Earnings per share ("EPS")* for the first quarter of 2024 was $2.07 compared to $2.04 per share for the first quarter of 2023 Adjusted EPS** for the first quarter of 2024, which excludes transaction and transition-related expenses attributable to the acquisition and integration of Florida City Gas ("FCG"), increased by three percent to $2.10 compared to $2.04 per share for the first quarter of 2023 Adjusted gross margin** growth of $35.0 million during the first quarter driven by contributions from FCG, natural gas organic growth and continued pipeline expansion projects, additional customer consumption, and regulatory initiatives Completed filings for seven projects representing more than $85 million of capital investment to support growth initiatives in Florida, including for FCG Warmer than normal temperatures in our Delmarva and Ohio service territories reduced operating income by approximately $1.5 million, or $0.05 per share DOVER, Del., May 8, 2024 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE:CPK) ("Chesapeake Utilities" or the "Company") today announced financial results for the three months ended March 31, 2024. Net income for the first quarter of 2024 was $46.2 million compared to $36.3 million in the first quarter of 2023. Excluding transaction and transition related expenses associated with the fourth quarter 2023 acquisition of FCG, adjusted net income was $46.8 million, or $2.10 per share compared to $2.04 per share reported in the same prior year period. Adjusted earnings for the first quarter of 2024 were driven by incremental margin contributions from FCG; growth in the Company's natural gas distribution businesses and continued pipeline expansion projects to support distribution growth; higher customer consumption; incremental contributions associated with regulated infrastructure programs; and contributions from the Company's Florida natural gas base rate proceeding. These improvements were partially offset by higher operating expenses primarily attributed to the addition of FCG and increased interest expense related to debt issued in connection with financing the acquisition. "During the first quarter, we continued to build on the momentum from our strong finish to 2023. While the weather in our service areas was colder than it was last year, temperatures were warmer than normal for our respective territories.  Nonetheless, our team once again executed on all fronts, and we remain on track to achieve our 2024 earnings guidance of $5.33-$5.45 on an adjusted EPS basis and our longer-term outlook," commented Jeff Householder, chair, president and CEO. "Our success is driven by our progress integrating our FCG and Chesapeake families, pursuing growth investments across all of our businesses, advancing regulatory initiatives and prudently managing expenses.  Specifically, the team advanced the FCG integration, delivering efficiencies from consolidating the SAFE and GUARD programs, and filed for three new pipeline projects with the Florida Public Service Commission which will serve RNG projects developed by third parties in proximity to our distribution system and serve to improve resilience and increase capacity to serve our customers. Our regulated natural gas distribution businesses continued to gain customers at more than twice the national average, we executed on numerous opportunities to expand our natural gas transmission systems, and we realized meaningful contributions from our non-regulated businesses. "We are undertaking numerous initiatives in our march to our 2025 guidance of $6.15-$6.35 per share.  We have immediately recognized positive impacts from our FCG integration efforts, continued our business transformation to support our larger footprint and accelerated the capital investment opportunities we identified to propel earnings growth. Filing for seven new capital investment projects with the Florida Public Service Commission during the quarter is a record for our Company. Across the enterprise, our team remains committed to delivering on the attractive opportunities across our businesses, positioning our company for future growth and contributing to another record year of performance that will drive increased shareholder value," concluded Householder. Earnings and Capital Investment Guidance The Company continues to support its 2024 EPS guidance of $5.33 to $5.45 in adjusted earnings per share given the incremental margin opportunities present across the Company's businesses, investment opportunities within and surrounding FCG, regulatory initiatives and operating synergies. The Company also supports its previously announced 2024 capital expenditure guidance of $300 million to $360 million. From a longer-term perspective, the Company is also reaffirming its previously announced capital expenditure guidance for the five-year period ended 2028 that will range from $1.5 billion to $1.8 billion.  This investment profile is projected to result in a 2025 EPS guidance range of $6.15 to $6.35, as well as a 2028 EPS guidance range of $7.75 to $8.00 per share. This implies an EPS growth rate of approximately 8 percent from the previous 2025 EPS guidance range, or since 2018, an 8.5 percent growth rate. *Unless otherwise noted, EPS and Adjusted EPS information are presented on a diluted basis. Non-GAAP Financial Measures **This press release including the tables herein, include references to both Generally Accepted Accounting Principles ("GAAP") and non-GAAP financial measures, including Adjusted Gross Margin, Adjusted Net Income and Adjusted EPS. A "non-GAAP financial measure" is generally defined as a numerical measure of a company's historical or future performance that includes or excludes amounts, or that is subject to adjustments, so as to be different from the most directly comparable measure calculated or presented in accordance with GAAP. Our management believes certain non-GAAP financial measures, when considered together with GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. The Company calculates Adjusted Gross Margin by deducting the purchased cost of natural gas, propane and electricity and the cost of labor spent on direct revenue-producing activities from operating revenues. The costs included in Adjusted Gross Margin exclude depreciation and amortization and certain costs presented in operations and maintenance expenses in accordance with regulatory requirements. The Company calculates Adjusted Net Income and Adjusted EPS by deducting costs and expenses associated with significant acquisitions that may affect the comparison of period-over-period results. These non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures. The Company believes that these non-GAAP measures are useful and meaningful to investors as a basis for making investment decisions, and provide investors with information that demonstrates the profitability achieved by the Company under allowed rates for regulated energy operations and under the Company's competitive pricing structures for unregulated energy operations. The Company's management uses these non-GAAP financial measures in assessing a business unit and Company performance. Other companies may calculate these non-GAAP financial measures in a different manner. The following tables reconcile Gross Margin, Net Income, and EPS, all as defined under GAAP, to our non-GAAP measures of Adjusted Gross Margin, Adjusted Net Income and Adjusted EPS for each of the periods presented. Adjusted Gross Margin For the Three Months Ended March 31, 2024 (in thousands) Regulated Energy Unregulated Energy Other and Eliminations Total Operating Revenues $               168,426 $                 83,103 $                  (5,785) $               245,744 Cost of Sales: Natural gas, propane and electric costs (49,918) (37,054) 5,755 (81,217) Depreciation & amortization (12,537) (4,481) 2 (17,016) Operations & maintenance expenses (1) (12,736) (8,422) (2) (21,160) Gross Margin (GAAP) 93,235 33,146 (30) 126,351 Operations & maintenance expenses (1) 12,736 8,422 2 21,160 Depreciation & amortization 12,537 4,481 (2) 17,016 Adjusted Gross Margin (Non-GAAP) $               118,508 $                 46,049 $                       (30) $               164,527 For the Three Months Ended March 31, 2023 (in thousands) Regulated Energy Unregulated Energy Other and Eliminations Total Operating Revenues $               142,270 $                 83,165 $                  (7,306) $               218,129 Cost of Sales: Natural gas, propane and electric costs (55,288) (40,571) 7,270 (88,589) Depreciation & amortization (12,952) (4,234) 3 (17,183) Operations & maintenance expenses (1) (9,287) (8,476) 5 (17,758) Gross Margin (GAAP) 64,743 29,884 (28) 94,599 Operations & maintenance expenses (1) 9,287 8,476 (5) 17,758 Depreciation & amortization 12,952 4,234 (3) 17,183 Adjusted Gross Margin (Non-GAAP) $                 86,982 $                 42,594 $                       (36) $               129,540 (1) Operations & maintenance expenses within the condensed consolidated statements of income are presented in accordance with regulatory requirements and to provide comparability within the industry. Operations & maintenance expenses which are deemed to be directly attributable to revenue producing activities have been separately presented above in order to calculate Gross Margin as defined under US GAAP.   Adjusted Net Income and Adjusted EPS Three Months Ended March 31, (in thousands, except per share data) 2024 2023 Net Income (GAAP) $          46,168 $          36,344 FCG transaction and transition-related expenses, net (1) 677 — Adjusted Net Income (Non-GAAP) $          46,845 $          36,344 Weighted average common shares outstanding - diluted (2) 22,306 17,832 Earnings Per Share - Diluted (GAAP) $               2.07 $               2.04 FCG transaction and transition-related expenses, net (1) 0.03 — Adjusted Earnings Per Share - Diluted (Non-GAAP) $               2.10 $               2.04 (1) Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transition services, consulting, system integration, rebranding and legal fees. (2) Weighted average shares for the quarter ended March 31, 2024 reflect the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG. Operating Results for the Quarters Ended March 31, 2024 and 2023  Consolidated Results Three Months Ended March 31, (in thousands) 2024 2023 Change Percent Change Adjusted gross margin** $       164,527 $       129,540 $         34,987 27.0 % Depreciation, amortization and property taxes 26,110 23,490 2,620 11.2 % FCG transaction and transition-related expenses 921 — 921 NMF Other operating expenses 57,911 51,135 6,776 13.3 % Operating income $         79,585 $         54,915 $         24,670 44.9 % Operating income for the first quarter of 2024 was $79.6 million, an increase of $24.7 million compared to the same period in 2023. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $25.6 million or 46.6 percent compared to the prior-year period. Adjusted gross margin in the first quarter of 2024 was positively impacted by FCG, natural gas organic growth and continued pipeline expansion projects, higher customer consumption, incremental contributions associated with regulatory initiatives, and contributions from the Company's unregulated businesses. Higher operating expenses largely associated with FCG were partially offset by lower employee benefits and incentive compensation costs compared to the prior-year period.  Increases in depreciation, amortization and property taxes attributable to growth projects and FCG were partially offset by lower depreciation in our electric operations due to revised rates in the electric depreciation study filing approved in December 2023 and a $3.4 million reserve surplus amortization mechanism ("RSAM") adjustment from FCG. Regulated Energy Segment Three Months Ended March 31, (in thousands) 2024 2023 Change Percent Change Adjusted gross margin** $       118,508 $         86,982 $         31,526 36.2 % Depreciation, amortization and property taxes 20,955 18,670 2,285 12.2 % FCG transaction and transition-related expenses 921 — 921 NMF Other operating expenses 38,523 30,687 7,836 25.5 % Operating income $         58,109 $         37,625 $         20,484 54.4 % The key components of the increase in adjusted gross margin** are shown below: (in thousands) Contribution from FCG $                        24,959 Natural gas growth including conversions (excluding service expansions) 1,916 Natural gas transmission service expansions 1,622 Rate changes associated with the Florida natural gas base rate proceeding (1) 1,498 Contributions from regulated infrastructure programs 1,278 Other variances 253 Quarter-over-quarter increase in adjusted gross margin** $                        31,526 (1) Includes adjusted gross margin contributions from permanent base rates that became effective in March 2023. The major components of the increase in other operating expenses are as follows: (in thousands) FCG operating expenses $                        10,413 Payroll, benefits and other employee-related expenses (1,787) Other variances (790) Quarter-over-quarter increase in other operating expenses $                          7,836   Unregulated Energy Segment Three Months Ended March 31, (in thousands) 2024 2023 Change Percent Change Adjusted gross margin** $         46,049 $         42,594 $           3,455 8.1 % Depreciation, amortization and property taxes 5,155 4,822 333 6.9 % Other operating expenses 19,465 20,527 (1,062) (5.2) % Operating income $         21,429 $         17,245 $           4,184 24.3 % The major components of the change in adjusted gross margin** are shown below: (in thousands) Propane Operations Increased propane customer consumption $                   1,388 Increased propane margins and service fees 559 Contributions from acquisition 438 Aspire Energy Increased margins - rate changes and gathering fees 938 Increased customer consumption 309 Other variances (177) Quarter-over-quarter increase in adjusted gross margin** $                   3,455 The major components of the decrease in other operating expenses are as follows: (in thousands) Decreased payroll, benefits and other employee-related expenses $                 (1,177) Other variances 115 Quarter-over-quarter decrease in other operating expenses $                 (1,062) Forward-Looking Statements Matters included in this release may include forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements. Please refer to the Safe Harbor for Forward-Looking Statements in the Company's 2023 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the first quarter of 2024 for further information on the risks and uncertainties related to the Company's forward-looking statements. Conference Call Chesapeake Utilities (NYSE:CPK) will host a conference call on Thursday, May 9, 2024 at 8:30 a.m. Eastern Time to discuss the Company's financial results for the three months ended March 31, 2024. To listen to the Company's conference call via live webcast, please visit the Events & Presentations section of the Investors page on www.chpk.com. For investors and analysts that wish to participate by phone for the question and answer portion of the call, please use the following dial-in information: Toll-free: 800.343.5419International: 203.518.9731Conference ID: CPKQ124 A replay of the presentation will be made available on the previously noted website following the conclusion of the call. About Chesapeake Utilities Corporation  Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange. Chesapeake Utilities Corporation offers sustainable energy solutions through its natural gas transmission and distribution, electricity generation and distribution, propane gas distribution, mobile compressed natural gas utility services and solutions, and other businesses. Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma. For more information, contact: Beth W. CooperExecutive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary302.734.6022 Michael D. GaltmanSenior Vice President and Chief Accounting Officer302.217.7036 Lucia M. DempseyHead of Investor Relations347.804.9067 Financial Summary (in thousands, except per-share data) Three Months Ended March 31, 2024 2023 Adjusted Gross Margin   Regulated Energy segment $    118,508 $      86,982   Unregulated Energy segment 46,049 42,594   Other businesses and eliminations (30) (36) Total Adjusted Gross Margin** $    164,527 $    129,540