Chesapeake Utilities (CPK)

Beth Cooper EVP, Chief Financial Officer & Assistant Corporate Secretary
Jeff Householder President & Chief Executive Officer
Jim Moriarty EVP, General Counsel, Corporate Secretary, Chief Policy and Risk Officer
Tate Sullivan Maxim
Brian Russo Sidoti
Call transcript
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Welcome to Chesapeake Utilities Corp.

Second Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, August 6, 2020. I would now like to turn the conference over to Beth Cooper, EVP and CFO. Please go ahead.

Beth Cooper

afternoon, good and you, everyone. Thank to It today. all you with is great of be We review today and us appreciate joining you to year-to-date our results. quarter second well We staying that you your are trust and safe. doing families and

are President, Slide Compliance X, Officer. Risk and me call and As shown Corporate Jeff Executive Secretary participating President Vice on Householder, Moriarty, and Counsel, on with the today General Jim Chief CEO; and

management website team be We the joining we virtually. our take of also to have Events can our other prepared your happy Today's or IR and accessed section our on subsection via under members Investors presentation remarks, Webcast app. be questions. us and will our After

expected for provide our our is to on the progress second business insight to focus date, quarter the numerous for call and of results, initiatives impact key strategic our COVID-XX our Our the future. on outlook into and year-to-date

you in involve may Moving to I would X, like remind uncertainties. and risks forward-looking discussed that include to matters call conference statements Slide this that

from Form on of the to and projections from safe statements and forward-looking Forward-looking statements annual to for actual harbor further provide COVID-XX reports differ the section including that The results. differ our our company's quarterly on XXXX on such could pandemic, Form statements actual our report the XXXX XX-K related factors, cause XX-Q information the and risks materially uncertainties could results.

provide our forward. the opening going again Now quarter on our insights to response more to remarks our on I'll turn Jeff? COVID-XX details some and call Jeff over performance, second on outlook

Jeff Householder

XXXX. with earnings second $X.XX, above for our of all second per share you quarter the XXXX results, and joining GAAP you, Thank afternoon, solid Beth. our results. second of quarter achieved Good call of quarter $X.XX We thank for

the you'll overcome year, later we find half the over the we first hear escape but of to those of didn't impacts. the in or impacts weather did COVID-XX call, As ways

of and customer meeting only delivery also a to our service, will worked results we remain expectations employees in our suppliers to testament but that with projects that face hard of future remarkable COVID-XX drive keep team and to and and continue to has entire earnings. of employees, on pandemic dedication growth keep the It's for contribute the Our contractors target our energy strong not growing reliable the businesses.

Let me spend on minutes highlighted you COVID-XX Slide as updating a X. couple our on of experience, company's

XXX occupants field secure employees from the the for margin occupied March. of reductions You and QX activation in in enter we building procedures call, preparations working hard began March refining late processes. functions, as where actions March, our also PPE may sick. supporting our we end such with significant for increases We pandemic By did how protocols in February, adjusted controls were be service remotely, virus X,XXX We working not with of see spread. field response our the an virtual began had to to personnel about our technology, of recall we would office various full expense our as and might the or

has impacted were by of the results That the the quarter quarter. been Our more in lack than second first COVID-XX. not weather case

industry true expenses hotel, restaurant the during margins most for coming numerous impacted. other the serve during customers the Florida and closed part, our have coronavirus-related which were, and We in Our it businesses, accordingly. been been period, as closed that distribution increased, responded lockdown quarter. That's have negatively gas second especially and saw businesses hospitality our

assure while have our out cost we operational the $X those were in you first and of reductions, we've significant reduction not at aggressive programs. we of quarter, impacts the already management I looking compliance more cost elevated our And safety expenses. Given weather COVID-XX initiatives. achieved cut

maintenance inspection, our unchanged. activities of All and replacement remain

accelerate many along of to able center with new the training town fact, of been in our gas Dover. In construction these operations safety activities, we've

contributions teacher, in can-do who all of We in worker, to a usual a parents especially has for our other I I coordinator I'm thankful running and deliver all truly recreational energy pandemic also that normal unprecedented the grandparents, provided and the also know a we Utilities are quarter, the child easy, for positive continue forward Chesapeake these moving families, time this care suspended. this not attitude home, where and acknowledge reflect activities times. required to stress to or unconditional day employees' to of for job on the we're want been team services. As the support keep addition a our functions when Chesapeake daycare essential as team

about school on more employees contemplate our to accommodate mind, working our to districts then peers. to the problem while often solving our the in the when forward, finding and education customer's than needs. our begins we starting with we're economy We've perspective deal. on with little many interest for to and always going A sending like a of children focused work a frequently I'm a many turn looks when to digging will entrepreneurial, this get schedules better what and opportunities I their structure applying has harder reopen employees profit message in overlook, flexible educational asked, response. same to normal Chesapeake's team our way been interested child to pandemic different normal? that care to we're little that our been find it the end? the back to And speak customer's will As

our from of We're year, than extend into So will planning likely company of that this that Chesapeake at continuing will I and this work fairly XXXX. we through we certain I COVID-XX. ever am least current emerge a before environment as end the don't stronger this know were heard when end. pandemic will operationally on

our to Women the team positions. that ago, members rates for a with process into us to our initiative effort company. required expanded ways, many capital underway before to very our and a In management pace historic simplification also to affect numerous enhanced companies improve concerted couple provide to race a communities and the of greater fact, gender grow we standardization our greater our and and to active, needed our business toward in to years and other and customer We've had COVID-XX system We're Energy began, chapter consistent on equality safety and employees, business also suspend this moved energy organizational workplace. formal accelerated female development live address late working focus training fronts pandemic consider updated the we structure, of leadership across We've service transformation with recently technology, pandemic across issues guidance. and on is developing forward has continue on and we employee have units, of on Chesapeake, focus have In collaboration business the A where diversity We've first fees. earnings that and operational in and business we with continued in many the at our of Chesapeake delivery support communications disconnects the continued process. the and standardization process the work. that Utilities began effort safety to addressing processes. the one diversity of was moving are inclusion the

matching to aid result organizations volunteerism. continuing $XXX,XXX to work Chesapeake state on organizations. as contributions our in And and procedures. of in the for offer program to financial and to we'll contributions made These more communities We've of established continue address giving local and the commissions donations continue with reinstitute through We process beyond normal a COVID-XX local with impact. the are regulatory situation. also work the above needs We're employee to customers delayed philanthropy options their over payment to traditional budget our to fight also against our a and disconnect timing payment plans level. community has to

growth. to Jersey about Industry, pandemic, we've noted expanding several customers pipeline earlier, strategy, and acquisition the from well footprint are As solid new adding our expansion to highlights quarterly as development distribution of both continued X,XXX Gas South X business growth of the and activities. earnings recently accomplishments in including Slide Maryland. County, midst completed as of execute Cecil that contributing Elkton the in the projects I future Chesapeake We system and our the

Shore is And underway. we placed construction Eastern pipeline Florida service, Maryland natural our in Pipeline project a gas of schedule. Callahan in recently Our ahead month

and customers two EPS to strong poultry disposal us XXXX our our COVID-XX, growth. focused distribution capital local a guidance. and reaffirm expenses manage to million business projects given in estimates local date. that's on support presentation, will Delmarva. the And partial Despite these which waste to COVID-XX and of and and second quarter $XX resolving in above working average the to performance to created our add in the systems long-term communities by growth $XX announced operating unique we'll on impact XXXX renewable remain enabled new units now same rate major circumstance at announced our continue challenge gas time, project million rate the our waterways all gas margin Later We Our generate All to significantly projects initiatives the country. that commitment natural across contributions at we're in discuss a offset XXXX, as the impacts. to our table, in

Slide Turning to X.

COVID-XX an on to the $X.X tax was Despite year. year-to-date as same TCJA. a carryback quarter I able CARES increased Further, basis, a and COVID-XX a Act, a due per per income $X.XX a share, ongoing to share. the of efficiencies with benefit compared and to EPS the managing as generate COVID-XX, tax while basis. cause we've favorable mentioned, company grown cost Chesapeake to Federal share, years million pre net $X.XX Second $X.XX earnings cost last increase seeking period On associated the of NOLs

generated CARES were the depreciation versus be timing tax Before required forward. to tax all Act, from and differences NOLs book bonus carried primarily

where tax to other are restructuring our pulling taking actions colleague to continue shareholder rates, and Cooper interest driving opportunities, we and advantage possible deliver taking favorable sales many we pushing find are to by say, debt property, As unneeded closing buttons my and means short working Beth value. long-term margins she on both and manage cost, regulatory to of which to likes levers, lower

the more quarter results. me to now back in Beth call Let turn to our detail Beth? discuss second

Beth Cooper

Jeff. Thanks,

tax last Net compared growth for were XX% operating was Year-to-date representing year. million earnings federal Act, $XX.X the mentioned, allowed million us growth. net tax rate, year The CARES X. $XX million $X.X quarter the in in benefit in quarter as the income for provisional of was for carryback higher $XX to CARES the $X.X losses Slide last compared years Act with XXXX, to rate a this of of resulting compared representing X.X%. to Turning same income a of result XX% quarter year, to The to XX% Jeff million. as million

and depreciation differences bonus versus from primarily generated be to NOLs book required tax carried all timing tax forward. again, Act, CARES the Before were

negative one on continuing in driving the to second basis, also increases on of per year-to-date of our our our performance. a by EPS EPS the A first drove year-to-date driven our reducing results. operations, experienced in by EPS the share, the share. had temperatures warmer from of quarter. discuss thereby our negative that primarily was while quarter the increase deviating quarter, helped impact grew for we've year-to-date in factors terms some will included These factor. temperatures the In same impact the per first mitigate overall quarter volumetric On year-to-date reductions the Weather Colder later by $X.XX presentation. $X.XX COVID-XX quarterly we the in lot grew

day $X.X Palm from and the increased key drivers the contributed million. first our rates performance West Slide the growth pipeline of quarter, nonessential earnings issued offset we the the as for initiating Gross $XXX,XXX. new service by gross $X.X from is expansion summarizes the Pipeline for in customers the X Services significantly property organic national at Three Gas Callahan added expansions, interesting quarter, propane our margins Beach During yesterday. margin market manage increased gains recognized in conditions by end project, to given impact. of release $XXX,XXX. million. the margin the also local sales Del-Mar we supply Energy Marlin gas Intrastate the $X.X Pathway County, Demand project Natural retail weather gross margin described propane million. Favorable growth remain increased several that Florida primarily our What's as average. above customer and cost detail

incremental margin the growth the second quarter margin of also incremental Our the quarter approximated for for XXXX. closely second

during pretax And million. this also XX% a for the Expense increasing in customer Additional margin from gains, acquisition of $X.X the on Increased while Boulden COVID consumption another million. costs margin weather $X.X million finally, quarter resulted negative $X added added new our basis. primarily growing colder impact normal. quarter finally was the due businesses management to the just in estimated

loss earlier adjustment $X.X periods the to rates allowed million a this Act statutory with carryback operating for benefit net a higher thereby However, income CARES quarter. tax provided and to net

Public Moving net and industrial nor service recorded $X.X premium through the each the impacts Commission have our or during decreased the expense field Operating request. Slide to our the $X.X margin due were to and our COVID-XX commercial approached operations personal million Service sectors similar in wages for equipment the businesses Maryland-regulated we that our down customers. costs or a for Florida Gross territories. operations, second not to of of to regulatory scale in date, to had increased for back the we a pay reduced of with shut essential Delaware quarter consumption, COVID-XX up have XX% of teams million and expenses June To X. for front-facing quarter due regarding end protective in assets largely any as

financial We of the of situation, path quarter. quarter year-to-date. the in XX on more forward. fluidity and the and subsequent Slide timing the the activity economic COVID-XX detail impact presents felt were business slowdown are determine the virus this the and for impact evaluating largely operations projected The best to and in of estimates current

net and year-to-date previous short-term per the distribution decline basis, our actions, on margin gas industrial estimated Delmarva coming by of natural and quarter Reserve's to the benefit saw natural gas operations gas Federal of In million, for volume was gas segment. CARES and businesses, commercial of share, after COVID-XX impact for our As slide, with XX% energy and The have a we driven per for XX% to distribution Florida approximately our our distribution, the was X% regulated borrowings and on mentioned On $X.X natural the commercial declined from $X.XX distribution, minimal. on the declines natural $X.X a basis, the gross X% million industrial customers lower electric and Act $X.XX customers. we the impact rates on share. transmission

declines first impact, quarter continued impacts COVID-XX identify to first we've consumption As for with the for associate changes some in we we second did COVID-XX. that and and quarter, weather analyze margin the now the

We in in are as to our reduced reduced look the impact as what could consumption represent projections continuing upcoming X to months well to at the regards COVID-XX as expenses.

We estimates updates refined will be implications we CARES are We all financing through the that no will developed as we tax normal know normal on allow diminish Like country provide year. prevent way there thought return be and on future Act this will life. move of people the COVID-XX of and a virus. through weather ultimately can more last of new to quarter vaccine the and and would of spread the first the the the future hoping transactions. impact the would to a any the We the depend side end warmer Americans, to from

mentioned, XXXX. the our least are as end through customers planning for security and expenses factor continuing our in business driving result Safety run operating and how in we a Jeff on we delivering the higher of is as essential at we and services. just are, Now in will employees

expenses, for and For remote conference and the XXXX, time, that to XX, through costs date, part the can of travel out have of see the On we and found most increasing and year-over-year. those managing that efficiently costs. bringing continue continue. done highlight time we our decline delay our the to office, we that remainder time. some some reducing staff or the may those will great into can work expenses a we of we of better, folks job full either phenomenon back To that Slide telework expect This teams year we

XX has to looking The mentioned, capital for this and at we XXXX were business could shown a $XXX investment on overall. how gas across range $XXX regulated forecast natural $XXX average target efficient transmission majority in and just million. already organization The the scalable Jeff As million will in allowed efforts remains projects. underway of more $XX.X expenditures million. invested to COVID-XX the regard. year-to-date we basis, Slide the million, collaborate of for that's distribution us terms in our be On processes and on of have approximately of really our accelerate we become that's and to

would are We third will progress attributable investment be variations largely year. well carried and year-end any continue projection to our update to monitor believe we track and we and our the but be to over next quarter, construction timing after on

billion, total will can in lines for average of long-term stockholders' see debt, rates at equity, current debt XXXX, As of million fixed X.XX%. bank capitalization X million including XX, renewed debt and XX, long-term the million of availability the of company funded and private next Chesapeake of as at long-term $XXX $X.X an credit has was under portion $XXX debt. placement short-term on $XX have June lines credit comprised XX% and of XX% XX% you The rate Slide recently years. new facilities of has shelf this of summer bank

indicated We and earnings reinvestment target plans, and the beyond have Retirement contribution this equity stock we our back Plan to time, capital closer increase utilized dividend purchase our equity and plans. our the issue traditional XXX(k) our year Over incentive will stock retained structure. Supplemental through plans we move our have to

call are opportunities. and I Jeff current like line year-to-date discuss growth now future to would our this. actions back with Our turn the in to to

Jeff Householder

Thank you, Beth.

Turning to Slide XX.

past the decade. long Our many XXXX our for executed growth. plans mirror strategic XXXX through process ways, current our the for period plan over In integral has planning we've been the

execute growth than the strategy were our with long-term straightforward. confidence somewhat Of we they these same can consistent XXXX, That level investments in but is fairly that strategy. the have days that course, are we are on expectations greater of our

and our long We regulated X of that for criteria: We're that investments disciplined past provide existing predictable to a businesses. our We them to we are our time. that been core Our businesses, execute. than fundamental walk that risk related to earnings businesses stable, meet period return augment manage our we approach. look investments deals if do in in nonregulated we've exhibit energy We're correctly, interested with consistent earnings over meet that and regulated more able our nonregulated profiles targets

is nonregulated years our the ways to regulated the a over the One nonregulated to mitigated business. we've of risk operations link

is a good example. Aspire Energy

nonregulated is that but distribution customers primary gas are that supply gathering its natural agreements under serve system, risk lower Aspire a profile. operations long-term we Aspire's significantly

the past objectives. our we've Over of sustainability also years, couple investments to how overall considered may future ESG and contribute

in Marlin, acquire long among on product natural investment things, from Marlin adequate both And us a production transportation distribution that's quartile biogas our fuel provide growth, seen signal capital Delmarva opportunities. an addition of and to earnings, that upper to sought in other You've a or company the our move system. value of We've working, total and achieve our dividend investing biogas processing, targets. short- our return in long-term RNG sources renewable can the shareholder in to on driven recent interest and performance, production announcements gas to projects in by peers prescribed pipeline

projected to we They Aspire businesses, have investments that regulated also our profile. and and for core are allowed similar achieving strategic also increased most dialogue record, but returns. transmission are primarily of have I in oil considerable us, capital said, distribution, expanding pipelines investing many that for who we're what XXXX or customers EPS and areas. our a forecast propane frankly, companies businesses comfortable existing as But regulated utility we midstream CHP in higher-than-regulated geographic nonregulated noted, We're consistently know and services assets. characteristics, divestiture to utility or our by do. growth Beth the business returns regulated their unregulated a still new track to to As with services, add means notably growth our regulated distribution several our nonregulated above means our utility, are EPS in is I generated and can ROEs and about indicates and businesses, there gas

to projects Shore's progressing investment Eastern infrastructure pipeline XX, in first expansions transmission flight. Chesapeake's the include natural highlight Expansion, largest business nicely. in pipeline been transmission and recently have project Florida Our to completed the which time. Slide dedicated new those largest Delaware. On The expanded the dollars Florida both gas recent are for Florida we completed Projects and Panhandle Northwest and underway

Somerset Florida mentioned Delaware I in in we Duval and serve most Guernsey As a the Ohio, with earlier, in Maryland, expand schedule. June to the year, importantly, bringing expansion. Nassau plant first project power in and power announced in counties. Energy our for gas pipeline services and Callahan to expansion the are pipeline Del-Mar County will for Energy, Last project, the natural The Both gas first Pathway the time. major needs services initiated service plant joint we Emera proceeding of on venture pipeline,

take XX. acquire Maryland. Last the agreement in welcome Slide existing complements natural and Acquiring had this the the earlier, Peninsula. and gas and subsidiary, I to County, December, a Gas Cecil for company, Jersey team July I'd completed this our was mentioned Industries and at like existing received for portfolio Utilities This transaction excited distribution I-XX. our to Turning we're recently our for about an natural growing we South publicly Gas, Delmarva that the expansion enables announced expand entered is which as on acquisition, Chesapeake approval XX. on the to us to area in company operates fit that to regulatory acquisition Elkton Gas Elkton grow We along the to with into opportunity business prospects in family. SJI Elkton

Turning Slide to XX.

value Commission rate proceeding. has book at made. Service to for the base Service work systems return replacement change replacement regulated community investments The other VNG's of the gas highlight planned Michael to in Sharp a Commission basis the current opposed And a Delaware initiatives. of rates requested recent seeking as limited asset's additions. to to as approved the result we Let unit we gas of Hurricane our We with VNG our base our regulatory hurricane. storm-related on We're The a of natural me the value propane become return the couple value. sale and/or Public on will distribution incurred Florida on a also earn a recovery Public continue costs the

the by We rates finalized potentially year, as end we third of proceeding established early and resolution of as initiatives. the of of reserve expect projects timeline. key this given the in proceeding. our all proceeding and fully but a until were year revenue table the to be current quarter final this Interim January, the Slide XX includes current

projects For amounts for and increase which for XXXX Michael respectively. this in and represents has XXXX The the team compared at for $X initiatives key estimates pipeline total, renewable million to these now represents for the margin will margin of the for projects the million million $XX.X in $X.X margin estimated projects $XX.X transportation growth million are XXXX We been that note We've and from regulatory of regulatory and $X.X margin quarter's additional In end $X.X key Elkton these XXXX pipeline via of in yet in estimate generate and estimates and provided gas. proceeding gas increase XXXX. incremental XXXX, we proceeding, not presentation, estimated finalized. years $X million the million million for included provided expected the margin XXXX natural first once million a margin virtual million XXXX identified key acquisitions the an growth, Hurricane XXXX the to has for quarter. of Marlin, The for expansions, $XX initiatives. $XX.X and and

transport relationship just and create organic Bioenergy gas both digestion excess project Utilities Slide The generated Bio natural XX from resources renewable in from Now that anaerobic poultry are soil material. DevCo's products natural healthy a developer renewable facility of equipment. DevCo, a processing to converting involved Utilities facilities and Services digestion renewable Gas waste $X into I'd quality and minutes for RNG receipt The Gas Natural gas. totaling RNG waste multiple Chesapeake Corporation removing energy like spend investments million investments it natural and to couple make ultimately about The build. of facilities additional also of anaerobic in our These which and approximately it's gas of Delaware project Shore organic and organics incremental from systems delivered space. talking with announcements, will transport utility through Chesapeake the by an the global interconnect outlines a Chesapeake be suppliers, Marlin include million. to associated between its gas Utilities Company leading latest RNG Eastern processed will once $X will become plant the customers. distribution will

Gas an its to renewable renewable produced have opportunities always we one on operations. and units, west natural that new Natural The transporting of Maryland leaders support Gas biorefinery vehicle the Services, focused we for in Under the with move our a Delmarva Chesapeake our enviro-tech believe Chesapeake generate additional is and plant of at namesake needs. projects Delmarva, greenhouse the sustainable infrastructure Eastern origin as And which critical enhancing to green well in become relationship gas Shore serve the Utilities commitment of will Transmission identify the of as to in growth gas. second at Utilities our These LDC, show while when and Chesapeake Chesapeake announced projects gas types to sustainability we arrangement, provide see Delmarva gas poultry supportive to Bay, natural project industry, CleanBay's encouraged and gas, Marlin transport XX. of case, excited fuel company service Delmarva we're the these collaborate agribusiness territories opportunities service. sustainability. multiple environmental we environmental to CleanBay processing the of gas Renewables, poultry will business natural as opportunity also are on Corporation We of on Slide production production, include renewable Utilities as aimed further, I'm market It's further units farmers the credits this projects the potentially in industry the bring these Chesapeake on to natural to renewable early great customers’ other being replicated natural Delmarva.

the Moriarty call turn ESG efforts. many on few me minutes to to Jim? a over Jim our for touch Let of

Jim Moriarty

and is you to a today. with afternoon, pleasure Jeff, you, Thank be everyone. good again It

As shown the strongly on is members. work we how all of every governance team Slide This XX, highest day. Utilities conduct standards Chesapeake and sound our committed is principles by ethical to

operate our that embedded company, responsibility of and a as is safe stewardship is in we manner be our and could the Board are. facilitates road we chart with in extending the informed of throughout Directors and together sustainable important at Our friendly to engagement, our who and Active the ahead. which more not practices environmentally beginning center people, furthers

diverse advancing XX. highlighted In our we platform, or Our Council. as have diversity the Inclusion, equity, vibrant ESG teams bedrock collaborate to Diversity formed and continuing Equity, cross-functional inclusion, Slide closely commitment and our increasingly on EDI on

Everyday Utilities Our commitments, who Chesapeake be of our further EDI better quarter, we want vision Extraordinary in Week, of business. presented keeping employees us and for contributions webinar EDI make culture significant Diversity," that who for Women take and share the to experiences CS around team to to improve "Be United conference the the We central backgrounds pride engine to enhance States. help and the The and the workplace customer are our during service in driving in is the a Council will serve embrace support company. the we virtual our by each members. and to the hosted collaboration was Demonstrating we their with recognizing is Council important diverse is Utilities, our largest with and our mission the entitled a In all second by communities which utility and

opportunity receiving had XXth, to energy to clean, hard day who serve that energy no that those Appreciation the essential every provide of affordable behind. the example, thank to to continue special you conditions communities so our National to respond services in and challenging some plentiful celebrate is Day, another and the work value ensure to one communities. services the say on Lineworker left We benefits of and and delivery we virtually we clock to join As around July most together the

several to responsible being new FERC-approved for fuel now and first building potential county environmental in chips project benefits extending Maryland. to The proven environmentally projects, County, a Somerset used infrastructure displace are will mentioned time our and the the Jeff and to including As our system earlier, extend wood Maryland. deliver economic teams energy oil

pursuing also RNG explored DevCo Bioenergy recent policy CleanBay projects. study additional various partnerships of promotion and of Renewables the by gratified RNG that development. We the for our on Delaware are University were We with by considerations a issued

to We the RNG conditions and several terms unveiling new as look and other opportunities several forward finalized. are projects are pursuing

our diverse are reduce the carbon projects We we engaged teams via excited the the of and underway to communities footprint serve. about

back steadfast steps environmental remains call the Our the is our it I comments. where to deliver commitment with stewardship. continuing appreciate take turn and advance to necessary today being when some Jeff? for to to needed, while Jeff you energy and all closing

Jeff Householder

Jim. Thanks,

Just a final of couple comments.

reaffirm $XXX We work Our live and our communities and team safety, engagement potential to and to on on Slide is as we the XX. continuing employee for come million we capital of years planning as deliver with. year into where as through view us growth to we've focus strategic $X five the services and outlined XXXX customers XXXX initiatives our for guidance billion expenditure

continued $X.XX operational earnings as We those to earnings XX. reaffirm on growth XXXX believe the customer the $X.XX our to based X.X% be continuing and in for of The growth operations rate online, Slide on We we key average guidance can rates annual results efficiencies. three projects our years. compound of achieved near-term growth X.X% also from show coming from

growth As financial like is continuation solutions year in by our This of cleaner This also with by positioned energy remain and XX% approximately growth investment you five utility RNG. infrastructure supported we and underpinned of our plan growth targets. investments nonutility capital XXXX strategic the to achieve can our businesses. well is see, in our sustainable our

record ensuring our our track a continue for discipline. capital will while growth financial We strong balance access to maintaining for our investors and delivering sheet, of

despite year While the staying on for find focused we achieving future unique through ourselves strong the circumstances XXXX looks we're this bright, in. results

So I ongoing company. thank our thank participating employees of and to call. our of growing want customers me Chesapeake all all Utilities' in And let you our closing, for in serving just commitment to for our their

happy questions may address you We will any have. to be now


from of question Tate Our Sullivan the first line with Maxim. [Operator Instructions] comes

Tate Sullivan

of with from it what at Marlin you ago. Slide year and for incremental we and you RNG margin the details, if since have thought besides million, changed start And the in might $X the gross, the XX. I correctly, I I Thank Great. the mean doubled discussed margin, 'XX for thank all it last margin you? from you contribution and with you you all, opportunity heard looks the gross I'd looked that introduced gross like gross

or more are am at I there that So looking here states correctly?

Beth Cooper

terms that, than emergency the a where tended you're of more from down really to One of be of, still driven of fee terms a with second acquired We're to there's type you we've moving path charged. how quarter when since being year and and things. of to quarter, their shifted Marlin's greater part year-over-year, at that the Tate, that's business, in look to that Marlin, contracted has services second aligned this it's services, second quarter the been retainer we've service we're where a that's providing quarter higher in a convert level last year of business of results to contract. provide several looking but So at a is

happened services. an just so And one as as for emergency-type that of Marlin that's the in the uptick things well

these year, of because Marlin's lot opportunities is first year-to-date that's announced the in. If that operates contracts the to last margin and year. Marlin's those Marlin be is you RNG you new also, talked look new emergency in, Jim quarter the in at of going on is as can existing in and continuing it and look It's was services it that CNG kind the from about, had in for the space, projects. last space we coming basis, expanding we've of Jeff where both X of what to strong business a are quarter a see first

CNG that at mentioned also also And Marlin some both RNG. in we've we're working arena, to point for here. hopefully, looking LNG we'll the into expand in We be some also and other have projects on in the that past

well you'd really beyond. don't as anything those to Marlin all as bit kicking like on has you'll a And cylinders. the within capacity continue of And footprint that so little expand all add. our I to own into to there's know areas. if we're We're Jeff, see kicking

Jeff Householder

it commitments pipeline interest I maintenance work have pretty and long-term Well, work. that I in think well. pipelines would covered as an with focusing the you and in engaged then utilities say integrity that indicated, principally we certainly, on

revenue an a us in provides our think come for business. And we've some well. I that we have Mid-Atlantic so we're of pretty the margin And quite marketing stable of stream work increase And more to that with and some this opportunities opportunity significant especially seeing here the reflective that in been the the Southeast that know seeing doing, you're is way. utilities

Tate Sullivan

while. was many the else Okay. in among Great. within unregulated a propane given besides both margin Yes. I too. margin in XQ unregulated was Marlin, and very think were one Because your operating it thing, mean I in other? notable others, operating Marlin's that everything income Were there a going other income quite on, -- XQ contributor? was positive strength there And highest

Beth Cooper


-- cover, you Sharp, relative that that under segment Aspire. to if each our margin it businesses, on the the negatively strong quarter. of off, at correctly. by being dig Tate, unregulated the the see at you of is pretty so propane amount small you and would was speak, there, a the really, Florida a to about -- look first operation And key to impact, the I what particular were just down under COVID -- being unregulated segment it COVID in and looking even out absolutely at was impact, impacted was of mean, I million impact $X.X unregulated if COVID You're $XXX,XXX. gross I that look it overall mean, the

pretty case of the coupled overcome we've those much they of driven been quarter coming able operation, impact. Florida and Sharp partly In and That's able the supply able COVID-XX weather to with being have stayed strong. there. retail to margins keep our and the were first impact in the So do what and to been out up propane

us for at consummated recall, acquisition The of you'll the the we end that thing other is, happened the year. Boulden

quarter. during add strongly And very so to the Boulden continued

the big gas. overall but were those There so contributed, drivers, of unregulated to -- a of bigger lot the that use performed some Certainly, in being April continuing some people were home, And at weather smaller, well. were with drivers. using very others

overall, unregulated so fared very the quarter. well And again during

Tate Sullivan

the the the any concern shouldn't be customer I jump in mean, all that that, organic Is an seemed at including Delmarva converted Or before a of And -- distribution, but Yes. growth which back X% for very just is or it natural figures, queue, -- the that gas there just looking customers some that I year-over-year. portion? on side propane high I and meaningful regulated on don't number?

Beth Cooper

in a I activity is a some a not we see expansion. is mean, There of part but customer not it -- conversion there, significant significant it. it's lot to of continue

Delaware, to which Delaware, basically and being of it's continues of I are in expand. the our grow are are Dover, areas the like expanding distribution new the Wilmington, beach communities Middletown north as know. pathway developments As of the area in that system, areas, bedroom -- But

in markets. so and very growth area strong And it's be two to principally our continued Delaware those

as of that's some that's as are driven And conversions. by it's but than driver. the much more there not the so There happening growth customer those,

Jeff Householder

We're Palm pipeline We've to limits, small to systems see the existing the in also Florida. It's Beach the west There's emerging growth west four on activity segments, as the recall, continuing Peninsula of you significant a in pipeline extended, I-XX. area. reach of growth. lot of the out may city

over accounts serving at XX,XXX the systems hopping that are to we But regulatory the all happen also we gas going community have across scattered Delmarva propane at gas. take natural out, side, almost are once. underground of systems, That's things might action point. mentioned just to point a not a the we I as well. So systems the and converting on second in Florida this those propane number

and natural years of at multiple in you're them. start those all we looking of So gas, get will gas front converting before developments service

as Beth well So hard Delmarva replace ago. you'll part community additional obviously we acquisition we see erosion and as the gas places. And with some to as on gas mentioned systems growth Boulden And convert propane increases. natural that in working that those loss that propane other moment propane margin was of a very are


the question Sidoti. Brian Our Russo comes next from line with of

Brian Russo

investment that project with $X or RNG what tied is the margin Bioenergy on contribution, Just CleanBay? million specific to gross or

Beth Cooper

announced, that That first the project for completely done. are is but associated is now right partially we not with projects all associated both contracts with,

And estimates higher so that margin for out come is will that is more we the a all likely, of once preliminary finalized. those a will refined, estimate with everything contracts impact of

Brian Russo

then... And it. Okay. Got

Jeff Householder

just and the add mentioned agreements. earlier, we're, that said, Bioenergy to made, It's one a, processing in these at thing. We've I'll of things, as combination we gas we're making and investment an said, contract Beth as she equipment working It's facility. refine a as DevCo

and Gas margins so are will there associated And through for there support those new some that. gas be And associated with transportation Marlin to margins activities. There again equipment the Services. also we're transporting investment

Brian Russo


dollar to So using... kind back what investment of, just of into assume just or back into the should we envelope, what ROE XX.X% XX% an amount type

Jeff Householder

always mad but question, that gets answer do. me would at I Beth I when

So Beth, you. why don't

Beth Cooper

of to would targeting what as above return still the yes, I say that, return not for mean, we've But a underway. that's it, always, I LDC and regulated should we're Brian, some point, know that done business. also because a be yet, I you, what as going contracts is Jeff at are Well, mentioned this mentioned

we've investment the estimates dollars. out some some of included on So

adjust you make then do And continue out so information you additional what look disclose there. a with dollars are what at at from to we a projects, return associated is utility like there, I these is as can assumption And are would that above return. investment

Brian Russo

of services Okay. storm? those the Great. tropical dispatched have that, has terms Understood. response in And to Gas, Marlin in been

Jeff Householder

know obviously, discussed went certainly had further Delmarva, knowledge, shouldn't in but believe Delmarva no we've I hold have in utilities a dispatched X, impact any I storm on not I repair virtually in north X, my transmission any or that issues for and purposes then to systems. system if had but Peninsula anything to on know directly that, of don't say we gas we've result no that either. as Florida. distribution we we And any not the And Marlin that or of our

Brian Russo

the Southeast. Okay. I the mid-Atlantic or just was curious in in

Jeff Householder

we any any substantive seen systems really of gas dispatch. Yes. that Marlin to actually just, to require will We the damage haven't

Brian Russo

I'm because benefits Understood. CARES expense a expenses? curious. good a a you Okay. job done it impact, of so Is you've tax and why curious, filed of you such haven't deferral the the it that net file Just Is COVID offsetting of And offsetting elsewhere? with for kind you're that?

Beth Cooper

? to Jeff, want to or would me that take you do you like

Jeff Householder

ahead. Go sure. Yes,

Beth Cooper

standpoint our right continued has evolve. situation, From now, Brian, we the as about, talked to

be everybody pandemic, time think this be thought, normal. to going to okay, it's this will amount initially and I of back then everybody

we don't, we what do continuing We're evaluate be is want what so to And able to the to on really projections. magnitude. work our

as We as are packages. of that about result looking already at other potential a the filings future stimulus might that are as come regulatory the changes organization other considering underway well We're overall.

sure don't we we make And to we quick and We going the the what make is necessary want so think to then that deliberate, we'll filings. evaluate want the gate. impact we're to be be to

evaluation, the looking continues overall analysis to again, as it so and just evolve. And and at it's situation

Jeff Householder

believe expectation reasonable a it agencies be number. a will net certainly, it's to you that And looking regulatory as indicated, for

other to as versus effects. from the colleagues different impacts need or we do in our so that And What's COVID figure across net that's [indiscernible] out, just is. country many what of weather due to

Brian Russo

is conclusion quarter? Florida, schedule? On the the occur that And Hurricane can Michael it you what confidence third gives the proceedings by on in

Jeff Householder

is it schedule. have, on we Well,

We a date that the hearing commission September has have established.

just hearing. the Public staff, Office will to can for getting track to a there, that of And issue. of begin agreement know to Service settlement move sort we with usual on we'll going any to we Counsel we're where so the if reach that deal point I the the need now conversation don't see our Public get and prepare for the that and but close the hearing this staff down Commission between would eliminate there's

Brian Russo

that the sheet then the that debt flow interest long-term lower just look statement, And retiring plan balance sheet with part debt? you earlier? balance are quick or the at management a cash Okay. you briefly Is Great. of taking rate, mentioned short-term

Beth Cooper

-- when the as mean, current we're mean, balance through retired, but together, debt I are said, the through also channels through extent to borrowings you time, growing, that our getting it's funded using stock to is so as long-term normal either at to -- that either fund -- speak, also same short-term Well, comes I getting sheet our things.

several that of Brian, different would levers is at say, day, end I are ultimately, So the the what happening. there's

that's long-term have retired. We being debt

debt issuing have We're some of using. equity also long-term We total to And beginning then $XX since our also up issuing the that year. that's of we're this short-term moved we've equity been million the capitalization debt year.

that. of all it's So

Brian Russo

the XXXX. charts, it When projects you under Great. gross the as you're the RNG And margin high completion, if then of pushing then potential course one through of last the projects, end towards near already pipeline of at look updated development CAGR and seems that question. EPS

roll So on curious might then And there. to XXXX? thoughts your when might over get when we -- you

Beth Cooper

we're Well, color around come add Jeff Jim review what and strategic and up process I'll this. then I say would here But -- going the our I know can into planning through coming further as we is start, typically will fall. certainly some we

earnings our what growth like over looking investment And next the will the capital like what over looks plan so trajectory years. years, include that X of X our at at next part looks review looking

to annual look put not is, to I guidance. we point, what guidance, out -- but And kind would do of some expect to so an will new Chesapeake go at likely

we to I But as will when -- to at that we've next it we're coming decided be in certainly want yet looking here be, up coming planning that cycle not going strategic a that think fall. what this longer-term are more of from we the kind look at perspective. in but


a with the question. Tate from line your Maxim. Please Our with proceed is question of Sullivan next follow-up

Tate Sullivan

agreements for just renewable are? two $X deals biodigester? it current it and CleanBay, the the multiple announced, so does Thank X Or my million those you've facilities? Hi. On up. X taking follow what represent -- with margin and that in gross you natural frame biodigester you Bioenergy Can those gas, both is of

Jeff Householder

Beth And DevCo for finalize working to contract Seaford. facility we're agreements at with actually the as Sure. said, the Bioenergy are, we

the saying. get executed The at letter some will a a of of lays of -- out million Beth most for intent through me working have mad We of the that $X is deal, we're that still terms again, details. but

a will be of variety almost placeholder it's different from believe So margins a what for coming sources. we

We the at million equipment, said, investment. are Bioenergy facility, $X processing a DevCo gas as of building I

in interconnect of We will $X will Eastern mentioned, that will Eastern the are, Shore. that Shore million that are ultimately in those build million investment, we not Eastern on $X bring Shore gas margins into that that, be included

$X We have that to of the Delmarva. support then investing equipment will equipment million With distribution come either. equipment a Those excuse is biomethane that significant a me, point transportation margins a gas. our of that be that through CleanBay, is into this Clean we at significant, fairly but investments and interconnect really fairly will operation, that's ultimately in position transport processing Marlin Marlin the making in systems are not that the in to Energy, deal variety on transport

essentially this. to the finalize peninsula. Devco where a to facility. out that We we're there indicate wanted of other of CleanBay And kind so put the CleanBay west going with the facilities magnitude Maryland. of number Delmarva a then and are we're Bioenergy something in again, number an of potentially agreements. represents to working across the There's of finalize facility trying that But are of to order there Devco Bioenergy And

think I months, more not couple to point. definitive next at certainly, at be equipment, more able number a give potentially to the a point numbers facilities to or either front see in we Marlin that opportunity pretty natural in margin over in we us quite So give would with just will fairly transportation, install And to over gas you this use But by And quickly. definitive pipelines I investing we're of investing ensure truck a processing information. years. expect number that little interesting you a of gas here of of coalesce by at fuel probably the

Tate Sullivan

detail regulatory it on happened the the month that approval you All follow-up received community that what was put just was last the is systems. And regulatory, Jeff, the gas No. Okay. in? that to great. something one

Jeff Householder

conversion value of begin assets from earning natural on sort value that propane value contention, enter those well, customers. Yes. one happens the actually have into it's buying you worked assets, utility market the that's frankly, how state underground, purchase going We, the gas always what book the that to propane of of acquired issues by it those long-standing those that's into And gas the Delaware propane at of being when when rate if an to for by the any one the you're ever a And the underground I've base natural depreciated level asset is of course, pay of something been a a assets. asset base. closer those that ever of you're company, And been everywhere of you do I've you And an a utility things bring worked, is, would in Public in, the rate into position come you Service Commission, actually utility. point every rate basically and asset and base system. regulated is and acquiring of a

be gas asset were system. if in into value the negotiate, it bring get to that in value were able a So assets market forward what And you would possibly if at approved rate want you able is building natural distribution replacement to at we that base we to those Delaware new bring can.

we're value that put significantly frankly. It's a rate accomplishment, So and significant the the earn it able on. base pretty increases assets to into of ultimately


are there call turn remarks. to closing continue will [Operator your the at Householder, no back I now Mr. please you, with further Instructions] questions this time.

Jeff Householder

your you. interest in Thank forward always, We this and with we again as Chesapeake thank hanging Utilities there soon. you you just this again speaking And Goodbye. all in time. afternoon look us appreciate to joining for and


for the participation, you your call lines. thank and ask does please for We conference today. your That conclude disconnect you