Chesapeake Utilities(CPK) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $1.04 for Q2 2025, up 21% from 2024, marking the fourth consecutive quarterly increase in earnings relative to the prior year period [7] - Adjusted gross margin was approximately $143 million, up 13% from 2024, driven by investments in infrastructure and operational efficiencies [24] - Adjusted net income was approximately $24 million, up 26% from 2024, reflecting strong performance despite a higher share count [24] Business Line Data and Key Metrics Changes - The regulated segment's adjusted gross margin was approximately $118 million, up 14% from the previous year, driven by organic growth and increased rates from recent rate cases [26] - The unregulated energy segment's adjusted gross margin was up 7% to approximately $25 million, with growth from Marlin Gas Services and Full Circle Dairy, offset by a reduction in propane margins [27] Market Data and Key Metrics Changes - Year-to-date residential customer growth was 4.2% in Delmarva and 3% in Florida compared to the first half of last year, indicating strong demand for natural gas [8] - The company is seeing increased interest from multifamily developments opting for natural gas instead of all-electric builds, which supports overall growth strategy [9] Company Strategy and Development Direction - The company is focused on three pillars of growth: identifying and deploying capital, managing regulatory agendas, and transforming business operations to maintain top quartile growth and shareholder returns [10] - A five-year capital investment plan of $1.5 billion to $1.8 billion has been initiated, with approximately 70% requiring no additional regulatory approval [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full year 2025 EPS guidance of $6.15 to $6.35, contingent on a successful outcome of the Florida City Gas depreciation study [7][32] - The company is committed to long-term EPS growth of 8% through 2028, supported by ongoing capital investments and operational excellence [31] Other Important Information - The company has increased its 2025 full-year capital expenditure guidance to $375 million to $425 million, reflecting growing demand for natural gas [8] - The company has successfully completed three rate cases, resulting in annual revenue increases of $3.5 million in Maryland, $6.1 million in Delaware, and $8.6 million in Florida [18] Q&A Session Summary Question: Was the successful outcome in the FCG depreciation study assumed in the 2025 guidance? - Yes, the successful outcome was considered within the full guidance range for 2025 [35] Question: How does the company plan to fund the additional CapEx for this year? - The company plans to maintain its target capital structure and utilize available capacity from its revolving credit facility and long-term debt placements [37][39] Question: When will the company refresh its key guidance structure? - The company expects to evaluate and potentially refresh its capital guidance for 2026 in February, as it is still early in the current guidance period [40]