Period | Capital Expenditure Guidance | | :--- | :--- | | **2024** | $300M - $360M (Affirmed) | | **2023-2028** | $1.5B - $1.8B (Reaffirmed) | [Consolidated Financial Results](index=6&type=section&id=Consolidated%20Financial%20Results) [Operating Results for the Year Ended December 31, 2023](index=6&type=section&id=Operating%20Results%20for%20the%20Year%20Ended%20December%2031%2C%202023) Full year 2023 operating income increased **5.5%** to **$150.8 million**, or **12.8%** excluding FCG transaction expenses, driven by a **$33.9 million** adjusted gross margin increase | Metric (in thousands) | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Adjusted Gross Margin** | $454,123 | $420,198 | $33,925 | 8.1% | | **Operating Income** | $150,803 | $142,933 | $7,870 | 5.5% | - Excluding **$10.4 million** in FCG transaction-related expenses, operating income increased by **$18.2 million** or **12.8%** compared to the prior year[32](index=32&type=chunk)[30](index=30&type=chunk) [Operating Results for the Quarter Ended December 31, 2023](index=9&type=section&id=Operating%20Results%20for%20the%20Quarter%20Ended%20December%2031%2C%202023) Fourth quarter 2023 operating income rose **10.2%** to **$47.3 million**, or **25.2%** excluding FCG transaction expenses, with adjusted gross margin growing **13.0%** to **$130.3 million** | Metric (in thousands) | Q4 2023 | Q4 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Adjusted Gross Margin** | $130,331 | $115,297 | $15,034 | 13.0% | | **Operating Income** | $47,315 | $42,952 | $4,363 | 10.2% | - Excluding FCG transaction-related expenses, operating income increased by **$10.8 million** or **25.2%** compared to the same period in 2022[65](index=65&type=chunk) [Segment Performance](index=7&type=section&id=Segment%20Performance) [Regulated Energy Segment](index=7&type=section&id=Regulated%20Energy%20Segment) The Regulated Energy segment's 2023 operating income grew **9.4%** to **$126.2 million**, driven by a **10.4%** increase in adjusted gross margin from rate changes, FCG acquisition, and organic growth Full Year Performance (in thousands) | Metric | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Adjusted Gross Margin** | $333,587 | $302,252 | $31,335 | 10.4% | | **Operating Income** | $126,199 | $115,317 | $10,882 | 9.4% | Key Drivers of Full Year Adjusted Gross Margin Increase (in thousands) | Driver | Contribution | | :--- | :--- | | Rate changes (Florida) | $13,361 | | FCG Acquisition | $8,687 | | Natural gas growth | $6,214 | | Transmission expansions | $4,812 | | Warmer temperatures | ($5,096) | [Unregulated Energy Segment](index=8&type=section&id=Unregulated%20Energy%20Segment) The Unregulated Energy segment's 2023 operating income decreased **10.7%** to **$24.4 million**, despite a **2.2%** adjusted gross margin increase driven by propane margins but offset by lower consumption Full Year Performance (in thousands) | Metric | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Adjusted Gross Margin** | $120,656 | $118,067 | $2,589 | 2.2% | | **Operating Income** | $24,426 | $27,350 | ($2,924) | -10.7% | Key Drivers of Full Year Adjusted Gross Margin Change (in thousands) | Driver | Contribution | | :--- | :--- | | Increased propane margins and fees | $8,821 | | Propane customer consumption (weather) | ($8,235) | | Aspire Energy gathering margin | $1,141 | [Major Projects and Initiatives](index=16&type=section&id=Major%20Projects%20and%20Initiatives) [Project Portfolio Overview](index=16&type=section&id=Project%20Portfolio%20Overview) The company's major projects, including pipeline expansions and clean energy initiatives, contributed **$38.1 million** to adjusted gross margin in 2023, with projections of **$53.0 million** in 2024 and **$64.0 million** in 2025 Adjusted Gross Margin Contribution from Major Projects (in thousands) | Category | 2022 | 2023 | 2024 (Est.) | 2025 (Est.) | | :--- | :--- | :--- | :--- | :--- | | **Pipeline Expansions** | $1,763 | $6,575 | $11,812 | $14,096 | | **CNG/RNG/LNG** | $11,100 | $11,181 | $12,500 | $13,969 | | **Regulatory Initiatives** | $4,961 | $20,343 | $28,669 | $35,907 | | **Total** | **$17,824** | **$38,099** | **$52,981** | **$63,972** | - Key regulatory initiatives include the Florida GUARD Program and FCG SAFE Program, which are expected to drive significant margin growth in coming years[81](index=81&type=chunk)[115](index=115&type=chunk)[93](index=93&type=chunk) - The company is constructing a dairy manure RNG facility in Florida, with the first injection of RNG projected for the first half of 2024[114](index=114&type=chunk) [Other Major Factors Influencing Performance](index=19&type=section&id=Other%20Major%20Factors%20Influencing%20Performance) [Weather and Consumption](index=19&type=section&id=Weather%20and%20Consumption) Warmer weather significantly impacted 2023 results, reducing adjusted gross margin by approximately **$13.6 million** due to reduced heating demand across key service territories - Significantly warmer weather negatively impacted adjusted gross margin by approximately **$13.6 million** in 2023 compared to 2022[117](index=117&type=chunk)[140](index=140&type=chunk) Full Year 2023 Heating Degree Day (HDD) Variance from Normal | Region | Variance from 10-Year Average | | :--- | :--- | | **Delmarva** | (745) | | **Florida** | (162) | | **Ohio** | (551) | [Natural Gas Distribution Growth](index=21&type=section&id=Natural%20Gas%20Distribution%20Growth) The company achieved strong organic customer growth in 2023, with residential customer increases of **5.4%** in Delmarva and **3.9%** in Florida, contributing **$6.2 million** to adjusted gross margin - Average residential customers grew by **5.4%** in Delmarva and **3.9%** in legacy Florida operations during 2023[142](index=142&type=chunk) Full Year 2023 Adjusted Gross Margin from Customer Growth (in thousands) | Region | Residential | Commercial & Industrial | Total | | :--- | :--- | :--- | :--- | | **Delmarva** | $1,895 | $589 | $2,484 | | **Florida** | $1,599 | $2,131 | $3,730 | [Capital Investment and Structure](index=22&type=section&id=Capital%20Investment%20and%20Structure) [Capital Expenditures](index=22&type=section&id=Capital%20Expenditures) Total 2023 capital expenditures were approximately **$1.1 billion**, primarily driven by the **$926.7 million** FCG acquisition, with **2024** forecasted between **$300 million** and **$360 million** 2023 Capital Expenditures (in thousands) | Category | Amount | | :--- | :--- | | **Legacy Capital Expenditures** | $211,195 | | **FCG Acquisition** | $926,702 | | **Total** | **~$1.1B** | 2024 Forecasted Capital Expenditures (in thousands) | Segment | Low | High | | :--- | :--- | :--- | | **Regulated Energy** | $265,000 | $318,000 | | **Unregulated Energy** | $31,000 | $36,000 | | **Other** | $4,000 | $6,000 | | **Total** | **$300,000** | **$360,000** | [Capital Structure](index=23&type=section&id=Capital%20Structure) As of December 31, 2023, the company's equity to total capitalization ratio was approximately **47%**, below its **50% to 60%** target, reflecting the FCG acquisition financing impact - The company's equity to total capitalization ratio was approximately **47%** as of December 31, 2023, impacted by the FCG acquisition financing[124](index=124&type=chunk) - The company's target ratio of equity to total capitalization is between **50% and 60%**[124](index=124&type=chunk) [Financial Statements and Reconciliations](index=3&type=section&id=Financial%20Statements%20and%20Reconciliations) [Non-GAAP Reconciliations](index=3&type=section&id=Non-GAAP%20Reconciliations) This section provides reconciliations for non-GAAP financial measures, primarily adjusting for FCG acquisition transaction-related expenses to enable clearer period-over-period operating comparisons Reconciliation of GAAP to Non-GAAP EPS | Metric (per share) | Full Year 2023 | Q4 2023 | | :--- | :--- | :--- | | **GAAP EPS - Diluted** | **$4.73** | **$1.26** | | FCG transaction-related expenses, net | $0.58 | $0.38 | | **Adjusted EPS - Diluted (Non-GAAP)** | **$5.31** | **$1.64** | Reconciliation of GAAP to Non-GAAP Net Income (in thousands) | Metric | Full Year 2023 | Q4 2023 | | :--- | :--- | :--- | | **Net Income (GAAP)** | **$87,212** | **$25,328** | | FCG transaction-related expenses, net | $10,625 | $7,727 | | **Adjusted Net Income (Non-GAAP)** | **$97,837** | **$33,055** | [Consolidated Statements of Income (Unaudited)](index=24&type=section&id=Consolidated%20Statements%20of%20Income%20(Unaudited)) This section presents the unaudited consolidated statements of income for the years and quarters ended December 31, 2023, and 2022, detailing revenues, expenses, and net income [Consolidated Balance Sheets (Unaudited)](index=25&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) This section provides the unaudited consolidated balance sheets as of December 31, 2023, and 2022, detailing assets, liabilities, and stockholders' equity [Operating Statistics](index=27&type=section&id=Operating%20Statistics) This section provides key operating statistics for the company's distribution businesses, including operating revenues, volumes, and average customer counts

DOVER, Del., Feb. 6, 2024 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) will host a conference call on Thursday, February 22, 2024 at 8:30 a.m. ET to discuss the Company's financial results for the fourth quarter and full year ended December 31, 2023. The earnings press release will be issued on Wednesday, February 21, 2024, after market close.To listen to the Company's conference call via live webcast, please visit the Events & Presentations section of the Investors page on www.chpk.com.For ...

Second State-of the-Art Safety Training Center Underway DOVER, Del., Feb. 2, 2024 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today that it broke ground for its second safety training facility in DeBary, Florida, to serve its Florida subsidiaries Florida Public Utilities (FPU) and Florida City Gas (FCG). Florida's Safety Town will serve as a resource for training employees who build, maintain and operate the Company's energy infrastructure, as well as regional first responders. Th ...

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $0.69 for Q3 2023, an increase from $0.54 in the prior year, bringing year-to-date adjusted EPS to $3.63, which is $0.05 higher than the previous year [56][20][11] - Adjusted gross margin increased by $7.6 million for the quarter, with operating income rising by 1.6 million, and excluding transaction-related expenses, operating income increased by 29% [57][9][36] - Interest expense rose over 13% during the quarter and more than 22% compared to the prior year, reflecting the ongoing rising rate environment [57][20] Business Line Data and Key Metrics Changes - The adjusted gross margin for the unregulated segment increased by 8.4% for the quarter and 2% year-over-year [39] - The regulated energy segment saw an adjusted gross margin increase of 8.8% for the quarter and 7.8% year-over-year, driven by new rates from Florida natural gas base rate proceedings and organic growth [59][36] - The company experienced a 5.6% increase in customer growth in Delmarva service territories and a 4% increase in Florida [34] Market Data and Key Metrics Changes - The acquisition of Florida City Gas is expected to more than double the company's regulated natural gas distribution business in Florida, with a pro forma expectation of approximately 211,000 combined customers [13][21] - The company anticipates a $40.5 million increase in margin for 2024 due to rate case settlements and pending approval of Florida City Gas' investment schedule [47] Company Strategy and Development Direction - The company has increased its capital investment plan by approximately 65% to a range of $1.5 billion to $1.8 billion for the five years ending in 2028, focusing on cost management and efficient growth [6][49] - The company is committed to a disciplined approach to mergers and acquisitions, applying the same operational rigor that has driven past successes [23][21] - The company is actively pursuing regulatory initiatives that will deliver incremental margins and provide a foundation for substantial system investment [21][11] Management's Comments on Operating Environment and Future Outlook - Management noted that warmer weather had a significant impact on results, particularly in the first half of the year, negatively affecting EPS by approximately $0.41 [20][31] - The management expressed confidence in achieving 2025 guidance despite challenging financial markets and emphasized the importance of maintaining a strong balance sheet [55][16] - The company remains focused on cost management and is optimistic about future growth opportunities, particularly in Florida [71][22] Other Important Information - The company announced its role as a project partner in the MACH2 Hydrogen Hub, which is expected to receive funding from the Bipartisan Infrastructure Law [25] - The company has received several awards for its sustainability efforts and board diversity, highlighting its commitment to corporate responsibility [48][68] Q&A Session Summary Question: Impact of weather on O&M costs - Management confirmed that the organization focused on cost management, which helped mitigate the impact of warmer temperatures on operational costs [51] Question: Regulatory approvals for Florida City Gas - Management indicated that the Hart-Scott-Rodino waiting period is set to expire soon, and they are on track to close the transaction [95][77] Question: Synergies from the Florida City Gas acquisition - Management expects to identify synergies and provide more clarity on these in February during the year-end earnings call [78][99] Question: Propane business performance - Management noted that the propane business is performing well despite weather impacts, with strong retail margins and customer growth [83][109] Question: Future growth projects and strategy - Management stated that they will continue to explore growth opportunities in both regulated and non-regulated sectors, including potential small-scale acquisitions in propane [122][121]

FORM10-Q Commission File Number: 001-11590 ☒ | --- | --- | --- | |--------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------| | C HESAPEAKE (Exact \nDelaware of incorporation or organization) (State or other jurisdiction | U TILITIES C name of registrant as specified | ...

C 2022 A Absence of gain from sales of assets -$0.08 F Depreciation, amortization and property tax costs due to new capital investments -$0.07 G Regulated Energy Segment – Financial Summary Second Quarter Change Year-to-Date Change Year-to-Date Highlights 1See appendix for GAAP to non-GAAP reconciliation of adjusted gross margin Stockholders' Equity increased $31.4 million since the end of 2022 primarily driven by: • Strong Net Income performance of $52.5 million • Continued Dividend payments of $20.2 milli ...

Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $0.90 for Q2 2023, down from $0.96 in the prior year, impacted by warmer weather and higher interest costs [59][60] - Year-to-date EPS for 2023 was $2.94 compared to $3.04 in the previous year, reflecting a margin impact of approximately $0.38 due to significantly warmer weather [60][61] - Adjusted gross margin increased by $7.4 million and operating income increased by $1.9 million for Q2 2023, despite weather impacts [39][40] Business Line Data and Key Metrics Changes - Adjusted gross margin for the Regulated Energy segment increased by 9.4% for the quarter and 7.3% year-over-year [43] - The Unregulated segment saw a 4% increase in adjusted gross margin for the quarter, remaining relatively constant compared to the prior year [64] - The propane business experienced volume declines due to warmer weather, but margins were managed effectively [32][111] Market Data and Key Metrics Changes - Customer growth rates in natural gas distribution were 5.5% in Delmarva and 4% in Florida, indicating strong demand for natural gas [51][108] - Heating degree-days were down by over 30% year-over-year in Florida, significantly impacting volumes [30][50] - The company continues to see growth in residential and commercial infrastructure, particularly in areas like Middletown, Delaware, and Wildlight, Florida [55][56] Company Strategy and Development Direction - The company remains committed to its growth strategy, focusing on capital investments projected between $200 million to $230 million for 2023 [27][71] - Investments in renewable natural gas and pipeline expansions are key components of the company's strategy for sustainable growth [20][33] - The company is also enhancing its technology platform to improve service delivery and operational efficiency [98] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by warmer weather and rising interest rates but emphasized the team's focus on cost savings and margin acceleration [26][29] - The company expects to recognize close to $17.2 million in projected margin impact from permanent rates in Florida in 2024 [67] - Management remains optimistic about future growth opportunities driven by customer demand and ongoing infrastructure projects [46][99] Other Important Information - The company has initiated several new investment projects to meet strong customer demand for energy delivery services [47] - The Florida Public Service Commission approved the GUARD program, which is expected to enhance safety and deliverability in the distribution systems [49][93] - The company published its second Sustainability Report, highlighting a 16% decrease in emissions compared to 2019 [94] Q&A Session Summary Question: Can you provide context on the growth in Middletown and Wildlight? - Management highlighted the significant growth opportunities in these areas, supported by community development and infrastructure projects [76][77] Question: How does the Newberry expansion fit into the overall growth strategy? - The Newberry project is a new expansion that will convert propane customers to natural gas, reflecting the company's strategy to meet customer demand [80][102] Question: What are the criteria for evaluating acquisitions? - The company looks for earnings per share accretion, cultural fit, and operational synergies when considering acquisitions [112][126] Question: How will the GUARD program impact margins post-2024? - Management indicated that while the GUARD program's margins could be linear, they may vary based on other ongoing projects [114]

Financial Performance - For the three months ended June 30, 2023, total operating revenues were $139.47 million, with regulated energy contributing $92.19 million and unregulated energy contributing $53.46 million[250]. - Gross margin (GAAP) for the regulated energy segment for the six months ended June 30, 2023, was $119.7 million, an increase of $9.4 million, or 8.5% compared to the same period in 2022[253]. - Gross margin (GAAP) for the unregulated energy segment for the six months ended June 30, 2023, was $40.7 million, a decrease from $43.3 million in the same period in 2022[254]. Debt and Borrowings - The company reported a carrying value of long-term debt at June 30, 2023, of approximately $666.8 million, compared to an estimated fair value of $573.3 million[257]. - As of June 30, 2023, the company had $95.8 million in short-term borrowings outstanding at a weighted average interest rate of 5.33%[261]. - The company has entered into amended Shelf Agreements with Prudential and MetLife, expanding total borrowing capacity and extending the term for an additional three years[259]. Growth Strategy - The company’s growth strategy includes optimizing earnings growth in existing businesses and pursuing additional pipeline expansions[247]. - The company is focused on expanding its Marlin Gas Services' CNG transport business and entering LNG and RNG transport markets[247]. Lease Information - The weighted-average remaining lease term for operating leases as of June 30, 2023, was 8.37 years, with a weighted-average discount rate of 3.5%[267]. - Operating cash flows from operating leases for the six months ended June 30, 2023, were $1.465 million, compared to $1.428 million for the same period in 2022[267].

Chesapeake Utilities Corporation (NYSE:CPK) Q1 2023 Results Conference Call May 4, 2023 8:30 AM ET Company Participants Alex Whitelam - Head, IR Jeff Householder - President, CEO Beth Cooper - EVP, CFO, Treasurer & Assistant Corporate Secretary Jim Moriarty - EVP, General Counsel, Corporate Secretary & Chief Policy and Risk Officer Conference Call Participants Brian Russo - Sidoti Tate Sullivan - Maxim Group Operator Welcome to the Chesapeake Utilities First Quarter 2023 Earnings Conference Call. At this ti ...