FORM10-Q For the quarterly period ended: March 31, 2024 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | --- | |-------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------|--------------------------------------------------------------------------------------| | C HESAPEAKE (Exact nam ...

"Our success is driven by our progress integrating our FCG and Chesapeake families, pursuing growth investments across all of our businesses, advancing regulatory initiatives and prudently managing expenses. Specifically, the team advanced the FCG integration, delivering efficiencies from consolidating the SAFE and GUARD programs, and filed for three new pipeline projects with the Florida Public Service Commission which will serve RNG projects developed by third parties in proximity to our distribution FOR ...

DOVER, Del., May 8, 2024 /PRNewswire/ -- At their meeting held today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) voted to increase the quarterly cash dividend on the Company's common stock from $0.59 per share to $0.64 per share. The Board's action raises the 2024 annualized dividend by $0.20 from $2.36 to $2.56 per share, an 8.5 percent increase. The $0.64 per share dividend will be payable July 5, 2024 to all shareholders of record at the close of business on June 14, 2024. "Th ...

Public Service Commission Votes to Approve Programs Benefitting Delaware Residents DOVER, Del., April 22, 2024 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced today the Delaware Public Service Commission voted to approve the Company's establishment of a portfolio of natural gas energy efficiency programs for Delaware. Chesapeake Utilities will partner with the Delaware Sustainable Energy Utility to deliver the programs, which are the first natural gas efficiency programs to be offered ...

Company Welcomes Lucia DempseyDOVER, Del., April 18, 2024 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) announced that Lucia Dempsey has joined the Company as head of investor relations, effective April 15.  Lucia Dempsey, Chesapeake Utilities Corporation, Head of Investor Relations Dempsey will be responsible for communicating to the investment community Chesapeake Utilities' strategy and commitment to being a leader in delivering energy that ensures a more sustainable future for our ser ...

DOVER, Del., April 16, 2024 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) issued its 2023 Safety and Reliability Report today, providing updates on the related topics most important to the Company's businesses, stakeholders and the communities we serve, including: Progress toward safety targets Employee and community engagement metrics, including first responder training Implementation of new programs and initiatives driven by our risk management mindset Reliability and resiliency efforts, i ...

Financial Data and Key Metrics Changes - In 2023, the company achieved adjusted EPS of $5.31, representing a 5.4% growth over 2022, driven by incremental gross margins of $33.9 million [25][77] - The company reported a 10.4% increase in adjusted gross margin for the Regulated Energy segment, with operating income increasing by 18.4% [50] - Stockholders' equity increased by $413 million or approximately 50%, primarily due to equity financing for the Florida City Gas acquisition [60] Business Line Data and Key Metrics Changes - The company invested $211 million in capital projects, with approximately 80% allocated to the Regulated Energy segment [43] - The unregulated energy segment's adjusted gross margin increased by 2.2% over the previous year, although operating income decreased by 10.7% due to lower consumption [36] - The propane business saw an increase in margins per gallon, contributing to overall growth [27] Market Data and Key Metrics Changes - The average residential customer growth rate was 5.4% in the Delmarva service territories and nearly 4% in Florida [25] - The company expects customer base growth of approximately 3% in Florida and 4% in Delmarva over the next five years [45] Company Strategy and Development Direction - The company is focused on integrating Florida City Gas and pursuing operational efficiencies across its businesses [32][41] - Future capital investments are projected to be between $1.5 billion and $1.8 billion by 2028, with a significant portion dedicated to regulated energy [58][85] - The company is also exploring hydrogen initiatives and sustainable energy projects to enhance its service offerings [11][65] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of warmer temperatures and rising interest rates on customer consumption but emphasized that regulatory initiatives and growth investments offset these challenges [39][49] - The outlook for 2024 is seen as a transition year, with EPS guidance set at $5.33 to $5.45 per share [42] - Management remains optimistic about achieving top quartile performance and delivering value to stakeholders through disciplined investments [68][93] Other Important Information - The company is finalizing regulatory filings for three RNG transmission projects expected to generate margins by late 2024 or early 2025 [31] - The Worcester Resiliency Upgrade project, a significant capital investment, is currently pending before FERC [64] Q&A Session Summary Question: When will the company file a full general rate case in Florida? - Management indicated that they are evaluating the timing for filing a recovery of a portion of the goodwill from the acquisition, focusing on integration first [95][100] Question: What is the status of the propane business in 2024? - The company is not pursuing large transformational deals but may consider smaller bolt-on transactions to enhance its propane footprint [75][118] Question: Can you provide insight into customer growth forecasts? - Management noted that the forecasts are conservative, considering potential impacts from rising mortgage rates, but they remain optimistic about exceeding these estimates if construction activity continues [104][128]

Full Year 2023 earnings per share ("EPS")* was $4.73, including transaction-related expenses attributable to the acquisition of Florida City Gas ("FCG") of $0.58 per share, compared to $5.04 per share in 2022 Adjusted EPS**, which excludes the transaction-related expenses, was $5.31 for the year ended 2023, or an increase of 5.4 percent over 2022 EPS for the fourth quarter of 2023 was $1.26, including transaction-related expenses of $0.38 per share, versus $1.47 per share for the fourth quarter of 2022 Ad ...

DOVER, Del., Feb. 20, 2024 /PRNewswire/ -- At their meeting held today, the Board of Directors of Chesapeake Utilities Corporation (NYSE: CPK) declared a quarterly cash dividend of $0.59 per share on the Company's common stock. The $0.59 per share dividend will be paid on April 5, 2024 to all shareholders of record at the close of business on March 15, 2024. With this dividend, Chesapeake will have paid dividends to its shareholders without interruption for 63 years and has increased its annualized dividend ...

[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)