Chesapeake Utilities(CPK) - 2025 Q2 - Quarterly Results

Financial Highlights and Guidance Second Quarter and First Half 2025 Performance Summary Chesapeake Utilities reported strong Q2 and H1 2025 financial results, with significant adjusted EPS growth driven by regulatory initiatives and expansion projects Q2 2025 Financial Performance vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Income (in millions) | $23.9 | $18.2 | +31.3% | | EPS (Diluted) | $1.02 | $0.82 | +24.4% | | Adjusted Net Income (in millions) | $24.3 | $19.3 | +25.9% | | Adjusted EPS (Diluted) | $1.04 | $0.86 | +20.9% | H1 2025 Financial Performance vs. H1 2024 | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Income (in millions) | $74.8 | $64.4 | +16.2% | | EPS (Diluted) | $3.22 | $2.89 | +11.4% | | Adjusted Net Income (in millions) | $75.4 | $66.1 | +14.1% | | Adjusted EPS (Diluted) | $3.25 | $2.96 | +9.8% | - Adjusted gross margin grew by $16.2 million in Q2 and $34.1 million in H1 2025, driven by organic growth in natural gas, transmission expansion projects, regulatory initiatives, and increased demand for CNG, RNG, and LNG services[6] Earnings and Capital Investment Guidance The company reaffirmed its 2025 and 2028 adjusted EPS guidance while increasing 2025 capital expenditure guidance by $50 million due to project advancements - Re-affirming 2025 Adjusted EPS guidance of $6.15 - $6.35, contingent on a successful outcome of the FCG Depreciation Study[6][10] - The Company is increasing its 2025 capital guidance range to $375 million - $425 million, an increase of $50 million, due to advancements on various capital projects[6][9][11] - The Company continues to affirm its 2028 EPS guidance of $7.75 to $8.00 and its 2024-2028 capital expenditure guidance of $1.5 billion to $1.8 billion[6][10][11] Operating Results Analysis Consolidated Operating Results Consolidated operating income grew significantly in Q2 and H1 2025, driven by increased adjusted gross margin from regulatory initiatives, pipeline expansions, and sustainable energy services Consolidated Operating Results - Q2 2025 vs Q2 2024 (in millions) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Adjusted gross margin | $142.8 | $126.6 | $16.2 | 12.8% | | Operating income | $50.3 | $40.8 | $9.5 | 23.3% | Consolidated Operating Results - H1 2025 vs H1 2024 (in millions) | Metric | H1 2025 (in millions) | H1 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Adjusted gross margin | $325.2 | $291.1 | $34.1 | 11.7% | | Operating income | $137.1 | $120.4 | $16.7 | 13.9% | Regulated Energy Segment The Regulated Energy segment achieved strong operating income growth in Q2 and H1 2025, driven by rate changes, transmission expansions, and infrastructure programs Regulated Energy Segment Operating Results - Q2 2025 vs Q2 2024 (in millions) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Adjusted gross margin | $117.7 | $103.3 | $14.4 | 13.9% | | Operating income | $51.8 | $40.5 | $11.3 | 27.9% | Regulated Energy Segment Operating Results - H1 2025 vs H1 2024 (in millions) | Metric | H1 2025 (in millions) | H1 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Adjusted gross margin | $245.8 | $221.8 | $24.0 | 10.8% | | Operating income | $112.3 | $98.6 | $13.7 | 13.9% | Unregulated Energy Segment The Unregulated Energy segment saw varied performance, with Q2 operating loss despite margin growth, while H1 showed strong operating income driven by CNG/RNG/LNG services Unregulated Energy Segment Operating Results - Q2 2025 vs Q2 2024 (in millions) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Adjusted gross margin | $25.0 | $23.4 | $1.6 | 6.8% | | Operating income (loss) | $(1.5) | $0.4 | $(1.9) | NMF | - The Q2 increase in adjusted gross margin was driven by a $3.5 million increase in CNG/RNG/LNG services, partially offset by a $2.3 million decrease from propane operations (consumption and margins)[25] Unregulated Energy Segment Operating Results - H1 2025 vs H1 2024 (in millions) | Metric | H1 2025 (in millions) | H1 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Adjusted gross margin | $79.5 | $69.4 | $10.1 | 14.6% | | Operating income | $24.8 | $21.8 | $3.0 | 13.8% | - The H1 increase in adjusted gross margin was primarily driven by a $7.1 million increase in CNG/RNG/LNG services and a $2.3 million net increase from propane operations[31] Major Projects and Initiatives Overview of Major Projects The company is advancing pipeline expansions and regulatory initiatives projected to generate significant incremental adjusted gross margin in FY2025 and FY2026 Estimated Adjusted Gross Margin from Major Projects (in millions) | Category | FY 2025 Estimate (in millions) | FY 2026 Estimate (in millions) | | :--- | :--- | :--- | | Pipeline Expansions | $22.8 | $45.3 | | CNG/RNG/LNG Infrastructure | $22.0 | $22.7 | | Regulatory Initiatives | $40.1 | $56.0 | | Total | $84.9 | $124.0 | Key Project Updates Key projects like Worcester Resiliency Upgrade, Florida reinforcement, and new RNG/pipeline agreements advanced, contributing to future adjusted gross margin - Worcester Resiliency Upgrade: FERC approved revised transportation rates in July 2025 to address increased capital costs. The project is expected to generate $10.2 million in adjusted gross margin in 2026[44] - Florida Projects: The New Smyrna Beach project was placed in service in May 2025, and the Lake Mattie project went into service in July 2025[45][46] - Duncan Plains Pipeline Project: In July 2025, Aspire Energy Express entered an agreement to build and operate a pipeline in central Ohio to serve a new data center's fuel-cell facility, expected to be in service in H1 2027[50] - Rate Cases: Settlements were approved for the Delaware Natural Gas Rate Case (June 2025, $6.1 million annual increase) and the FPU Electric Rate Case (July 2025, $8.6 million annual increase)[53][55] Other Key Performance Drivers Weather and Consumption Impact Colder weather in H1 2025, particularly in Ohio and Delmarva, increased customer consumption, contributing $5.7 million to adjusted gross margin - For the six months ended June 30, 2025, increased customer consumption, including the effects of colder weather, resulted in a $5.7 million increase in adjusted gross margin[56] Heating Degree Day (HDD) Variance - H1 2025 vs H1 2024 | Service Area | H1 2025 Actual HDD | H1 2024 Actual HDD | Variance | | :--- | :--- | :--- | :--- | | Delmarva Peninsula | 2,501 | 2,281 | +220 | | Ohio | 3,774 | 3,137 | +637 | Natural Gas Distribution Growth Natural gas distribution saw steady organic growth in H1 2025, with residential customer increases in Delmarva and Florida contributing $4.0 million to adjusted gross margin - For the six months ended June 30, 2025, the average number of residential customers increased by 4.2% in the Delmarva Peninsula and 3.0% in Florida[59] Adjusted Gross Margin from Customer Growth - H1 2025 (in millions) | Area | Residential (in millions) | Commercial & Industrial (in millions) | Total (in millions) | | :--- | :--- | :--- | :--- | | Delmarva Peninsula | $0.9 | $0.2 | $1.1 | | Florida | $1.8 | $1.1 | $2.9 | | Total | $2.7 | $1.3 | $4.0 | Capital Investment and Structure The company invested $212.8 million in H1 2025 capital expenditures, raising the full-year forecast, while maintaining a healthy capital structure with 50% equity to total capitalization - Capital expenditures were $212.8 million for the six months ended June 30, 2025[61] Forecasted 2025 Capital Expenditures by Segment (in millions) | Segment | Low (in millions) | High (in millions) | | :--- | :--- | :--- | | Regulated Energy | $335.0 | $375.0 | | Unregulated Energy | $33.0 | $42.0 | | Other | $7.0 | $8.0 | | Total | $375.0 | $425.0 | - The Company's equity to total capitalization ratio was approximately 50% as of June 30, 2025, in line with its target of 50% to 60%[62] Financial Statements (Unaudited) Condensed Consolidated Statements of Income This section presents unaudited income statements for Q2 and H1 2025, detailing total operating revenues and net income for both periods Key Income Statement Data (in millions) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | H1 2025 (in millions) | H1 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenues | $192.8 | $166.3 | $491.5 | $412.0 | | Operating Income | $50.3 | $40.8 | $137.1 | $120.4 | | Net Income | $23.9 | $18.2 | $74.8 | $64.4 | Consolidated Balance Sheets This section provides unaudited balance sheets, showing total assets grew to $3.74 billion and total stockholders' equity increased to $1.50 billion as of June 30, 2025 Key Balance Sheet Data (in millions) | Metric | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Net property, plant and equipment | $2,908.0 | $2,735.9 | | Total Assets | $3,737.8 | $3,577.0 | | Long-term debt, net | $1,249.6 | $1,261.7 | | Total stockholders' equity | $1,499.1 | $1,390.2 | | Total Capitalization and Liabilities | $3,737.8 | $3,577.0 | Distribution Utility Statistical Data This section presents key operational statistics for distribution utilities, showing total customers increased to 376,027 in Q2 2025, reflecting continued growth Total Average Customers - Q2 2025 vs Q2 2024 | Distribution Utility | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Delmarva NG Distribution | 113,903 | 109,356 | | Florida Natural Gas Distribution | 228,545 | 222,259 | | FPU Electric Distribution | 33,579 | 33,121 | | Total | 376,027 | 364,736 |