Core Insights - Chesapeake Utilities Corporation's Ohio subsidiary, Aspire Energy Express, LLC, has signed an agreement with American Electric Power (AEP) to build and operate a natural gas pipeline in central Ohio to support a new fuel-cell facility for a data center [1][2][3] Company Overview - Chesapeake Utilities Corporation is a diversified energy delivery company listed on the NYSE (NYSE: CPK), providing sustainable energy solutions through various services including natural gas transmission and distribution, electricity generation, and propane gas distribution [5] - Aspire Energy Express, LLC, established in 2020, focuses on expanding natural gas infrastructure in Ohio, leveraging the state's workforce and resources to deliver efficient and reliable energy [6] Project Details - The new pipeline project represents a capital investment of approximately $10 million and is expected to provide reliable natural gas for on-site electricity generation at the data center by the first half of 2027 [3][4] - AEP is actively supporting the growing demand for distributed data infrastructure by offering solutions to meet increasing power requirements [2]

Company Overview - Chesapeake Utilities (CPK) is based in Dover and operates in the Utilities sector, with a year-to-date share price change of -0.19% [3] - The company currently pays a dividend of $0.64 per share, resulting in a dividend yield of 2.11%, which is lower than the Utility - Gas Distribution industry's yield of 3.36% and the S&P 500's yield of 1.54% [3] Dividend Performance - Chesapeake Utilities has an annualized dividend of $2.56, reflecting a 2% increase from the previous year [4] - Over the past five years, the company has increased its dividend five times, achieving an average annual increase of 9.63% [4] - The current payout ratio is 46%, indicating that the company pays out 46% of its trailing 12-month earnings per share as dividends [4] Earnings Growth Expectations - For the fiscal year 2025, the Zacks Consensus Estimate predicts earnings of $6.27 per share, representing a year-over-year growth rate of 16.33% [5] Investment Considerations - Dividends are favored by investors for various reasons, including improving stock investing profits and providing tax advantages [6] - Established firms with secure profits are typically viewed as the best dividend options, while high-growth businesses rarely offer dividends [7] - Chesapeake Utilities is considered a compelling investment opportunity due to its strong dividend profile and a Zacks Rank of 3 (Hold) [7]

Group 1: Dividend Stocks Overview - In volatile markets, investors often seek the relative safety of dividend stocks, which provide income even when stock prices fluctuate [1] - The compounding effect of rising dividends combined with rising stock prices increases total return for investors [2] Group 2: Chesapeake Utilities - Chesapeake Utilities Corp. (NYSE: CPK) has a dividend yield of 2.23% and an annual dividend of $2.74, with a 21-year track record of dividend increases [3][4] - The company raised its dividend by approximately 7% in early May, with a payout ratio of around 43% based on next year's estimates, indicating potential for future growth [4] - Natural gas prices are expected to rise due to increasing demand, particularly from data centers, which supports the growth outlook for Chesapeake Utilities [5] Group 3: RTX - RTX (NYSE: RTX) has a dividend yield of 2.01% and an annual dividend of $2.72, with a 5-year track record of dividend increases [6][10] - The company raised its dividend by nearly 8% and has a consensus Buy rating with a price target of $159.82, indicating a 17.9% upside potential [7][8] - RTX is positioned well in the defense sector, focusing on future technologies like drones, which may mitigate concerns over current geopolitical issues [7] Group 4: Paychex - Paychex Inc. (NASDAQ: PAYX) has a dividend yield of 2.77% and an annual dividend of $4.32, with a 3-year track record of dividend increases [10][11] - The company raised its dividend by 10% in early May, with annualized three-year dividend growth at over 13% [11] - Despite a strong performance, the current stock price is near the top of its 52-week range, leading to concerns about potential growth opportunities [12][13]

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Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $2.22, a 6% increase from Q1 2024 [8] - Adjusted gross margin for Q1 2025 was approximately $182 million, up 11% from Q1 2024 [25] - Adjusted net income increased by 9% to approximately $51 million for the quarter [25] Business Line Data and Key Metrics Changes - Regulated segment adjusted gross margin was approximately $128 million, an 8% increase from the previous year [28] - Unregulated energy segment adjusted gross margin rose 18% to approximately $54 million [28] Market Data and Key Metrics Changes - Delmarva customer growth was up nearly 4%, while Florida saw a 3% increase compared to the same period last year [10] - Increased demand for natural gas was noted across service areas, driven by population growth and new residential communities [10] Company Strategy and Development Direction - The growth strategy focuses on three pillars: prudent capital deployment, proactive regulatory management, and continuous business transformation [11] - The company plans to invest between $325 million and $375 million in capital growth for 2025, with $113 million already invested in Q1 [9][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting the full-year 2025 adjusted EPS guidance of $6.15 to $6.35, despite the delay in the WRU project [33][76] - The company remains optimistic about its capital program and the demand for gas, indicating no significant impacts from the broader economic environment [76] Other Important Information - The company received a $20 million increase in capital investment for the WRU project, raising the total expected cost to approximately $100 million [16] - The Board approved an $8 increase in the annualized dividend, reflecting a 7% growth [32] Q&A Session Summary Question: Any updates on natural gas infrastructure for the space industry in Florida? - Management reported no substantive updates but mentioned ongoing interest and potential for liquefied natural gas to support space launch facilities [38][39] Question: Is there any expansion planned for Marlin? - Management indicated ongoing capital investment in Marlin but no large-scale expansion announcements at this time [40][41] Question: Thoughts on tariffs and their impact on the business? - Management noted minimal issues related to tariffs so far but acknowledged potential cost increases for specific projects like WRU due to market uncertainties [47][48] Question: How will the delay in WRU affect margins? - Management stated they can manage the $3 million margin drop from WRU and have operational capabilities to provide peaking services temporarily [51][52] Question: Concerns about foreign tourism or housing starts affecting business? - Management has not seen significant impacts on tourism but noted a strong backlog of contracted housing starts [55][56] Question: Will the company revert to a normal seasonality pattern in 2027? - Management believes that seasonality will return to a more typical pattern in 2027, influenced by regulatory activity and capital projects [57] Question: What are the thresholds for potential credit rating downgrades? - Management indicated that a downgrade could be considered around a 4.8 FFO to debt ratio, with upgrades around 3.8 [65][66]

Financial Data and Key Metrics Changes - Adjusted earnings per share for Q1 2025 was $2.22, a 6% increase from Q1 2024 [7] - Adjusted gross margin for Q1 2025 was approximately $182 million, up 11% from Q1 2024 [22] - Adjusted net income for Q1 2025 was approximately $51 million, a 9% increase from the previous year [22] Business Line Data and Key Metrics Changes - Regulated segment adjusted gross margin was approximately $128 million, an 8% increase from the previous year [25] - Unregulated energy segment adjusted gross margin increased by 18% to approximately $54 million in Q1 2025 [26] - The Marlin Gas Services business contributed $3.6 million of additional gross margin in Q1 2025 [26] Market Data and Key Metrics Changes - Delmarva customer growth was up nearly 4% and Florida customer growth increased by 3% compared to the same period last year [8] - Increased demand for natural gas was noted across service areas, driven by population growth and new residential communities [8] Company Strategy and Development Direction - The company focuses on three pillars for growth: capital deployment for customer demand, proactive regulatory management, and continuous business transformation [9] - A five-year capital investment plan of $1.5 billion to $1.8 billion has been initiated, with $356 million invested in 2024 and $113 million in Q1 2025 [15] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about achieving the full year 2025 adjusted EPS guidance of $6.15 to $6.35 despite the delay in the WRU project [30] - The company is monitoring macroeconomic impacts but has not seen significant adverse effects on its operations [72] Other Important Information - The company received a $20 million increase in capital investment for the WRU project, raising total expected costs to approximately $100 million [14] - An $8 increase in the annualized dividend was approved, reflecting a 7% growth [29] Q&A Session Summary Question: Any updates on natural gas infrastructure for the space industry in Florida? - Management reported no substantive updates but mentioned ongoing interest and a $6.5 million grant for infrastructure expansion in Virginia [37][38] Question: Thoughts on tariffs and their impact on the business? - Management indicated minimal issues related to tariffs but acknowledged some cost increases for specific projects due to market uncertainty [43][45] Question: How will the company manage the margin loss from the WRU project delay? - Management expressed confidence in managing the margin loss through operational capabilities and ongoing projects [48][50] Question: Concerns regarding foreign tourism or housing starts affecting business? - Management noted no significant impacts on tourism and a strong backlog of contracted housing starts, although multifamily markets in Florida face challenges [52][53] Question: Will the company revert to a normal seasonality pattern in 2027? - Management believes that seasonality will return to a more typical pattern, influenced by regulatory activity and capital projects [54]

Safe Harbor for Forward-Looking Statements THURSDAY, MAY 8, 2025 Q1 2025 Earnings Call Presentation Safe Harbor Statement Some of the statements in this presentation are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable law. Such forward-looking statements may be identified by the use of words, such as "project," "believe," "expect," "anticipate," "intend," "plan," "estimate," "continue," "potential," "forecast" or other similar word ...

Chesapeake Utilities (CPK) came out with quarterly earnings of $2.22 per share, missing the Zacks Consensus Estimate of $2.28 per share. This compares to earnings of $2.10 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -2.63%. A quarter ago, it was expected that this energy and utility company would post earnings of $1.67 per share when it actually produced earnings of $1.63, delivering a surprise of -2.40%.Over the last four ...

[PART I—FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Financial Statements](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Chesapeake Utilities reported Q1 2025 revenue of $298.7 million and net income of $50.9 million, with assets at $3.66 billion [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 2025 vs Q1 2024 Income Statement Highlights | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $298.7 | $245.7 | +21.6% | | **Operating Income** | $86.8 | $79.6 | +9.0% | | **Net Income** | $50.9 | $46.2 | +10.2% | | **Diluted EPS** | $2.21 | $2.07 | +6.8% | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary | Account | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | **Total Assets** | $3,664.6 | $3,577.0 | | Net property, plant and equipment | $2,828.2 | $2,735.9 | | Total current assets | $199.6 | $204.3 | | **Total Liabilities & Equity** | $3,664.6 | $3,577.0 | | Total stockholders' equity | $1,447.3 | $1,390.2 | | Long-term debt, net | $1,260.0 | $1,261.7 | | Short-term borrowing | $215.4 | $196.5 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 vs Q1 2024 Cash Flow Summary | Activity | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $85.0 | $97.3 | | Net cash used in investing activities | ($113.1) | ($74.7) | | Net cash provided by (used in) financing activities | $20.9 | ($25.8) | | **Net Decrease in Cash** | **($7.2)** | **($3.2)** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company's business is seasonal, with revenues and earnings typically higher in the first and fourth quarters due to increased energy consumption for heating[32](index=32&type=chunk) - The company operates two reportable segments: Regulated Energy and Unregulated Energy. For Q1 2025, the Regulated Energy segment generated **$60.5 million** in operating income, while the Unregulated Energy segment generated **$26.3 million**[87](index=87&type=chunk)[85](index=85&type=chunk) - The company utilizes derivative instruments, including propane and interest rate swaps, to manage commodity price and interest rate risks. As of March 31, 2025, the company had cash flow hedges for **6.3 million gallons of propane** and interest rate swaps with a notional amount of **$100.0 million**[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - As of March 31, 2025, the company had total long-term debt of **$1.286 billion** and short-term borrowings of **$215.4 million** under its **$450.0 million** revolving credit facility[123](index=123&type=chunk)[127](index=127&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=34&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management reported strong Q1 2025 net income of $50.9 million, driven by consumption and regulatory programs [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q1 2025 vs Q1 2024 Adjusted Results | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Adjusted Gross Margin** | $182.4M | $164.5M | +$17.9M | | **Operating Income** | $86.8M | $79.6M | +$7.2M | | **Adjusted Net Income (Non-GAAP)** | $51.1M | $46.8M | +$4.3M | | **Adjusted EPS - Diluted (Non-GAAP)** | $2.22 | $2.10 | +$0.12 | - Key drivers for the **$17.9 million** increase in Adjusted Gross Margin included higher customer consumption (**$5.5M**), increased demand for virtual pipeline services (**$3.6M**), contributions from regulated infrastructure programs (**$3.4M**), and organic natural gas growth (**$2.2M**)[158](index=158&type=chunk) - Operating expenses increased primarily due to higher depreciation and amortization (**$5.2M**) from growth projects and increased payroll and benefits expenses (**$4.5M**)[158](index=158&type=chunk) [Segment Analysis](index=47&type=section&id=Segment%20Analysis) - **Regulated Energy Segment:** Operating income increased by **$2.4 million (4.1%)** to **$60.5 million** in Q1 2025. Adjusted gross margin grew by **$9.6 million**, driven by regulated infrastructure programs (**$3.4M**), natural gas customer growth (**$2.2M**), and transmission service expansions (**$2.2M**)[191](index=191&type=chunk)[193](index=193&type=chunk) - **Unregulated Energy Segment:** Operating income improved by **$4.9 million** to **$26.3 million** in Q1 2025. The **$8.5 million** increase in adjusted gross margin was primarily due to higher propane customer consumption from colder weather (**$4.2M**) and increased demand for virtual pipeline services (**$3.6M**)[200](index=200&type=chunk)[201](index=201&type=chunk) [Major Projects and Initiatives](index=41&type=section&id=Major%20Projects%20and%20Initiatives) Estimated Annual Adjusted Gross Margin from Major Initiatives (in millions) | Initiative Category | 2025 Estimate | 2026 Estimate | | :--- | :--- | :--- | | Pipeline Expansions | $22.1 | $42.3 | | CNG/RNG/LNG Transportation | $20.0 | $20.7 | | Regulatory Initiatives | $40.8 | $56.0 | | **Total** | **$82.9** | **$119.0** | - The company is advancing numerous growth projects, including the Worcester Resiliency Upgrade, various Florida pipeline expansions (Wildlight, Newberry, East Coast Reinforcement), and Renewable Natural Gas (RNG) supply projects[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - Key regulatory initiatives driving growth include Florida's GUARD and FCG's SAFE infrastructure programs, Eastern Shore's Capital Cost Surcharge, and recent rate cases in Maryland, Delaware, and Florida[178](index=178&type=chunk)[179](index=179&type=chunk)[181](index=181&type=chunk)[183](index=183&type=chunk) [Financial Position, Liquidity and Capital Resources](index=50&type=section&id=Financial%20Position,%20Liquidity%20and%20Capital%20Resources) 2025 Forecasted Capital Expenditures | Segment | Low (in millions) | High (in millions) | | :--- | :--- | :--- | | Regulated Energy | $305.0 | $345.0 | | Unregulated Energy | $19.0 | $28.0 | | Other | $1.0 | $2.0 | | **Total** | **$325.0** | **$375.0** | - The company's equity to total capitalization ratio, including short-term debt, was **49%** as of March 31, 2025, slightly below its target range of **50% to 60%**[215](index=215&type=chunk) - As of March 31, 2025, the company had **$215.4 million** in short-term borrowings outstanding and **$227.0 million** of available credit under its **$450.0 million** revolving credit facility[220](index=220&type=chunk)[224](index=224&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company manages market risks from interest rates and commodity prices using hedging and recovery mechanisms - Interest rate risk is managed through debt refinancing decisions and the use of interest rate swap agreements to mitigate short-term borrowing rate fluctuations[238](index=238&type=chunk) - Regulated operations have limited commodity price risk due to PSC-authorized fuel cost recovery mechanisms[239](index=239&type=chunk) - Unregulated propane operations use storage (up to **8.5 million gallons**) and forward/hedging contracts to mitigate commodity price risk[240](index=240&type=chunk)[241](index=241&type=chunk) [Controls and Procedures](index=56&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Management's evaluation concluded that disclosure controls and procedures were effective as of March 31, 2025[249](index=249&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[250](index=250&type=chunk) [PART II—OTHER INFORMATION](index=56&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Legal Proceedings](index=56&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Routine legal and regulatory proceedings are not expected to materially impact the company's financial position or results - The company states that the ultimate outcome of its current legal and regulatory proceedings is not expected to have a material effect on its financial condition or results[251](index=251&type=chunk) [Risk Factors](index=56&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to risk factors were reported, referring to the 2024 Annual Report on Form 10-K for details - The report does not introduce new risk factors and refers to the risk factors disclosed in the 2024 Annual Report on Form 10-K[252](index=252&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company purchased 607 common shares at $119.90 for a Rabbi Trust, not part of a public repurchase program Q1 2025 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 1 - Jan 31, 2025 | 607 | $119.90 | | Feb 1 - Feb 28, 2025 | 0 | N/A | | Mar 1 - Mar 31, 2025 | 0 | N/A | | **Total** | **607** | **$119.90** | - The company does not have any publicly announced plans or programs to repurchase its shares[254](index=254&type=chunk) [Defaults Upon Senior Securities](index=57&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults on its senior securities during the period - None[255](index=255&type=chunk) [Other Information](index=57&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No director or officer adopted or terminated Rule 10b5-1 trading arrangements in Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement in Q1 2025[256](index=256&type=chunk) [Exhibits](index=58&type=section&id=ITEM%206.%20EXHIBITS) Exhibits include CEO and CFO certifications and XBRL data files filed with the Form 10-Q - The exhibits filed with this report include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and various XBRL instance and taxonomy documents[257](index=257&type=chunk)

Net income and earnings per share ("EPS")* were $50.9 million and $2.21, respectively, for the first quarter of 2025 compared to $46.2 million and $2.07, respectively, for the first quarter of 2024 Adjusted net income and Adjusted EPS**, which exclude transaction and transition-related expenses attributable to the acquisition and integration of Florida City Gas ("FCG"), were $51.1 million and $2.22, respectively, for the first quarter of 2025 compared to $46.8 million and $2.10, respectively for the first ...