Chesapeake Utilities (CPK)

Beth Cooper SVP, CFO & Assistant Secretary
Mike McMasters President & CEO
Call transcript
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Good morning. My name is Chris, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Chesapeake Utilities Third Quarter 2018 Earnings Call. [Operator Instructions] Thank you. Beth Cooper, you may begin your conference.

Beth Cooper

everyone. morning Good for conference you Utilities quarter third And joining earnings call. XXXX thank Chesapeake all the We us you of appreciate taking this time morning. join to office members joining We're Dover, President today and today's call well from Management McMasters, Silver hosting as Team. as other live is Mike Delaware, our on me Lake and CEO; the of call our in

of the to Before we this ours. and to appreciation all extend all served who like honor who great begin, being I on in We country as team would salute and the our would Veteran's Day. like this served veterans and recognized have have recognition day military

you we you Form on our that turning Slide may differ Annual discusses information. presentation XX-K Now may that information. those forward-looking to would refer like forward-looking results begin, that X, cause to today's from to actual remind before Report include to factors would I We

natural Pipeline include Peninsula The expansion of year-to-date. and our projects, distribution project, program. key and terms that our XX% return and approximately remain gas XX% electric year-to-date XXXX, expansion key growth, net Slide our performance energy of growth Florida other X, to drivers to GRIP of the Shore this a our see or $X.X compared again strong, in very September more higher nine up our drivers in rate performance Eastern system months million our and you'll finally XXXX. project Turning business regulated include ended weather, income terms reliability normal case Northwest year-to-date The of several up our earnings year-to-date our to being over pipeline

on business. look in by it increased and service side, This finally growth being had X.X% at when income They continued largely revenues to growth, energy basis too net Aspire normal a unregulated also a our the driven margins. more and wholesale and Energy we're return weather customer year-to-date. is also propane AutoGas, continued up On you

things our third Company other internal look particular and in on to at our in the as Some as seasonal that quarter our talked the that in regarding forecast a line earlier second where our revenues we mind about see being also the in you touch you and that third I'll a And see quarters. year-over-year we that quarter, year the results keep for we in communications continue year. in previous overall with highlighted have are costs fixed minute, the given to just and third is that ongoing

earnings share Lastly impacts over minor again, Michael. I'll we XXXX per continue minute, some XX% $X.XX. that growth hurricane from And adjusted in of XXXX of EPS talk to very forecast of potential include, reaffirm our about a does

the operating at income to quarter. with in share. Net for that We and forecasts the businesses saw had profitable our pipeline of of in quarter our up look with the X, tax, or continued for adding impact internal when growth quarter results the We was actually the million Act, being $X.X expansions Creation Tax factor the $X.X biggest all see margin. our side continued XX% in the Jobs million growth you'll regulated income once on Turning million terms you $X.XX our Slide the quarter line third the $X.X segment the was TCJA, were before of a regulated the energy quarter. the for or again take in per

see those the grow once continue businesses seasonality On particular in out you the quarter third to energy the this again, as unregulated side, quarter. of coming

to million on of share performance income, terms to Slide $XX.X in driving basis. per or represented a the beginning million our Page year-to-date our I in about us the that talked net $X.X XX% growth X, Turning in about year-to-date $X.XX

growth as outcome gross little basis. the the a Mike at adding talk Digging on-track growth at added the in the Peninsula and and reliability across for I expansion the and case strong the project operating driving $X.X are distribution into year-to-date added well year-to-date our sales, looking once our drivers million, then income growth from from the about expansion terms quarter a value million from Shore's And on system natural overall talked propane share again as Eastern remains transmission, and distribution $XXX of key also including added on. bottom growth chain the million, gas Eastern result. expansion again segment about $XXX,XXX and that natural gas you about profitable electric Shore Continued XX.X% our standpoint, $XXX,XXX. bit lastly a bit impact Eastern $X.X later about energy of little and regulated will a that and Shore see programs per as the added it once perspective Pipelines quarter, the rate margin distribution finally

side propane margins energy unregulated driven some the also gas and lower in those natural slight some positions subsidiary. lower by retail imbalanced the true-ups gallon, On per related were our declines side margin of marketing businesses, to consumption, there on

tune it TCJA quarter-over-quarter side. become million, were overall in from the And pronounced offset seasonality. basis operating growth by side due the to when a with the the higher more quarterly that income finally, Our about slightly see and those you'll of you penny driven once to margin a gross was at and impact $X.X on perspective, a expenses the by the again about being overall shift from the tax look than tax are third largely a quarter

grateful and we history. and our volunteers Slide, both during colleagues showed saying next bit customers our expansive about are a dedication began effort to the wanted restoration little most extremely talk Hurricane its to first the that we'd they our employees for to Turning our And by Michael. to to in we that like

in and wellbeing service recover restore our every has Our around withstanding storm. transformers the the been from working resilient of and to commitment equipment effort forefront we’re than and until were the several to be done this storm-hardened action the clock, weather. and more communities miles restoration extreme taken will poles each one more safety rebuilding XXXX and customer, and over of replacing power At point we’ve capable continue with lines, X,XXX colleagues employees, volunteers at of that and XXXs to engaged contractors electrical of

included Our officials put pictures a we work video a and was hyperlink And FPUs your some mentioned I efforts. emergency into we X on we had actually as can restoration that communities management also regarding necessary to you see subsidiary ensure as these truly and this in actually local federal, the impacted expansive and most state browser included the have ever It copy of our all with shown effort closely effort of that Slide together that received the resources. history. was that before

what more you customers see In our on restored terms particular off and than is power on in situation Slide us, the power we first of all customers to were XX,XXX access will impacted. have overall X that who impact can

who are addition to service able are or they excessive we In repairing customers rebuilding to working using those and to power are those restore have per who service now with and backup month. electricity once take are

earnings the Those the there XXXX share storm regards in historically service be to repair been that exceed recovered rates. present reserve are and again share current potential year storm, the to At EPS. minimal great we earlier to restoration, our while time our of million. expect overall $X.XX Florida still most year every and $XX we place and Our of per guidance on once at will is are at XXX,XXX of have we approximately types think impact for cost about damage and costs our impact through $X.XX per estimate reaffirming we in

Turning XXX,XXX of two-thirds rate the undertaken to about by but about earlier operations to gas note million the with margin in quarter it's heat organic load quarter project growth a $X.X depending margins doesn’t terms but to lot this much that on we’re that quarter we've regardless on it as both it incremental distribution addition Slide when X.X% largely regions and well you are Northwest but In will In our experiencing September exceeds you talk important the in in margin that as that X, on for X.X% anywhere of basically to I Customer am through additional are talked the continues and classes natural mean at expansion it Delmarva being I growth still while there the been X.X% growth we've whether growth. and growth we Florida. to that look we generate represented basis residential added expected going that quarter. between are few has the strong through of all year-to-date at in our margin in or customer a see you that in on by achieving. driven for the generated that customer industry it's of not growth customer looking look a On our is Florida year-to-date. at Delmarva average. Florida contribution and but of a minutes really

Slide there we a the and PSC basically side reviewing in rate and to We revaluation. XX all of and in in our that the deferred quarter case regulatory and refunded regulatory associated regulatory with is as been In utilities. our it have associated From jurisdiction. the the we tax our is and where reached we’ve made the refunded methodology customer to regards a the for to a standpoint regards adjusted do In first various relates in have we’ve Turning natural TCJA rates stand to working and for with In there TCJA associated already for filed tentatively gas basically our on have to relates result place with Delaware, XXX,XXX have an filing. hearing natural time establishment Florida. Maryland, XXX,XXX a deferred we liability settlement when at the tax the currently will Florida fourth Eastern been refund it adjusted as rates we are filed basically as filing a next year-to-date schedule with gas be liability reevaluation. Eastern scheduled

an associated the well applications proposed rate On reserves over several agreement with the a electric of reached hearing we is years. combination a base reduction fuel with with of next December the currently in storm the cost have the PSC scheduled side and as as recovery

Turning to support growth ensuring place our that our is to a sheet Slide in XX growth. to always continued paramount have strong balance we

September the of a see equity at our sat XX%. approximately capitalization of end as total You’ll at percentage

the to-date next another million debt to XX% scheduled this short-term to August later remaining be at long-term schedule year and invest later include our not we’ve does already short-term effort our XX%. debt debt for with any that we and approximately to to and forecast that $XXX XXX. week. This no restoration million. have of of talked of And to cost new long-term our convert from than for million million for has impact continue the XXXX Hurricane was already refinance this investments expanded XXX debt $XXX future about We is can financing part ensured happen I Our still XX refinanced earlier the

for So investments investments about various to have can well making talk Slide have between And the million. our continued $XX.X $XX recall see $XX a million propel margins incremental million. that regulatory as we basis over is and XX earnings total there initiative that year bit had back growth, but later and $X year-to-date on on generated on little years been added $XX Michael margin a you of those million the as will as has incremental Chesapeake year-over-year last looking if historically quarter five over you million time for this

this we’ll generate over are year. turn the alone just to under some these projects And touch of million on now Mike to it currently I’m $XX that projects underway. from to going So

Mike McMasters

mainline new two turning spend the Beth. had essentially margin the XX projects Slide to I history increased million we’re looping upgraded compressor at million investment PESCO annual the to X,XXX $XX.X talk pressure stations going Shore this XX,XXX control project well. XXXX largest to pressure XX Thanks capacity Maryland two is $XX.X guess capital and for about and of for dekatherms. years miles XX Eastern We've Capital spend new loss million and project of in in our Pennsylvania, the with in Estimated County. XXXX we the as thereafter. years also Delaware. the $XXX Sussex we five stations, through first for Yes year with Total interconnect compression about $XXX first spaces date. control extension

complete largest the it's our system pipeline we We’ve first of the earlier remaining and XX-inch all of to into first the into our place and mentioned in hope is I segment time on which plan construction project XXXX. As service the by introduced history. quarter loops

for but The County, County but six subject filing to is required pressure the miles the mainline Somerset We’ve XXXX Turning that County, to pipeline capital with process we facilities capital of and develop we really Sussex Somerset million. million Estimated awarding delivery in the the the State Sussex margin of approval participating - There to County control Delaware stations, application basically pieces the in ongoing permitting. dependent the Pathway we’ve filed Maryland Delaware to on generate new $X.X on miles Maryland expected leading Maryland. - Delaware, bid to County, Somerset FERC Del-Mar had $X.X Slide one and September XX contract, are in to is million obtained we all County, get at XX, spends for $X.X for by margin the next XXXX. the we made the is continue and a candidate of the County. pipeline Energy project Note The and of stations with annual Project Sussex to FERC and this in investment Somerset Maryland that contract. $XX.X of extension project’s second two steps is is is the we new got of successfully our the XX first of underway. the bidding occur process for FERC the million of certificate looping one

went also Company Page the in not in XX, May significant capital also Peninsula and million project to serving margin, capacity Pipeline the annual $XX.X in XXXX. has service only add expansion, expansion, we're of $X.X customers. to we have Northwest but pipeline that today This total is existing Turning very a CFG, this million significant opportunities into investment additional

to Smyrna during pressure Pipeline quarter increased Western margin, be in PPC Peninsula in FPUs total of annual XXXX. margin, for mid partially capital XXXX. million to Slide and of million $XX constraint. results miles of that capital fourth in Turning $X.X million capacity we service we County $X the invested, see on annual in XX, expansion The New to service pipeline system, invested distribution Beach Beach - pipeline, expect in The million $X.X XX, expect XX of volume Palm fully Slide total million service $X XXXX.

when Total Chesapeake about speaks basically last XX in to for percentile now from comes until it over in XX, Slide comes the to years you'll to look to that XXth at strong capital What group, to percentile XXth the are year of the we ROE comes approximately period particular On so with results. when of again, and really that Turning XX. three quadrant it EPS to over several on Slide among when shareholder is of are years. strategic Slide that average, capital but we've see is when highest you’re you're XX% are capitalization, the slightly the it growth return execution. XXXX, see going talked are - plan see X.X%, so less you an we we in ROE three highest expenditures, median the than XX.XX% our this up is XX.XX%, going perspective, at case our us we the in we Chesapeake what capitalization spent

you'll XXth months return TSR group XX the first when right years, percentile three you is look above see return, hand XXth. for for it - XX%. year, see If years, XX peer returns in shareholder XX% X% over performance you or When the - XX X X XX the total on years XX performance significant year the CPK we've XX to that the side below percentile XX recent most years had slightly against the in is and you'll XX shareholder for come success percentile excuse for the years total performance percentile percentile that annualized years, comes - to what

percentile, you three below Chesapeake above us If you again XX and at XX% at moved see look the is XX there percentile you're percentile exceeding to When percentile. see year it at which XX you'll XXth and the the percentile to from - XXth year year XXth the the us puts XX percentile see continues year, the average, again that slightly going and again. XX five

to annualized Turning payout Slide dividend ratio. and XX,

graph can the around per dividends looking back see percentile We're from EPS the in at want XX% entire our recently out for earnings we've XX We our long-term share a in rate to XX slightly to to XXXX, growth. percentile You pay sustained the from to term period covered by XX% XXXX. increase lower our than most growth. be dividends

our about talk Slide XX, we'll Turning to little strategy.

consistently opportunities return. are to and looking identify We to growth future shareholder our new drive increase earnings

serve of new such new downstream users, This to systems and a provide gas power Now distribution, customers, Investing transmission, projects industrial service variety marketing we're natural into as CHP. municipalities, provide through doing includes services, expand methods end service customers new plants. cooperatives, areas. pipeline LDCs, that by this to development seeking and new in and

We industrial are commercial long-term serve pursuing expansion project customers. to

We’re markets investing in to propane with opportunities significant growth potential. new access

Our is Engagement employees sustainable and with Investing and our talent where engaging Cares we awards, strategic plans important a and continue pursue - development strategy our top growth brand safety Chesapeake build through this critically excellence for communities targeted infrastructure work continually to with topic. workplace Event. training, live and

We're are proud growth in excellent both and corporate opportunities record return objectives. performance team and driven done our operating and is we our discipline producing and execution, fine culture result superior and team, capital plans This that and to and our a and we’ve a values Slide our total strategy our Turning energized future of financial of entrepreneurship. earnings by strategic by and dividend track growth. our XX, very

manner in our serve a investments With competitive we’ll We honoring ways provide questions. safe obligation our us. to and innovative to guess I find with serve take while a on to that responsible environmental investors are and our driven return customers


no call in I’ll this are questions to presenters. the time Instructions] there turn queue. back [Operator At over the

Mike McMasters

Thank thank you your very our continued company. of support much. Well for everyone you

drive and identify good We increase our are very for shareholder returns. your day. Good attention. you effort to to much and - growth continuing night our our opportunities Thank


today's call. concludes conference This

now You disconnect. may