Table of Contents Common Stock - par value per share $0.4867 CPK New York Stock Exchange, Inc. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-11590 Indicate by check mark whether th ...

Chesapeake Utilities Corporation (NYSE:CPK) Q2 2021 Earnings Conference Call August 5, 2021 4:00 PM ET Company Participants Beth Cooper - Chief Financial Officer Jeff Householder - President and Chief Executive Officer Jim Moriarty - Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer Conference Call Participants Tate Sullivan - Maxim Group Brian Russo - Sidoti Roger Liddell - Clear Harbor Asset Management Operator Greetings and welcome to the Chesapeake Utilitie ...

| --- | --- | |-------|-------| | | | | | | Presenters Jeff Householder President & CEO Beth Cooper Executive Vice President, CFO and Asst. Secretary Jim Moriarty Executive Vice President, General Counsel , Corporate Secretary and Chief Policy and Risk Officer 2 Forward Looking Statements and Other Disclosures Safe Harbor Statement Some of the Statements in this document concerning future Company performance will be forwardlooking within the meanings of the securities laws. Actual results may materially dif ...

Table of Contents Common Stock - par value per share $0.4867 CPK New York Stock Exchange, Inc. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-11590 Indicate by check mark whether the reg ...

Chesapeake Utilities Corporation (NYSE:CPK) Q1 2021 Earnings Conference Call May 5, 2021 4:00 PM ET Company Participants Beth W. Cooper - EVP, CFO, and Assistant Corporate Secretary Jeff M. Householder - President and CEO James F. Moriarty - EVP, General Counsel, CS, and Chief Policy and Risk Officer Conference Call Participants Tate Sullivan - Maxim Group Brian Russo - Sidoti Michael Gaugler - Janney Montgomery Scott Operator Greetings and welcome to the Chesapeake Utilities Corporation's First Quarter Res ...

| --- | --- | |-------|-------| | | | | | | Presenters Jeff Householder President & CEO Beth Cooper Executive Vice President, CFO and Asst. Secretary Jim Moriarty Executive Vice President, General Counsel , Corporate Secretary and Chief Policy and Risk Officer 2 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 di ...

Table of Contents Common Stock - par value per share $0.4867 CPK New York Stock Exchange, Inc. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-11590 Indicate by check mark whether the re ...

Chesapeake Utilities Corporation (NYSE:CPK) Q4 2020 Earnings Conference Call February 25, 2021 4:00 PM ET Company Participants Beth Cooper – Executive Vice President and Chief Financial Officer Jim Moriarty – Executive Vice President, General Counsel, Corporate Secretary, Chief Risk Officer and Compliance Officer Jeff Householder – President and Chief Executive Officer Conference Call Participants Tate Sullivan – Maxim Group Brian Russo – Sidoti Michael Gaugler – Janney Montgomery Scott Roger Liddell – Clea ...

Commitment Growth Leadership Safety Sustainability Solutions Energy Strength Team Service Performance Community Value | --- | --- | |-------|--------------------------------------------| | | | | | Earnings Conference Call February 25, 2021 | Presenters Jeff Householder President & CEO Beth Cooper Executive Vice President, CFO and Asst. Secretary Jim Moriarty Executive Vice President, General Counsel , Corporate Secretary and Chief Policy and Risk Officer 2 Forward Looking Statements and Other Disclosures Sa ...

Part I [Business](index=8&type=section&id=ITEM%201.%20Business.) Chesapeake Utilities Corporation is an energy delivery company focused on natural gas, electricity, and propane distribution, transmission, and generation across the Mid-Atlantic, Florida, and Ohio regions - Chesapeake Utilities Corporation is a **diversified energy delivery company** with operations primarily in the Mid-Atlantic region, Florida, and Ohio. Its strategy focuses on growing earnings from a **stable utility foundation** and investing in related businesses and services that offer **returns greater than traditional utility returns**[14](index=14&type=chunk) - The Company's growth strategy includes **optimizing existing businesses**, pursuing **pipeline expansions** (interstate and intrastate), growing **Marlin Gas Services' CNG transport business** and expanding into **LNG and RNG transport**, identifying **strategic propane acquisitions**, and participating in **renewable energy opportunities**[15](index=15&type=chunk) Regulated Energy Segment Net Income and Total Assets (Year Ended December 31, 2020, in thousands) | Operations | Areas Served | Net Income (in thousands) | Total Assets (in thousands) | | :------------------------ | :---------------------------- | :------------------------ | :-------------------------- | | Natural Gas Distribution | | | | | Delmarva Natural Gas | Delaware/Maryland | $9,448 | $319,028 | | Central Florida Gas and FPU | Florida | $12,542 | $451,966 | | Natural Gas Transmission | | | | | Eastern Shore | Delaware/Maryland/Pennsylvania | $20,320 | $471,492 | | Peninsula Pipeline | Florida | $9,359 | $129,862 | | Aspire Energy Express | Ohio | $34 | $1,599 | | Electric Distribution | | | | | FPU | Florida | $3,942 | $173,672 | | **Total Regulated Energy**| | **$55,645** | **$1,547,619** | - In July 2020, Chesapeake Utilities acquired Elkton Gas, expanding its natural gas distribution service to approximately **7,000 customers** in Cecil County, Maryland. Elkton Gas's results are now integrated into Delmarva Natural Gas operations[21](index=21&type=chunk) Unregulated Energy Segment Net Income and Total Assets (Year Ended December 31, 2020, in thousands) | Operations (in thousands) | Area Served | Net Income (in thousands) | Total Assets (in thousands) | | :------------------------ | :------------------------------------------ | :------------------------ | :-------------------------- | | Propane Operations | Delaware, Maryland, Virginia, Pennsylvania, Florida | $6,485 | $144,805 | | Energy Transmission | Ohio | $3,407 | $115,882 | | Energy Generation | Florida | $2,260 | $40,666 | | Marlin Gas Services | The Eastern U.S. | $1,404 | $45,541 | | **Total** | | **$13,556** | **$346,894** | - The Company divested **PESCO's natural gas marketing business** in the fourth quarter of 2019 to focus on core energy delivery, with PESCO's historical financial results now reported as **discontinued operations**[60](index=60&type=chunk) - As of December 31, 2020, the Company had **947 employees**, with **110 unionized**. It was recognized as a **Top Workplace** for the ninth consecutive year and established an **Equity, Diversity and Inclusion (EDI) Council** in 2020[64](index=64&type=chunk)[65](index=65&type=chunk) - In response to COVID-19, the Company implemented an emergency response plan, ensured employee safety with PPE and premium pay, enabled remote work, suspended disconnections, waived late payment fees, and donated **$200,000** to relief organizations[68](index=68&type=chunk)[69](index=69&type=chunk) [Risk Factors](index=18&type=page&id=ITEM%201A.%20Risk%20Factors.) The Company faces various financial, operational, and regulatory risks - Financial risks include **instability in financial markets** affecting access to capital, fluctuations in **propane gas prices**, potential failure to comply with **debt covenant obligations**, increases in **interest rates**, and adverse impacts on **pension plan assets**[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - Operational risks include dependence on **new facility construction**, **competition** from other energy suppliers, fluctuations in **weather impacting earnings**, natural disasters and acts of terrorism, operating events affecting public safety, **security breaches**, failure to **attract and retain qualified employees**, labor disputes, **capital-intensive projects**, non-renewal of franchise agreements, slowdowns in customer growth, energy conservation, commodity price increases, and **acquisition integration challenges**[86](index=86&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - Regulatory, legal, and environmental risks include changes in the **regulatory environment**, **pipeline safety legislation**, operating and litigation risks not fully covered by insurance, significant costs of **environmental law compliance** (especially MGP sites), unanticipated changes in **tax provisions**, and future regulatory and financial risks associated with **global warming and climate change**[111](index=111&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - The COVID-19 pandemic poses **significant health and financial risks**, impacting business operations, supply chains, personnel, and general economic conditions, with the ultimate impact being **unpredictable**[121](index=121&type=chunk)[123](index=123&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=ITEM%201B.%20Unresolved%20Staf%20Comments) There are no unresolved staff comments to report for the period - **No unresolved staff comments** were reported[126](index=126&type=chunk) [Properties](index=25&type=section&id=ITEM%202.%20Properties.) Chesapeake Utilities owns or leases various operational facilities across its service territories - The Company **owns or leases offices and operational facilities** in Delaware, Maryland, Virginia, Florida, Pennsylvania, and Ohio[128](index=128&type=chunk) Regulated Energy Segment Pipeline Miles (as of December 31, 2020) | Operations | Miles | | :----------------------------- | :---- | | Natural Gas Distribution | | | Delmarva Natural Gas | 1,864 | | Delmarva Natural Gas (Propane) | 32 | | Central Florida Gas and FPU | 2,973 | | Natural Gas Transmission | | | Eastern Shore | 501 | | Peninsula Pipeline | 129 | | Electric Distribution | | | FPU | 900 | | **Total** | **6,399** | Unregulated Energy Segment Properties (as of December 31, 2020) | Operations | Gallons or miles | | :---------------------------------------- | :--------------- | | Propane storage capacity (gallons in millions) | 8.3 | | Underground propane distribution mains (miles) | 204 | | Unregulated Energy Transmission and gathering (Aspire Energy) | 2,700 | | Natural gas pipelines (miles) | 2,700 | - In December 2020, FPU redeemed its **9.08% secured first mortgage bonds**, removing the lien on its assets[132](index=132&type=chunk) [Legal Proceedings](index=26&type=section&id=ITEM%203.%20Legal%20Proceedings.) Information regarding legal proceedings is incorporated by reference from Note 21, Other Commitments and Contingencies, in the Consolidated Financial Statements - Legal proceedings information is **incorporated by reference** from Note 21, Other Commitments and Contingencies[133](index=133&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to Chesapeake Utilities Corporation - This item is **not applicable**[134](index=134&type=chunk) Part II [Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=ITEM%205.%20Market%20for%20the%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Chesapeake Utilities common stock trades on the NYSE under CPK, with consistent cash dividends for 60 consecutive years and strong cumulative total returns - Chesapeake Utilities common stock is traded on the NYSE under the ticker symbol **CPK**. As of February 18, 2021, there were **2,127 holders of record**[137](index=137&type=chunk) Common Stock Dividends Declared Per Share | Year | Dividends Per Share ($) | | :--- | :---------------------- | | 2020 | $1.725 | | 2019 | $1.585 | - The Company has paid a cash dividend to common stockholders for **60 consecutive years**[137](index=137&type=chunk) Issuer Purchases of Equity Securities (Quarter Ended December 31, 2020) | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :----------------------------------- | :--------------------- | :------------------------------- | | October 1, 2020 - October 31, 2020 | 544 | $84.15 | | November 1, 2020 - November 30, 2020 | — | — | | December 1, 2020 - December 31, 2020 | — | — | | **Total** | **544** | **$84.15** | - The **544 shares** purchased in October 2020 were for reinvesting dividends on shares held in Rabbi Trust accounts under the Non-Qualified Deferred Compensation Plan[139](index=139&type=chunk) Cumulative Total Stockholder Return (December 31, 2015 = $100) | Index | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | | :--------------------- | :--- | :--- | :--- | :--- | :--- | :--- | | Chesapeake Utilities | $100 | $120 | $144 | $151 | $181 | $209 | | Industry Index | $100 | $122 | $138 | $156 | $175 | $147 | | S&P 500 Index | $100 | $112 | $136 | $130 | $171 | $203 | [Selected Financial Data](index=29&type=section&id=ITEM%206.%20Selected%20Financial%20Data) This section provides a five-year summary of key financial data, including operating revenues, operating income, net income, assets, capitalization, and common stock data Selected Operating and Net Income Data (in thousands) | Metric | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | 2017 (in thousands) | 2016 (in thousands) | | :--------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Regulated Energy Revenues | $352,746 | $343,006 | $345,281 | $326,310 | $305,689 | | Unregulated Energy Revenues | $152,526 | $154,151 | $161,905 | $140,076 | $108,364 | | Total revenues | $488,198 | $479,605 | $490,316 | $449,646 | $404,735 | | Regulated Energy Operating Income | $92,124 | $86,584 | $79,215 | $74,584 | $71,515 | | Unregulated Energy Operating Income | $20,664 | $19,938 | $17,125 | $14,938 | $11,732 | | Total operating income from Continuing Operations | $112,723 | $106,285 | $94,844 | $89,727 | $83,649 | | Income from Continuing Operations | $70,642 | $61,100 | $56,968 | $60,321 | $43,283 | | Net Income | $71,498 | $65,153 | $56,580 | $58,124 | $44,675 | Selected Asset and Capitalization Data (in thousands) | Metric | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | 2017 (in thousands) | 2016 (in thousands) | | :--------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Gross property, plant and equipment | $1,908,992 | $1,746,532 | $1,568,441 | $1,310,993 | $1,175,595 | | Net property, plant and equipment | $1,601,178 | $1,463,797 | $1,353,520 | $1,124,938 | $986,664 | | Total assets | $1,932,487 | $1,783,198 | $1,693,671 | $1,414,934 | $1,229,219 | | Capital expenditures | $195,875 | $198,986 | $282,861 | $179,337 | $169,376 | | Stockholders' equity | $697,085 | $561,577 | $518,439 | $486,294 | $446,086 | | Long-term debt, net of current maturities| $508,499 | $440,168 | $316,020 | $197,395 | $136,954 | | Total capitalization | $1,205,584 | $1,001,745 | $834,459 | $683,689 | $583,040 | | Total capitalization and short-term financing | $1,394,828 | $1,294,716 | $1,140,852 | $944,079 | $805,010 | Selected Common Stock Data and Ratios | Metric | 2020 ($) | 2019 ($) | 2018 ($) | 2017 ($) | 2016 ($) | | :---------------------------------------------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Basic Earnings Per Share | $4.28 | $3.97 | $3.46 | $3.56 | $2.87 | | Diluted Earnings Per Share | $4.26 | $3.96 | $3.45 | $3.55 | $2.86 | | Diluted earnings per share growth - 1 year (%) | 13.2 % | 7.2 % | (5.7)% | 32.9 % | 5.3 % | | Return on average equity (%) | 11.5 % | 11.3 % | 11.3 % | 13.0 % | 11.0 % | | Common equity / total capitalization (%) | 57.8 % | 56.1 % | 62.1 % | 71.1 % | 76.5 % | | Cash dividends declared per share ($) | $1.73 | $1.59 | $1.44 | $1.28 | $1.20 | | Payout ratio (%) | 40.9 % | 42.6 % | 41.4 % | 34.7 % | 43.2 % | | Natural gas distribution customers | 178,220 | 164,134 | 158,387 | 153,537 | 149,179 | | Electric distribution customers | 32,326 | 31,818 | 32,185 | 32,026 | 31,695 | | Propane operations customers | 67,034 | 59,671 | 56,915 | 54,760 | 54,947 | | Total employees | 947 | 955 | 983 | 945 | 903 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Chesapeake Utilities' financial performance, liquidity, and capital resources, along with factors influencing these results - The COVID-19 pandemic negatively impacted 2020 earnings by approximately **$1.0 million**, primarily due to reduced energy consumption in commercial and industrial sectors and increased operational expenses (PPE, bad debt, premium pay). Regulatory assets were established for these incremental expenses in natural gas and electric distribution businesses[151](index=151&type=chunk) Operating Income and Net Income (2020 vs. 2019, in thousands) | Metric (in thousands) | 2020 (in thousands) | 2019 (in thousands) | Increase (decrease) (in thousands) | | :-------------------- | :------------------ | :------------------ | :--------------------------------- | | Regulated Energy | $92,124 | $86,584 | $5,540 | | Unregulated Energy | $20,664 | $19,938 | $726 | | Operating Income | $112,723 | $106,285 | $6,438 | | Net Income | $71,498 | $65,153 | $6,345 | | Diluted EPS | $4.26 | $3.96 | $0.30 | Key Factors Impacting 2020 vs. 2019 Continuing Operations (Pre-tax Income / Net Income / EPS) | Factor | Pre-tax Income (in thousands) | Net Income (in thousands) | EPS ($) | | :------------------------------------------------------------------ | :---------------------------- | :------------------------ | :------ | | Unfavorable COVID-19 impacts | $(5,864) | $(4,284) | $(0.26) | | Decreased customer consumption - primarily weather related | $(4,305) | $(3,145) | $(0.19) | | Hurricane Michael Settlement Margin Impact | $10,864 | $7,936 | $0.47 | | Eastern Shore and Peninsula Pipeline service expansions | $8,006 | $5,849 | $0.35 | | Margin from recent acquisitions | $5,304 | $3,875 | $0.23 | | Natural gas growth (excluding service expansions) | $3,370 | $2,462 | $0.15 | | Increased retail propane margins per gallon | $1,937 | $1,415 | $0.08 | | Increased demand for CNG services for Marlin Gas Services | $1,821 | $1,331 | $0.08 | | Aspire Energy rate increases | $1,312 | $959 | $0.06 | | Florida GRIP | $1,239 | $905 | $0.05 | | Eastern Shore margin from capital improvements and non-service expansion projects | $1,033 | $755 | $0.05 | | Depreciation and amortization associated with Hurricane Michael regulatory proceeding settlement | $(7,133) | $(5,210) | $(0.31) | | Depreciation, amortization and property tax costs due to new capital investments | $(6,262) | $(4,575) | $(0.27) | | Operating expenses from recent acquisitions | $(3,269) | $(2,388) | $(0.14) | | Insurance | $(2,088) | $(1,525) | $(0.09) | | Favorable income tax impact associated with the CARES Act | — | $1,841 | $0.11 | | Lower pension expense | $1,777 | $1,298 | $0.08 | | Increased share count from 2020 equity offerings | — | — | $(0.08) | | Deferral of COVID expenses under PSC orders | $1,925 | $1,432 | $0.09 | | Interest charges | $(1,232) | $(900) | $(0.05) | | Gains from sales of assets | $3,162 | $2,317 | $0.14 | | Interest expense associated with the early extinguishment of FPU mortgage bonds | $(961) | $(715) | $(0.04) | | Other income tax effects | — | $(1,060) | $(0.06) | | Payroll, benefits and other employee-related expenses | $716 | $523 | $0.03 | | Net Other changes | $614 | $446 | $0.01 | | **Total Change** | **$11,966** | **$9,542** | **$0.49** | Gross Margin from Major Projects and Initiatives (in thousands) | Project/Initiative | 2018 (in thousands) | 2019 (in thousands) | 2020 (in thousands) | Estimate for Fiscal 2021 (in thousands) | 2022 (in thousands) | | :---------------------------------- | :------------------ | :------------------ | :------------------ | :-------------------------------------- | :------------------ | | Pipeline Expansions | $54 | $3,153 | $11,159 | $18,126 | $21,664 | | CNG Transportation | $110 | $5,410 | $7,231 | $7,900 | $8,500 | | RNG Transportation | — | — | — | $1,000 | $1,000 | | Acquisitions | — | $329 | $5,633 | $9,992 | $10,463 | | Regulatory Initiatives | $13,020 | $13,939 | $26,042 | $29,253 | $31,726 | | **Total** | **$13,184** | **$22,831** | **$50,065** | **$66,271** | **$73,353** | - Weather variations led to a **$4.3 million decrease** in gross margin in 2020 compared to 2019, and a **$5.8 million decrease** compared to normal temperatures[183](index=183&type=chunk) - Natural gas distribution customer growth generated **$3.4 million** in additional margin in 2020, with residential customer growth of approximately **5.3%** on the Delmarva Peninsula and **4.1%** in Florida[185](index=185&type=chunk) Regulated Energy Segment Financial Performance (in thousands) | Metric (in thousands) | 2020 (in thousands) | 2019 (in thousands) | Increase (decrease) (in thousands) | | :-------------------- | :------------------ | :------------------ | :--------------------------------- | | Revenue | $352,746 | $343,006 | $9,740 | | Cost of sales | $91,994 | $102,803 | $(10,809) | | Gross margin | $260,752 | $240,203 | $20,549 | | Operating Income | $92,124 | $86,584 | $5,540 | Unregulated Energy Segment Financial Performance (in thousands) | Metric (in thousands) | 2020 (in thousands) | 2019 (in thousands) | Increase (decrease) (in thousands) | | :-------------------- | :------------------ | :------------------ | :--------------------------------- | | Revenue | $152,526 | $154,150 | $(1,624) | | Cost of sales | $62,780 | $68,884 | $(6,104) | | Gross margin | $89,746 | $85,266 | $4,480 | | Operating Income | $20,664 | $19,938 | $726 | - Interest charges decreased by **$0.5 million** in 2020 compared to 2019, primarily due to lower outstanding revolving credit facilities and interest rates, and a **$1.5 million amortization credit** from the Hurricane Michael settlement, partially offset by increased long-term debt interest[215](index=215&type=chunk) - Income tax expense from continuing operations increased to **$23.5 million** in 2020 from **$21.1 million** in 2019. The effective income tax rate was **25.0%** in 2020 (**26.9%** excluding CARES Act benefit) and **25.7%** in 2019. A **$1.8 million tax benefit** was recognized in 2020 due to the CARES Act allowing net operating loss carrybacks[216](index=216&type=chunk) Capital Expenditures by Segment (in thousands) | Segment | 2020 Capital Expenditures (in thousands) | | :--------------------------- | :--------------------------------------- | | Regulated Energy | $147,100 | | Unregulated Energy | $46,295 | | Other | $2,480 | | **Total** | **$195,875** | Forecasted Capital Expenditures for Fiscal 2021 (in thousands) | Segment | Low Estimate (in thousands) | High Estimate (in thousands) | | :--------------------------- | :-------------------------- | :--------------------------- | | Regulated Energy | $143,000 | $158,000 | | Unregulated Energy | $31,000 | $39,000 | | Other | $1,000 | $3,000 | | **Total** | **$175,000** | **$200,000** | Capitalization (in thousands) | Metric | December 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :-------------------------------------- | :------------------------------- | :------------------------------- | | Long-term debt, net of current maturities | $508,499 (42%) | $440,168 (44%) | | Stockholders' equity | $697,085 (58%) | $561,577 (56%) | | **Total capitalization** | **$1,205,584 (100%)** | **$1,001,745 (100%)** | | Short-term debt | $175,644 (13%) | $247,371 (19%) | | Long-term debt, including current maturities | $522,099 (37%) | $485,768 (38%) | | Stockholders' equity | $697,085 (50%) | $561,577 (43%) | | **Total capitalization, including short-term borrowings** | **$1,394,828 (100%)** | **$1,294,716 (100%)** | - The Company's equity to total capitalization ratio (including short-term borrowings) was **50%** as of December 31, 2020, aligning with its target of **50-60%**[225](index=225&type=chunk) Cash Flows Summary (in thousands) | Activity | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | | :----------------------- | :------------------ | :------------------ | :------------------ | | Operating activities | $158,916 | $102,964 | $117,362 | | Investing activities | $(181,631) | $(186,587) | $(256,848) | | Financing activities | $19,229 | $84,519 | $139,961 | | Net (decrease) increase in cash and cash equivalents | $(3,486) | $896 | $475 | | Cash and cash equivalents—end of period | $3,499 | $6,985 | $6,089 | Contractual Obligations (as of December 31, 2020, in thousands) | Contractual Obligations | 2021 (in thousands) | 2022-2023 (in thousands) | 2024-2025 (in thousands) | After 2025 (in thousands) | Total (in thousands) | | :---------------------- | :------------------ | :----------------------- | :----------------------- | :------------------------ | :------------------- | | Long-term debt | $13,600 | $37,700 | $42,200 | $429,500 | $523,000 | | Operating leases | $2,027 | $3,907 | $3,052 | $4,419 | $13,405 | | Purchase obligations | | | | | | | Transmission capacity | $35,330 | $66,434 | $56,533 | $169,102 | $327,399 | | Storage capacity | $2,044 | $2,618 | — | — | $4,662 | | Commodities | $25,728 | — | — | — | $25,728 | | Electric supply | $6,357 | $12,788 | $12,887 | $32,402 | $64,434 | | Unfunded benefits | $310 | $606 | $572 | $1,274 | $2,762 | | Funded benefits | $3,863 | $3,090 | $3,090 | $3,031 | $13,074 | | **Total** | **$89,259** | **$127,143** | **$118,334** | **$639,728** | **$974,464** | Overview and Highlights](index=32&type=section&id=Overview%20and%20Highlights) The Company's operating income increased by $6.4 million (6.1%) in 2020 compared to 2019, reaching $112.7 million Operating Income and Net Income (2020 vs. 2019, in thousands) | Metric (in thousands) | 2020 (in thousands) | 2019 (in thousands) | Increase (decrease) (in thousands) | | :-------------------- | :------------------ | :------------------ | :--------------------------------- | | Regulated Energy | $92,124 | $86,584 | $5,540 | | Unregulated Energy | $20,664 | $19,938 | $726 | | Operating Income | $112,723 | $106,285 | $6,438 | | Net Income | $71,498 | $65,153 | $6,345 | | Diluted EPS | $4.26 | $3.96 | $0.30 | - Key variances in continuing operations for 2020 compared to 2019 included unfavorable COVID-19 impacts (**$0.26 EPS decrease**), decreased customer consumption due to weather (**$0.19 EPS decrease**), and interest expense from early extinguishment of FPU mortgage bonds (**$0.04 EPS decrease**)[156](index=156&type=chunk) - Positive impacts included Hurricane Michael Settlement Margin (**$0.47 EPS increase**), Eastern Shore and Peninsula Pipeline service expansions (**$0.35 EPS increase**), margin from recent acquisitions (**$0.23 EPS increase**), natural gas growth (**$0.15 EPS increase**), and favorable income tax impact from the CARES Act (**$0.11 EPS increase**)[156](index=156&type=chunk) Summary of Key Factors](index=34&type=section&id=Summary%20of%20Key%20Factors) The Company's gross margin growth is significantly influenced by major projects and initiatives across pipeline expansions, CNG/RNG transportation, acquisitions, and regulatory efforts Gross Margin from Major Projects and Initiatives (in thousands) | Project/Initiative | 2018 (in thousands) | 2019 (in thousands) | 2020 (in thousands) | Estimate for Fiscal 2021 (in thousands) | 2022 (in thousands) | | :---------------------------------- | :------------------ | :------------------ | :------------------ | :-------------------------------------- | :------------------ | | Pipeline Expansions | $54 | $3,153 | $11,159 | $18,126 | $21,664 | | CNG Transportation | $110 | $5,410 | $7,231 | $7,900 | $8,500 | | RNG Transportation | — | — | — | $1,000 | $1,000 | | Acquisitions | — | $329 | $5,633 | $9,992 | $10,463 | | Regulatory Initiatives | $13,020 | $13,939 | $26,042 | $29,253 | $31,726 | | **Total** | **$13,184** | **$22,831** | **$50,065** | **$66,271** | **$73,353** | - Pipeline expansions, including Western Palm Beach County, Del-Mar Energy Pathway, Auburndale, and Callahan Intrastate Pipeline, are projected to significantly increase gross margin, with Callahan alone generating **$3.9 million** in 2020 and an estimated **$7.6 million annually** from 2021[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - Marlin Gas Services' CNG transportation business generated an additional **$1.8 million** in gross margin in 2020, with projected annual gross margin of **$7.9 million** in 2021 and **$8.5 million** in 2022[166](index=166&type=chunk) - The Company is actively pursuing Renewable Natural Gas (RNG) transportation opportunities, including projects with Noble Road Landfill RNG, Bioenergy Devco, and CleanBay, with an estimated **$1.0 million** in incremental margin from RNG transportation starting in 2021[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - Acquisitions in 2019-2020, including Boulden Propane, Elkton Gas, and Western Natural Gas, contributed **$5.3 million** in incremental gross margin in 2020, with projected annual gross margin of **$9.99 million** in 2021[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - Regulatory initiatives like Florida GRIP and the Hurricane Michael settlement significantly boosted gross margin. The Hurricane Michael settlement alone contributed **$10.9 million** in additional gross margin in 2020[177](index=177&type=chunk)[181](index=181&type=chunk) - Weather conditions resulted in a **$4.3 million decrease** in gross margin in 2020 compared to 2019, primarily due to milder temperatures[183](index=183&type=chunk) - Natural gas distribution operations experienced **$3.4 million** in additional margin from customer growth in 2020, driven by residential growth on the Delmarva Peninsula (**5.3%**) and Florida (**4.1%**)[185](index=185&type=chunk) Regulated Energy](index=39&type=section&id=Regulated%20Energy) The Regulated Energy segment's operating income increased by $5.5 million (6.4%) to $92.1 million in 2020, driven by regulatory settlements, expansion projects, and customer growth Regulated Energy Segment Financial Performance (in thousands) | Metric (in thousands) | 2020 (in thousands) | 2019 (in thousands) | Increase (decrease) (in thousands) | | :-------------------- | :------------------ | :------------------ | :--------------------------------- | | Revenue | $352,746 | $343,006 | $9,740 | | Cost of sales | $91,994 | $102,803 | $(10,809) | | Gross margin | $260,752 | $240,203 | $20,549 | | Operating Income | $92,124 | $86,584 | $5,540 | - Operating income increased by **$5.5 million (6.4%)** in 2020, driven by the Hurricane Michael regulatory proceeding settlement (**$10.9 million**), Eastern Shore and Peninsula Pipeline service expansions (**$8.0 million**), natural gas distribution customer growth (**$3.4 million**), Elkton Gas acquisition (**$1.3 million**), Florida GRIP (**$1.2 million**), and Eastern Shore capital relocation projects (**$1.0 million**)[188](index=188&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - These increases were partially offset by unfavorable COVID-19 impacts on gross margin (**$3.8 million decrease**) and decreased customer consumption due to milder weather (**$1.3 million decrease**)[189](index=189&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) Increase in Other Operating Expenses for Regulated Energy (2020 vs. 2019, in thousands) | Factor | Increase (in thousands) | | :------------------------------------------------------------------ | :---------------------- | | Hurricane Michael settlement agreement - depreciation and amortization impact | $7,133 | | Depreciation, amortization and property tax costs due to new capital investments | $5,551 | | Unfavorable COVID-19 impacts (higher operating expenses) | $2,285 | | Insurance (non-health) expense - both insured and self-insured components | $1,442 | | Operating expenses from the Elkton Gas acquisition | $651 | | Deferral of net expense increases of COVID-19 under PSC orders | $(1,925) | | Other variances | $(128) | | **Period-over-period increase in other operating expenses** | **$15,009** | Unregulated Energy](index=42&type=section&id=U%20NREGULATED%20E%20NERGY) The Unregulated Energy segment's operating income increased by $0.7 million in 2020, driven by acquisitions, higher propane margins, and increased CNG demand Unregulated Energy Segment Financial Performance (in thousands) | Metric (in thousands) | 2020 (in thousands) | 2019 (in thousands) | Increase (decrease) (in thousands) | | :-------------------- | :------------------ | :------------------ | :--------------------------------- | | Revenue | $152,526 | $154,150 | $(1,624) | | Cost of sales | $62,780 | $68,884 | $(6,104) | | Gross margin | $89,746 | $85,266 | $4,480 | | Operating Income | $20,664 | $19,938 | $726 | - Operating income increased by **$0.7 million** in 2020, primarily due to a **$4.5 million increase** in gross margin. This was driven by: **$3.96 million** from Boulden and Western Natural Gas acquisitions, **$1.94 million** from increased retail propane margins, **$1.82 million** from increased demand for Marlin Gas Services' CNG, and **$1.31 million** from Aspire Energy rate increases[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) - Offsetting factors included decreased customer consumption due to warmer weather (**$2.45 million decrease** for Mid-Atlantic propane, **$0.52 million decrease** for Aspire Energy) and unfavorable COVID-19 impacts on gross margin (**$1.46 million decrease**)[203](index=203&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk) Increase in Other Operating Expenses for Unregulated Energy (2020 vs. 2019, in thousands) | Factor | Increase (in thousands) | | :------------------------------------------------------------------ | :---------------------- | | Depreciation and amortization due to new capital investments | $1,840 | | Operating expenses from Boulden and Western Natural Gas acquisitions | $1,510 | | Insurance expense (non-health) - both insured and self-insured | $645 | | Other variances | $(241) | | **Period-over-period increase in other operating expenses** | **$3,754** | Divestiture of PESCO](index=43&type=section&id=Divestiture%20of%20PESCO) In the fourth quarter of 2019, Chesapeake Utilities completed the sale of PESCO's assets and contracts, exiting the natural gas marketing business - The Company sold PESCO's assets and contracts in Q4 2019, exiting the natural gas marketing business to focus on core energy delivery. PESCO's historical financial results are now reported as **discontinued operations**[212](index=212&type=chunk) Other Income (Expense), Net](index=44&type=section&id=OTHER%20INCOME%20(EXPENSE),%20NET) Other income (expense), net, significantly increased from $(1.8) million in 2019 to $3.2 million in 2020 Other Income (Expense), Net (in thousands) | Year | Amount (in thousands) | | :--- | :-------------------- | | 2020 | $3,222 | | 2019 | $(1,847) | - The increase in other income (expense), net, was primarily due to **gains from the sale of two properties** and **lower pension expense** in 2020[214](index=214&type=chunk) Interest Charges](index=44&type=section&id=INTEREST%20CHARGES) Interest charges decreased by $0.5 million in 2020 compared to 2019, primarily due to lower revolving credit facilities and an amortization credit Interest Charges (in thousands) | Year | Amount (in thousands) | | :--- | :-------------------- | | 2020 | $21,765 | | 2019 | $22,224 | - Interest charges decreased by **$0.5 million** in 2020, primarily due to a **$4.6 million decrease** from lower revolving credit facility outstanding balances and lower interest rates, a **$1.5 million amortization credit** from the Hurricane Michael settlement, and **$0.5 million** from higher capitalized interest[215](index=215&type=chunk) - This decrease was partially offset by a **$5.9 million increase** in interest expense on long-term debt from 2019 and 2020 issuances, and **$1.0 million** in interest and fees for the early payoff of FPU's **9.08% secured first mortgage bonds**[215](index=215&type=chunk) Income Taxes](index=44&type=section&id=INCOME%20TAXES) Income tax expense from continuing operations increased to $23.5 million in 2020, with a $1.8 million tax benefit from the CARES Act Income Tax Expense from Continuing Operations (in thousands) | Year | Amount (in thousands) | | :--- | :-------------------- | | 2020 | $23,538 | | 2019 | $21,114 | Effective Income Tax Rate from Continuing Operations | Year | Effective Tax Rate (%) | | :--- | :--------------------- | | 2020 | 25.0% | | 2019 | 25.7% | - In 2020, the Company recognized a **$1.8 million reduction** in tax expense due to the CARES Act, which allowed net operating losses from 2018 and 2019 to be carried back to prior years with a **35% federal income tax rate**. Excluding this impact, the effective tax rate for 2020 was **26.9%**[216](index=216&type=chunk) Liquidity and Capital Resources](index=44&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The Company's capital requirements are driven by investments, debt retirement, and working capital, funded by operations, borrowings, and equity issuances - Capital requirements are primarily for **new plant and equipment**, **debt retirement**, and **seasonal working capital**. Funding sources include **cash from operations**, **short-term borrowings**, and **long-term debt/equity issuances**[217](index=217&type=chunk) - The business is **weather-sensitive and seasonal**, with a large portion of net income and accounts receivable generated in **Q1 and Q4** due to **peak heating season demand**[218](index=218&type=chunk) Capital Expenditures by Segment and Business Line (Year Ended December 31, 2020, in thousands) | Segment/Business Line | Amount (in thousands) | | :--------------------------- | :-------------------- | | Regulated Energy: | | | Natural gas distribution | $85,257 | | Natural gas transmission | $58,609 | | Electric distribution | $3,234 | | Total Regulated Energy | $147,100 | | Unregulated Energy: | | | Propane distribution | $15,455 | | Energy transmission | $19,398 | | Other unregulated energy | $11,442 | | Total Unregulated Energy | $46,295 | | Other: | | | Corporate and other businesses | $2,480 | | Total Other | $2,480 | | **Total 2020 Capital Expenditures**| **$195,875** | Forecasted Capital Expenditures for Fiscal 2021 (in thousands) | Segment/Business Line | Low Estimate (in thousands) | High Estimate (in thousands) | | :--------------------------- | :-------------------------- | :--------------------------- | | Regulated Energy: | | | | Natural gas distribution | $79,000 | $85,000 | | Natural gas transmission | $55,000 | $60,000 | | Electric distribution | $9,000 | $13,000 | | Total Regulated Energy | $143,000 | $158,000 | | Unregulated Energy: | | | | Propane distribution | $9,000 | $12,000 | | Energy transmission | $14,000 | $15,000 | | Other unregulated energy | $8,000 | $12,000 | | Total Unregulated Energy | $31,000 | $39,000 | | Other: | | | | Corporate and other businesses | $1,000 | $3,000 | | Total Other | $1,000 | $3,000 | | **Total 2021 Forecasted Capital Expenditures**| **$175,000** | **$200,000** | - The target ratio of equity to total capitalization (including short-term borrowings) is **50-60%**. As of December 31, 2020, this ratio was **50%**[225](index=225&type=chunk) - In Q3 and Q4 2020, the Company issued **1.0 million shares** of common stock through DRIP and ATM programs, generating **$83.0 million** in net proceeds[226](index=226&type=chunk) - As of December 31, 2020, **$324.6 million** of consolidated net income was free of dividend restrictions imposed by Senior Notes covenants[227](index=227&type=chunk) - The Company has Shelf Agreements with Prudential, MetLife, and NYL, with a total remaining borrowing capacity of **$310.0 million** as of December 31, 2020[233](index=233&type=chunk) - Short-term borrowings decreased from **$247.4 million** in 2019 to **$175.6 million** in 2020, with weighted average interest rates decreasing from **2.62%** to **1.28%**[234](index=234&type=chunk) - A new **$375.0 million** syndicated Revolver was entered into in September 2020, replacing previous credit facilities. Available credit under the Revolver was **$196.9 million** as of December 31, 2020[235](index=235&type=chunk)[237](index=237&type=chunk) - Net cash provided by operating activities increased by **$55.9 million** in 2020 to **$158.9 million**, driven by changes in receivables, net income adjustments, and tax refunds from the CARES Act[243](index=243&type=chunk) - Net cash used in investing activities decreased by **$5.0 million** to **$181.6 million** in 2020, primarily due to lower capital expenditures and cash received from asset sales, partially offset by acquisitions[247](index=247&type=chunk) - Net cash provided by financing activities decreased by **$65.3 million** to **$19.2 million** in 2020, mainly due to lower long-term debt issuances and higher repayments of short-term debt, partially offset by new equity issuances[248](index=248&type=chunk) Contractual Obligations](index=49&type=section&id=Contractual%20Obligations) As of December 31, 2020, the Company had total contractual obligations of $974.5 million, with significant portions related to long-term debt, transmission capacity, and electric supply Contractual Obligations (as of December 31, 2020, in thousands) | Contractual Obligations | 2021 (in thousands) | 2022-2023 (in thousands) | 2024-2025 (in thousands) | After 2025 (in thousands) | Total (in thousands) | | :---------------------- | :------------------ | :----------------------- | :----------------------- | :------------------------ | :------------------- | | Long-term debt | $13,600 | $37,700 | $42,200 | $429,500 | $523,000 | | Operating leases | $2,027 | $3,907 | $3,052 | $4,419 | $13,405 | | Purchase obligations | | | | | | | Transmission capacity | $35,330 | $66,434 | $56,533 | $169,102 | $327,399 | | Storage capacity | $2,044 | $2,618 | — | — | $4,662 | | Commodities | $25,728 | — | — | — | $25,728 | | Electric supply | $6,357 | $12,788 | $12,887 | $32,402 | $64,434 | | Unfunded benefits | $310 | $606 | $572 | $1,274 | $2,762 | | Funded benefits | $3,863 | $3,090 | $3,090 | $3,031 | $13,074 | | **Total** | **$89,259** | **$127,143** | **$118,334** | **$639,728** | **$974,464** | - Expected interest payments on long-term debt total **$180.0 million** across all periods[249](index=249&type=chunk) Off-Balance Sheet Arrangements](index=50&type=section&id=Off-Balance%20Sheet%20Arrangements) The Company's Board of Directors has authorized up to $20.0 million in corporate guarantees and letters of credit for subsidiary obligations - The Board authorized up to **$20.0 million** for corporate guarantees and letters of credit for subsidiary obligations[252](index=252&type=chunk) - As of December 31, 2020, **$5.7 million** in guarantees (expiring through September 2021) and **$4.8 million** in letters of credit (expiring through October 2021) were outstanding. No draws have occurred, and renewals are expected[252](index=252&type=chunk)[253](index=253&type=chunk) Critical Accounting Policies](index=50&type=section&id=Critical%20Accounting%20Policies) The Company's financial statements rely on estimates and assumptions, particularly for regulated operations under ASC Topic 980, requiring significant management judgment - Financial statements are prepared using GAAP, requiring estimates and assumptions about future economic factors. Regulated operations follow **ASC Topic 980**, deferring costs/revenues as regulatory assets/liabilities based on probable recovery/refund through rates[254](index=254&type=chunk)[255](index=255&type=chunk) - Environmental liabilities for MGP sites are estimated by independent consultants and recorded on an **undiscounted basis**, with costs expected to be **recoverable through regulatory rate mechanisms**[256](index=256&type=chunk) - Financial instruments are used to mitigate **commodity price and interest rate risks**. Derivatives are recorded at **fair value**, with changes recognized in earnings or comprehensive income based on **hedge accounting criteria**[257](index=257&type=chunk)[259](index=259&type=chunk) - Revenue recognition for regulated operations is based on **PSC/FERC approved rates**, with **unbilled revenues accrued**. Unregulated operations recognize revenue based on delivery/service, with **flexible rates for competitive customers**[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) - An **allowance for expected credit losses** is recorded against trade receivables, based on historical collections, economic conditions, and customer payment ability, including impacts from pandemics[265](index=265&type=chunk) - Goodwill is tested for impairment annually using a **discounted cash flow technique**, with **no impairment indicated for 2020**. Pension and other postretirement plan costs and liabilities are determined **actuarially**, influenced by assumptions like market value of assets, discount rates, and expected returns[266](index=266&type=chunk)[269](index=269&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to interest rate risk, commodity price risk, and wholesale credit risk, which are managed through various strategies - **Interest rate risk** arises from potential losses due to changes in interest rates, affecting debt refinancing costs and short-term borrowings. The Company uses **interest rate swap agreements** to mitigate short-term borrowing rate risk[274](index=274&type=chunk) - Regulated energy distribution businesses have **limited commodity price risk** due to PSC-authorized **fuel cost recovery mechanisms**[276](index=276&type=chunk) - Unregulated propane operations are exposed to **commodity price risk**, mitigated by propane storage activities (**8.3 million gallons capacity**) and forward contracts for supply. Aspire Energy manages commodity price risk by procuring firm capacity and seeking new producers[277](index=277&type=chunk) Fair Market Value of Financial Derivatives Contracts (Propane) (in thousands) | Business unit | Balance at Dec 31, 2019 (in thousands) | Increase (Decrease) in Fair Market Value (in thousands) | Less Amounts Settled (in thousands) | Balance at Dec 31, 2020 (in thousands) | | :-------------- | :------------------------------------- | :------------------------------------------------------ | :---------------------------------- | :------------------------------------- | | Sharp | $(1,844) | $4,292 | $734 | $3,182 | | **Total** | **$(1,844)** | **$4,292** | **$734** | **$3,182** | Fair Market Value of Financial Derivatives by Maturity (as of December 31, 2020, in thousands) | Metric | 2021 (in thousands) | 2022 (in thousands) | 2023 (in thousands) | Total Fair Value (in thousands) | | :----------------------------------- | :------------------ | :------------------ | :------------------ | :------------------------------ | | Price based on Mont Belvieu - Sharp | $2,669 | $508 | $5 | $3,182 | | **Total** | **$2,669** | **$508** | **$5** | **$3,182** | - **Wholesale credit risks** with commodity derivative counterparties are reviewed by the **Risk Management Committee**[280](index=280&type=chunk) - **Inflation impacts** operating, maintenance, and capital improvement costs. The Company seeks **rate increases** for regulated operations and monitors returns for unregulated businesses to mitigate these effects[282](index=282&type=chunk) [Financial Statements and Supplementary Data](index=55&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section presents the audited consolidated financial statements for Chesapeake Utilities Corporation and its subsidiaries for the years ended December 31, 2020, 2019, and 2018 - The independent registered public accounting firm, Baker Tilly US, LLP, issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2020[285](index=285&type=chunk)[286](index=286&type=chunk) - The goodwill impairment assessment for four reporting units within the Unregulated Energy segment (Aspire Energy, Mid-Atlantic Propane, Florida Propane, Marlin Gas Services) was identified as a **critical audit matter** due to significant estimates and assumptions in fair value calculations[295](index=295&type=chunk) Consolidated Statements of Income (in thousands, except per share data) | Metric | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | | :--------------------------------------- | :------------------ | :------------------ | :------------------ | | Total operating revenues | $488,198 | $479,605 | $490,316 | | Total operating expenses | $375,475 | $373,320 | $395,472 | | Operating Income | $112,723 | $106,285 | $94,844 | | Income from Continuing Operations | $70,642 | $61,100 | $56,968 | | Net Income | $71,498 | $65,153 | $56,580 | | Basic Earnings Per Share of Common Stock | $4.28 | $3.97 | $3.46 | | Diluted Earnings Per Share of Common Stock | $4.26 | $3.96 | $3.45 | Consolidated Balance Sheets (in thousands) | Asset/Liability | December 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Net property, plant and equipment | $1,601,178 | $1,463,797 | | Total current assets | $136,431 | $134,826 | | Total deferred charges and other assets | $194,878 | $184,575 | | **Total Assets** | **$1,932,487** | **$1,783,198** | | Total stockholders' equity | $697,085 | $561,577 | | Long-term debt, net of current maturities| $508,499 | $440,168 | | Total capitalization | $1,205,584 | $1,001,745 | | Total current liabilities | $329,032 | $423,324 | | Total deferred credits and other liabilities | $397,871 | $358,129 | | **Total Capitalization and Liabilities** | **$1,932,487** | **$1,783,198** | Consolidated Statements of Cash Flows (in thousands) | Activity | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | | :----------------------- | :------------------ | :------------------ | :------------------ | | Net cash provided by operating activities | $158,916 | $102,964 | $117,362 | | Net cash used in investing activities | $(181,631) | $(186,587) | $(256,848) | | Net cash provided by financing activities | $19,229 | $84,519 | $139,961 | | Net (Decrease) Increase in Cash and Cash Equivalents | $(3,486) | $896 | $475 | | Cash and Cash Equivalents — End of Period | $3,499 | $6,985 | $6,089 | - The Company adopted **ASU 2016-13 (Credit Losses)** on January 1, 2020, recording an immaterial cumulative effect in retained earnings. The allowance for credit losses increased from **$1.3 million** in 2019 to **$4.8 million** in 2020, reflecting COVID-19 impacts[369](index=369&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk) - In 2020, the Company acquired Western Natural Gas for **$6.7 million** and Elkton Gas for **$15.6 million**, expanding its unregulated propane and regulated natural gas distribution services, respectively. These acquisitions contributed to goodwill and intangible assets[379](index=379&type=chunk)[380](index=380&type=chunk) - The divestiture of PESCO's natural gas marketing business in Q4 2019 resulted in **$23.1 million cash consideration** and a **$7.5 million pre-tax gain**, with PESCO's results reclassified as discontinued operations[386](index=386&type=chunk) Total Operating Revenues by Segment (in thousands) | Segment | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | | :----------------------- | :------------------ | :------------------ | :------------------ | | Regulated Energy | $352,746 | $343,006 | $345,281 | | Unregulated Energy | $152,526 | $154,151 | $161,905 | | Other and Eliminations | $(17,074) | $(17,552) | $(16,870) | | **Total Operating Revenues**| **$488,198** | **$479,605** | **$490,316** | Long-Term Debt (in thousands) | Debt Type | December 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :-------------------------------------- | :------------------------------- | :------------------------------- | | FPU secured first mortgage bonds (9.08%)| — | $7,990 | | Uncollateralized Senior Notes | $408,000 | $328,300 | | Term Note due Feb 2