Chesapeake Utilities(US:CPK)2025-11-06 22:02Financial Performance - For the three months ended September 30, 2025, the total operating revenues were $179.6 million, with regulated energy contributing $146.4 million and unregulated energy contributing $40.7 million[153]. - For the nine months ended September 30, 2025, total operating revenues were $671.1 million, an increase from $572.2 million in the same period of 2024, representing a growth of 17.3%[156]. - Revenue for the quarter ended September 30, 2025, was $146.4 million, an increase of $15.8 million, or 12.1%, from $130.6 million in the same quarter of 2024[210]. - For the nine months ended September 30, 2025, revenue was $195.3 million, up $35.2 million from $160.1 million in the same period of 2024[234]. Adjusted Metrics - The Adjusted Gross Margin for the same period was $137.2 million, compared to a Gross Margin (GAAP) of $91.8 million[153]. - Adjusted net income for the nine months ended September 30, 2025, was $94.9 million, compared to $84.2 million for the same period in 2024, reflecting an increase of 12.7%[163]. - Adjusted gross margin for the quarter ended September 30, 2025, increased by $12.5 million, or 12.2%, compared to the same period in 2024, reaching $114.7 million[210]. - Adjusted gross margin for the nine months ended September 30, 2025, was $101.9 million, reflecting a $12.7 million increase compared to $89.2 million in the prior year[234]. Operating Income - Operating income for the third quarter of 2025 was $45.0 million, an increase of $4.1 million or 10% compared to the same period in 2024[164]. - Operating income for the nine months ended September 30, 2025, was $182.1 million, an increase of $20.8 million compared to the same period in 2024[169]. - Operating income for the nine months ended September 30, 2025, was $20.9 million, an increase of $2.2 million from $18.7 million in the same period of 2024[234]. Margins and Contributions - The total adjusted gross margin for the three months ended September 30, 2025, was $137.2 million, an increase of $15.2 million or 12.5% compared to the same period in 2024[166]. - The increase in adjusted gross margin in the third quarter of 2025 was driven by regulatory initiatives, infrastructure programs, and increased demand for CNG, RNG, and LNG services[164]. - Natural gas transmission service expansions contributed $11.7 million to adjusted gross margins for the nine months ended September 30, 2025[173]. - Contributions from regulated infrastructure programs added $3.9 million to adjusted gross margin in the third quarter of 2025[213]. Customer Growth and Consumption - The average number of residential customers served on the Delmarva Peninsula increased by approximately 4.3% for the three months ended September 30, 2025[208]. - Total customer growth for the three months ended September 30, 2025, was $1.4 million, with residential customer growth contributing $1.2 million and commercial and industrial customers contributing $0.2 million[209]. - Increased customer consumption due to colder weather conditions resulted in a $4.8 million increase in adjusted gross margin for the nine months ended September 30, 2025[205]. Capital Expenditures and Financing - Capital expenditures for the nine months ended September 30, 2025, totaled $335.6 million, with a forecasted range for total capital expenditures in 2025 between $425.0 million and $450.0 million[249][250]. - The company entered into a Note Purchase Agreement for the issuance of Senior Notes totaling $200.0 million, with an initial funding of $150.0 million in August 2025 and an additional $50.0 million in September 2025, at an average interest rate of 5.04%[261]. - The company issued 5.20% Senior Notes due in November 2029 in the aggregate principal amount of $100.0 million, with proceeds used to reduce short-term borrowings and fund capital expenditures[262]. Regulatory and Rate Changes - The Maryland natural gas distribution businesses filed for a rate increase of approximately $6.9 million, with a cumulative increase of $3.5 million approved[200][203]. - The Delaware natural gas division filed for a rate increase of approximately $12.1 million, with an annual revenue increase of $6.1 million approved in June 2025[202][203]. - The Florida Electric division's rate case resulted in a total revenue increase of approximately $8.6 million annually, with $2.4 million incremental adjusted gross margin generated for the three months ended September 30, 2025[204]. Sustainability and Growth Strategy - The company’s growth strategy includes investments in renewable natural gas-related projects and expansion of Marlin Gas Services' CNG transport business[145]. - The focus on sustainability is supported by the Board of Directors and includes environmental stewardship initiatives[147]. - The company is committed to enhancing sustainability disclosures, with the first sustainability micro-report launched in 2024[150]. Interest and Debt Management - Interest charges for the nine months ended September 30, 2025, were $54.1 million, an increase of $3.2 million from $50.9 million in 2024[171]. - The company is required to maintain a funded indebtedness ratio of no greater than 65% under its financial covenants, and as of September 30, 2025, it was in compliance with this covenant[259]. Inflation and Risk Management - Inflation impacts the costs of supply, labor, and services, prompting the company to seek rate increases from regulatory commissions to mitigate these effects[284]. - The Risk Management Committee evaluates credit risks related to counterparties in commodity derivative contracts before approval[283].