Q4 2024 Chesapeake Utilities Corp Earnings Call
Corporations fourth quarter and full year 2024 earnings conference call. At this time, all participants have been placed in a listen only mode and the floor will be opened for your questions. Following the presentation.
Would like to ask a question at that time. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from the queue by pressing star too so.
Beth Cooper: This is twice as high as the top growth rates currently reflected in the industry. We recognize this is a significant opportunity to demonstrate our ability to execute on our targets and advance our growth strategy.
Speaker Change: So others can hear your questions clearly we ask that you. Please pick up your handset for best sound quality Lastly, if you should require operator assistance at any time. Please press star Zero I would now like to turn the call over to MS. Lucia Dempsey head of Investor Relations. Please go ahead ma'am.
Jim Moriarty: With that, it's my pleasure to turn the call over to Jim. Thank you, Beth, and good morning, everyone. As Jeff discussed earlier, a proactive regulatory agenda is our second fundamental growth driver.
Lucia Dempsey: Thank you and good morning, everyone. Today's presentation can be accessed on our website under the investors page and events and presentations section. After our prepared remarks, we will open up the call for questions.
Jim Moriarty: and I would like to share several updates in this area as shown on slide 22. for our Maryland jurisdiction. In September 2024, we received approval for a $2.6 million revenue increase. In November of 2024, we filed a Phase 2 proceeding to determine a schedule for incorporating this increase into customer rates, and a hearing will be held next month.
Speaker Change: On slide two we show our typical disclaimers, while I remind you that matters discussed on this conference call May include forward looking statements that involve risks and uncertainties.
Speaker Change: Forward looking statements and projections could differ materially from our actual results.
The safe Harbor for forward looking statements section of our 2024 annual report on Form 10-K provides further information on the factors that could cause such statements to differ from our actual results.
Speaker Change: Additionally, the company evaluates its performance based on certain non-GAAP measures, including adjusted gross margin adjusted net income and adjusted earnings per share and the information presented today includes the appropriate disclosures in accordance with the SEC regulation G.
Jim Moriarty: Last August, we filed a rate case in our Delaware jurisdiction proposing a $12.1 million rate increase and an ROE of 11.5 percent. We subsequently received interim rate relief of $2.5 million, which was effective in October of last year. On Monday, February 24th, we filed a second interim rate increase for $8.3 million while we continue to work on resolving the rate proceedings. A hearing is currently scheduled for May.
Operator: [music] Standby, we're about to begin.
Speaker Change: A reconciliation of these non-GAAP measures to the related GAAP measures has been provided in the appendix of this presentation and our earnings release and in our 2024 annual report on Form 10-K.
Operator: Good morning, everyone, and welcome to Chesapeake Utilities Corporation's fourth quarter and full year 2024 earnings conference call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2.
Speaker Change: Here at Chesapeake Utilities safety is our first priority we start all meetings with a safety moment and we will do so here with a moment on heart health as highlighted on slide three.
Jim Moriarty: We also filed a rate case for our Florida electric operations last August. proposing a $12.6 million rate increase and an 11.3% ROE. Interim rates of $1.8 million were approved and went into effect November 1 of 2024. Last week, we received an initial recommendation from the Florida PSC staff indicating a $9.9 million increase in rates. which is subject to PSC commission review and approval.
Speaker Change: February is not quite over and so it's still a great time to celebrate American heart month by refocusing on our heart and cardiovascular health.
Speaker Change: Heart disease affects more than $1 5 million Americans and millions more around the world.
Operator: So others can hear your questions clearly, we ask that you please pick up your handset for best sound quality.
Speaker Change: However, there is so much we can do to improve our heart health. So we encourage you to take a step today and everyday to strengthen your heart the only side effects will be improved physical and mental health overall.
Operator: Lastly, if you should require operator assistance at any time, please press star zero.
Lucia Dempsey: I would now like to turn the call over to Ms. Lucia Dempsey, Head of Investor Relations. Please go ahead. Thank you and good morning everyone. Today's presentation can be accessed on our website under the investors page and events and presentations subsection. After our prepared remarks, we will open up the call for questions.
Speaker Change: I will now introduce our presenters today, Jeff householder chair of the board President and Chief Executive Officer will provide an update on the many ways, we delivered with purpose throughout 2024, including executing on our core growth strategy.
Jim Moriarty: And finally, earlier this week, we filed an updated depreciation study for Florida City Gas. requesting approval of revised annual depreciation. as well as a reduction related to a reserve imbalance that would be amortized over a two-year period. This filing reflects our transition to a typical strategy for depreciation expense.
Beth Cooper Executive Vice President Chief Financial Officer, Treasurer, and assistant Corporate Secretary, who will discuss our full year financial results strong balance sheet and dividend and earnings growth trajectory.
Lucia Dempsey: On slide two, we show our typical disclaimers, while I remind you that matters discussed on this conference call may include forward-looking statements that involve risks and uncertainty. Forward-looking statements and projections could differ materially from our actual results. The Safe Harbor for Forward-Looking Statements section of our 2024 annual report on Form 10-K provides further information on the factors that could cause such statements to differ from our actual results. Additionally, the company evaluates its performance based on certain non-GAAP measures, including adjusted gross margin, adjusted net income, and adjusted earnings per share. And the information presented today includes the appropriate disclosures in accordance with the SEC's Regulation GT.
Speaker Change: And Jim Moriarty Executive Vice President General Counsel, corporate Secretary and Chief Policy and risk Officer will review, our active regulatory agenda key project updates and summarize our community engagement work in 2024.
Jim Moriarty: Slide 23 provides an update on our Eastern Shore Worcester resiliency upgrade.
Jeff Householder: With that it is my pleasure to turn the call over to Jeff.
Jim Moriarty: an $80 million liquefied natural gas storage project designed to support growth and resiliency at the southern end of our Delmarva system. As Jeff mentioned, we were pleased to receive FERC approval of the project in January of this year. enabling us to remain on track with our construction schedule. Storage tanks are complete and are currently on their way for delivery to our service area. We continue to expect the project to be in service in the third quarter of 2025, just in time for next year's winter period.
Jeff Householder: Thank you Lucy good morning, and thanks to all of you for joining our call. Today 2024 was a pivotal year for Chesapeake utilities, we were persistent in our mission to deliver energy that makes life better for the communities. We serve and we are successfully positioning the company to be a much larger more scalable enterprise.
Lucia Dempsey: A reconciliation of these non-GAP measures to the related GAP measures has been provided in the appendix of this presentation, in our earnings release, and in our 2024 annual report on Form 10-K.
Jeff Householder: Our theme for this year's annual report delivering with purpose, reaching new Heights isn't just marketing phrase that's an embodiment of how we operate each and every day at all levels across the company. So let me start by telling and how we delivered in 2024.
Lucia Dempsey: Here at Chesapeake Utilities, safety is our first priority. We start all meetings with a safety moment, and we'll do so here with a moment on heart health, as highlighted on slide three. February is not quite over, and so it's still a great time to celebrate American Heart Month by refocusing on our heart and cardiovascular health. Heart disease affects more than 1.5 million Americans and millions more around the world. However, there is so much we can do to improve our heart health, so we encourage you to take a step today and every day to strengthen your heart.
Jim Moriarty: Turning now to slide 24, I would like to provide a recap on our community engagement efforts throughout 2024. I am continually impressed with the dedication of our team. who shared their time and talent. crossed nearly 7,000 hours of volunteerism during the year.
Jeff Householder: Turning to slide six adjusted diluted earnings per share for the fourth quarter was $1 63.
Jeff Householder: Bringing our full year 2024, EPS to $5 39.
Speaker Change: At the midpoint of our guidance range.
Speaker Change: This is a significant accomplishment in light of our efforts to integrate the <unk> acquisition warmer than normal temperatures our decision to accelerate the return to our target capital structure.
Lucia Dempsey: The only side effects will be improved physical and mental health overall.
Jim Moriarty: As a company, we also provided $575,000 in charitable donations and community sponsorships to over 75 organizations within our four focus areas of giving. Safety and Health, Community Development, Education, and Environmental Stewardship. Delivering excellence for all stakeholders is the foundation for long-term growth and success. enabling us to continue serving our customers and driving value for our stakeholders for years to come so that no one is left behind.
Lucia Dempsey: I'll now introduce our presenters today.
Lucia Dempsey: Jeff Householder, Chair of the Board, President, and Chief Executive Officer, will provide an update on the many ways we delivered with purpose throughout 2024, including executing on our core growth strategy. Beth Cooper, Executive Vice President, Chief Financial Officer, Treasurer, and Assistant Corporate Secretary, will discuss our full year of financial results, strong balance sheet, and dividend and earnings growth trajectory.
Speaker Change: And the delay in the Finalization of our Maryland rate case as well.
Speaker Change: Ill go into more detail shortly we invested $356 million of capital in 2024, which is a record level of capital investment and at the upper end of our annual guidance range of $300 million to $360 million and well on our way toward our five year capital forecast of one five.
Lucia Dempsey: and Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary, and Chief Policy and Risk Officer will review our active regulatory agenda, key project updates, and summarize our community engagement work in 2024.
Speaker Change: To one $8 billion through 2028.
Speaker Change: As Jim will discuss in more detail, we were very active on the regulatory front, including filing three rate cases to depreciation studies receiving approval for 12 projects filed with the Florida Public Service Commission and completing additional regulatory filings related to consolidating and expanding our infrastructure reliability.
Jeff Householder: With that, I will turn the call to Jeff for concluding remarks. Thanks, Jim. 2024 has been an exciting turning point for the company, and I believe we've successfully demonstrated our ability to integrate the meaningful acquisition of Florida City Gas, deliver on our 2024 EPS and capital guidance ranges, and position the company to achieve the significant growth embedded in our 2025 EPS guidance, and through significant capital investment, proactive regulatory initiatives, and continued business transformation initiatives, put us on the path to achieve our longer-term capital and EPS targets.
Jeffrey Householder: With that, it is my pleasure to turn the call over to Jeff. Thank you, Lucia. Good morning, and thanks to all of you for joining our call today. 2024 was a pivotal year for Chesapeake Utilities. We were persistent in our mission to deliver energy that makes life better for the communities we serve, and we successfully positioned the company to be a much larger, more scalable enterprise. Our theme for this year's annual report, Delivering with Purpose, Reaching New Heights, isn't just a marketing phrase, it's an embodiment of how we operate each and every day at all levels across the company.
Speaker Change: And energy conservation programs.
Speaker Change: We also implemented one CX our companywide.
Speaker Change: Customer billing system rollout, a new safety data management system and made a number of organizational and process improvements related to our customer care construction services technology and risk management areas and finally as Beth will discuss later, we accelerated the return to our target capital structure and completed several.
Jeff Householder: As I mentioned at the start of this call, our theme for the year is Delivering with Purpose, Reaching New Heights. We have an exciting year ahead of us, new goals to meet, including at least 14% adjusted EPS growth, and new opportunities to explore. We'll be reaching new heights in 2025, and I look forward to updating you on our progress throughout the year and sharing our successes a year from now.
Jeffrey Householder: So, let me start by telling you how we delivered in 2024. Turning to slide six, adjusted diluted earnings per share for the fourth quarter was $1.63, bringing our full year of 2024 EPS to $5.39 at the midpoint of our guidance range. This is a significant accomplishment in light of our efforts to integrate the FCG acquisition, warmer than normal temperatures, our decision to accelerate the return to our target capital structure, and a delay in the finalization of our Maryland rate case. As I'll go into more detail shortly, we invested $356 million of capital in 2024, which is a record level of capital investment, and at the upper end of our annual guidance range of $300 to $360 million, and well on the way toward our five-year capital forecast of $1.5 to $1.8 billion through 2028.
Speaker Change: All key financings.
Speaker Change: Starting on slide seven at this time a year ago. The company was embarking on its next phase of transformation. We have just completed the acquisition of Florida City gas a transaction that grew our asset base by nearly 50%.
Speaker Change: What excited US about this transaction was the ability to leverage our capabilities to meet the growing demand in <unk> markets and the need for additional natural gas supply in southern Florida.
Operator: With that, we'll take your questions. Operator? Thank you.
Operator: Ladies and gentlemen, at this time, the floor is open for your questions. If you do have a question or comment, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. Again, we ask that you please pick up your handset when posing your questions to provide optimal sound quality.
Speaker Change: One year later I am pleased to report the significant progress we've made our FC G operations contributed nearly $89 million in 2024 adjusted gross margin.
Speaker Change: We filed and received approval for nine growth capital projects related to the <unk> service area.
Chris Ellinghaus: We'll go first this morning to Chris Ellinghaus at Siebert William Schenck. Chris, please go ahead. Hey, good morning, everybody. Jeff.
Speaker Change: And our investment in reliability improvements under the safe program generated $3 $8 million in full year adjusted gross margin.
Jeff Householder: All the executive orders that have been coming out, particularly things like tariffs and just energy policy in general, have you got any thoughts on, you know, what you've seen and does it change anything in terms of your strategic thinking? Good morning. It doesn't, as you might imagine, have been actively reviewing and trying to understand what those executive orders are doing. You know, we're generally encouraged, on one hand, that we're going to be able to put projects into service, hopefully a little quicker than we might have otherwise anticipated. We'll see if that actually happens. It's certainly, you know, a little bit chaotic at this point, trying to think your way through what is occurring there.
Speaker Change: Most importantly, 93% of <unk> teammates that transitioned to Chesapeake utilities are still with the company today, which I hope indicates their satisfaction with the transition and integration efforts and a recognition of the commitment we made to continue to invest in the <unk> system.
Jeffrey Householder: As Jim will discuss in more detail, we were very active on the regulatory front, including filing three rate cases, two depreciation studies, receiving approval for 12 projects filed with the Florida Public Service Commission, and completing additional regulatory filings related to consolidating and expanding our infrastructure reliability and energy conservation program. We also implemented 1CX, our company-wide SAP customer billing system, rolled out a new safety data management system, and made a number of organizational and process improvements related to our customer care, construction services, technology, and risk management areas. And finally, as Beth will discuss later, we accelerated the return to our target capital structure and completed several key finances.
Speaker Change: And many companies integrating such a large acquisition would have been the only major priority for the year.
Speaker Change: The Big Utilities. This acquisition law STAAR strategic intentions for 2024 integrate FC G operationally as well as culturally and move forward as one company to sustained top quartile performance by advancing the three pillars of our core business strategy.
Speaker Change: One prudently allocate capital to proactively manage our regulatory strategy and three continually transform our business operations as shown on slide eight.
Jeffrey Householder: Starting on slide 7, at this time a year ago, the company was embarking on its next phase of transformation. We had just completed the acquisition of Florida City Gas, a transaction that grew our asset base by nearly 50%. What excited us about this transaction was the ability to leverage our capabilities to meet the growing demand in FCG's markets and the need for additional natural gas supply in southern Florida. One year later, I'm pleased to report the significant progress we've made. Our FCG operations contributed nearly $89 million in 2024 adjusted gross margin. We filed and received approval for nine growth capital projects related to the FCG service area, and our investment and reliability improvements under the SAFE program generated $3.8 million in full-year adjusted gross margin.
Jim Moriarty: But we've got lots of people that are on top of that, including Jim Moriarty, who's been following all of those for us fairly closely. So, Jim, you might want to jump in here. Yeah, good morning, Chris. I think what I would say is that, you know, the tone and content of the executive orders are very favorable to the industry, energy generally, natural gas specifically. And so we see a lot of opportunity there. I think there's an attempt to rebalance power between the executive branch, the legislative branch, and the federal agency. We've been able to work with everybody and we take seriously our responsibilities to each of those agencies and our elected members.
Speaker Change: On slide nine let me start with the foundation that underlies our core business strategy operational excellence in our high growth service areas.
Speaker Change: Likely heard us say that we are the beneficiaries of our geography. This is a privilege that we take very seriously as our customers rely on us to operate safely fuel their homes and power of our businesses every single day.
Speaker Change: Throughout 2024, we continued to see rapid growth across our regulated businesses and Delmarva, we added over 4000, new customers driving residential growth by 4%.
Speaker Change: Marshall growth by one 6% over 2023 levels, we continue to see population growth in Delaware and Maryland as new communities are developed to serve demand from retirees family is looking for additional space, while remaining close to the metro areas of Philadelphia, Baltimore, and Washington D C.
Jim Moriarty: So we see it overall as positive.
Jeff Householder: Yeah, just to cap that off, I mean, our strategy has not changed. We're trying to deploy capital and pretty effectively doing that, frankly. I see a lot of opportunities in the future to continue to do that. We have a very proactive regulatory agenda, as we mentioned earlier, and we've been very successful along those lines. And we continue to transform the company to make sure that our administrative capabilities keep pace with the growth. And so not to sound like a broken record, but it's kind of those three things that we're focused on. And at this point, nothing in the executive orders or what we see coming down the road today is going to keep us from doing any of this.
Jeffrey Householder: Most importantly, 93% of FCG teammates that transitioned to Chesapeake Utilities are still with the company today, which I hope indicates their satisfaction with the transition and integration efforts and a recognition of the commitment we made to continue to invest in the FCG system. In many companies, integrating such a large acquisition would have been the only major priority for the year. At Chesapeake Utilities, this acquisition launched our strategic intentions for 2024. Integrate FCG, operationally as well as culturally, and move forward as one company to sustain top quartile performance by advancing the three pillars of our core business strategy.
Speaker Change: In Florida. The story is largely the same above average customer growth and demand for natural gas enabled us to expand distribution service, our existing areas and invest in our newly acquired FCB service areas across the state we added 6700, new customers driving residential and commercial growth.
Speaker Change: A three 9% and one 2% respectively.
Speaker Change: Florida continues to lead the nation in population growth in 2020 for Florida was number one for net in migration and new resident net income growth, which drives demand for new communities across the state throughout 2024, we saw growth in many areas of Florida served by our distribution system.
Chris Ellinghaus: Okay, Jeff, you're a Florida expert. What? Do you have any? thoughts about the Florida Supreme Court oral argument from December. on the RSAM issue, yeah. Um I'm sure. I have all kinds of thoughts on that.
Jeffrey Householder: One, prudently allocate capital. Two, proactively manage our regulatory strategy. And three, continually transform our business operations, as shown on slide eight. On slide 9, let me start with the foundation that underlies our core business strategy, operational excellence in our high-growth service area. You've likely heard us say that we are the beneficiaries of our geography. This is a privilege that we take very seriously, as our customers rely on us to operate safely, fuel their homes, and power their businesses every single day. Throughout 2024, we continue to see rapid growth across our regulated business. In Delmarva, we added over 4,000 new customers, driving residential growth by 4% and commercial growth by 1.6% over 2023 levels.
Speaker Change: We've also completed the next phase of expansion in Newbury and broke ground on projects in St cloud like whales like Matti plant City, New Smyrna Beach in Boynton Beach.
Speaker Change: This organic growth is the core driver of our record level of capital investment in 2024 as shown on slide 10.
Jeff Householder: I will tell you, though, that they, I don't believe, are going to be particularly instructive for us moving forward. The RSAM was an interesting mechanism. We filed a day or two ago a sort of a typical depreciation study for Florida City Gas and asked for a little bit of an accelerated treatment on the excess depreciation, which would in fact deal with that additional $25 or $26 million that was left over when the first tranche of RSAM was completed. And so RSAM for us, we completed the initial tranche of RSAM in 2024. The piece that City Gas had in place as part of the next era rate case that they did.
Speaker Change: As I mentioned earlier, we invested $356 million of capital throughout 2020 for approximately 90% of that was spent on our regulated businesses as we invested in our Florida, and Delmarva transmission and distribution systems and upgraded technology across the enterprise our regulated capital.
Speaker Change: Spend included $83 million of investment in the guard safe and SPP infrastructure reliability programs to upgrade and strengthen our system, enabling us to maintain safe and consistent energy delivery. These programs operate under approved regulatory mechanisms that provide for immediate recovery for.
Jeffrey Householder: We continue to see population growth in Delaware and Maryland as new communities are developed to serve demand from retirees and families looking for additional space while remaining close to the metro areas of Philadelphia, Baltimore, and Washington, D.C. In Florida, the story is largely the same. Above average customer growth and demand for natural gas enabled us to expand distribution service in our existing areas and invest in our newly acquired FCG service area. Across the state, we added 6,700 new customers, driving residential and commercial growth of 3.9% and 1.2% respectively. Florida continues to lead the nation in population growth.
Speaker Change: Investments driving a 2024 adjusted gross margin contribution of nearly $9 million.
Speaker Change: Our accelerated capital deployment throughout 2024, and continued customer demand growth have set us up for an increased level of capital spend in 2025.
Jeff Householder: And we moved on to a more traditional depreciation study, which we find compelling for us in many ways. And I think the commission will find the same way. And so, again, it accelerates what normally is kind of a five-year depreciation of that excess depreciation amount to two years. Which would be a great thing for us if we can get it. And we believe that we'll be successful there. So I'm not to be flippant about the Supreme Court notion.
Speaker Change: As shown on slide 11, we are initiating 2025 capital expenditure guidance of $325 million to $375 million driven primarily by investments in our natural gas transmission and distribution businesses.
Jeffrey Householder: In 2024, Florida was number one for net in-migration and new resident net income growth, which drives demand for new communities across the state. Throughout 2024, we saw growth in many areas of Florida served by our distribution. We've also completed the next phase of expansion in Newberry and broke ground on projects in St. Cloud, like Wales, like Matty, Plant City, New Smyrna Beach, and Boynton. This organic growth is the core driver of our record level of capital investment in 2024, as shown on slide 10. As I mentioned earlier, we invested $356 million of capital throughout 2024.
Speaker Change: As you can see on slide 12 construction continues on a number of transportation infrastructure projects to serve new communities across our service areas.
Jim Moriarty: And Jim, I don't know, you may want to weigh in on that as well. Yeah. I mean, I think the court is seriously looking at the statute and what the agency did and the support that was in the four corners of the decision.
Speaker Change: There are two project updates I'd like to highlight specifically and.
Speaker Change: In January we were pleased to receive FERC approval for our $80 million worse to resiliency upgrade LNG storage project later on this call Jim will provide additional detail on our construction progress.
Jim Moriarty: So, I think if the commission were, I'm sorry, if the court were to remand it, it would probably be to allow the commission another opportunity to address it. which we've kind of done here going forward.
Speaker Change: And in February we received approval from the Florida Public Service Commission for our Miami Inner loop series of projects followed late last year totaling approximately $40 million. These transportation projects will expand natural gas infrastructure and support future growth across <unk> distribution system in Miami.
Jeffrey Householder: Approximately 90% of that was spent on our regulated businesses, as we invested in our Florida and Delmarva transmission and distribution systems, and upgraded technology across the enterprise. Our regulated capital spend included $83 million of investment in the Guard, Safe, and SPP infrastructure reliability programs to upgrade and strengthen our system, enabling us to maintain safe and consistent energy delivery. These programs operate under approved regulatory mechanisms that provide for immediate recovery for investments, driving a 2024 adjusted gross margin contribution of nearly $9 million. For more information visit www.FEMA.gov Our accelerated capital deployment throughout 2024 and continued customer and demand growth have set us up for an increased level of capital spend in 2025.
Chris Ellinghaus: Okay, Jim, let me ask you another question. With the FERC decision on the LNG project, they had the error, and once you had filed for clarification, they corrected that very quickly, but it seemed like it took a long time for you to make that filing, which seemed kind of peculiar to me. Is there a reason for that? No, I think if you look at the calendar, we read the decision carefully when we got it and then almost immediately filed for that clarification. We also were weighing the pending rehearing period, which as you know is 30 days from the decision, and we're gratified that no rehearings or protests were filed.
Speaker Change: The investments underway will be a meaningful contributor to our 2025 performance generating at least $22 million of incremental margin in 2025.
Speaker Change: Given this increasing level of capital we are reaffirming our five year capital investment plan of one five to $1 $8 billion as shown on slide 13, with the addition of the Miami internally projects. We have now identified at least one $4 billion of this total.
Speaker Change: This amount more than 70% requires no additional regulatory approval.
Jim Moriarty: So we're now in the next phase, but we're very thankful to the Commission for issuing.
Speaker Change: Before I turn the call over to Beth I'd like to give an update on our business transformation efforts as shown on slide 14.
Jeffrey Householder: As shown on slide 11, we're initiating 2025 capital expenditure guidance of $325 to $375 million, driven primarily by investments in our natural gas transmission and distribution. As you can see on slide 12, construction continues on a number of transportation infrastructure projects to serve new communities across our services.
Beth Cooper: Okay, and one last thing, Beth, can you sort of give us some color on weather for the quarter and how that influenced results? in terms of coming up for the fourth quarter and how that impacted results overall. Yeah, I was particularly thinking about propane because it was kind of a relatively mild quarter, so I just wanted to get your thoughts. Sure. It was, Chris, as we started the quarter, I will tell you that as we, you know, as we ended up getting closer to the end of the year, there was a little bit more favorable weather, you know, from a propane standpoint that positively impacted us.
This third pillar in our growth strategy ensures that we are positioning the company to operate effectively as we rapidly scale.
Speaker Change: The acquisition of FC G and the implementation of our one CX customer billing system in 2024 provided us an opportunity to assess our internal organizational structures and identify improvement opportunities to better operate under our one company approach. This resulted in the consolidation centralization.
Jeffrey Householder: There are two project updates I'd like to highlight specifically. In January, we were pleased to receive FERC approval for our $80 million Worcester Resiliency Upgrade LNG Storage Project. Later on this call, Jim will provide additional detail on our construction progress. In February, we received approval from the Florida Public Service Commission for our Miami Interloop series of projects filed late last year. Totaling approximately $40 million, these transportation projects will expand natural gas infrastructure and support future growth across FCG's distribution system in Miami. The investments underway will be a meaningful contributor to our 2025 performance, generating at least $22 million of incremental margin in 2025.
Speaker Change: And standardization of a number of functions, including customer care construction services enterprise health and safety and business information systems.
Speaker Change: However, this is just the beginning looking ahead to 2025, we have a number of initiatives underway to continue those transformational work, we are preparing to transition our <unk> operations to the new SAP customer billing system, which is also driven a number of related process standardization efforts.
Beth Cooper: So not certainly as much as, you know, we've seen as we're coming into the first quarter here. But there was, you know, the last two weeks of December were, you know, were favorable in that regard.
Chris Ellinghaus: Okay, thank you guys, appreciate the color.
Speaker Change: We're also in the early stages of assessing an enterprise resource planning or ERP implementation, which represents a multi year overhaul of a number of cross functional systems, including accounting finance procurement asset management and human resources. Among others. We're also strengthening our technology systems and <unk>.
Operator: Thank you for your questions, Chris, appreciate it.
Operator: Thank you.
Dylan Lipner: We'll go next now to Dylan Lipner of Ladenburg. Morning, Dylan. Hey, good morning.
Dylan Lipner: Congrats on a great quarter. All my questions were answered. I thought I hung up on it, but looking forward to speaking to you guys soon. That sounds great. Thank you, Dylan. Thank you.
Jeffrey Householder: Given this increasing level of capital, we are reaffirming our five-year capital investment plan of $1.5 to $1.8 billion, as shown on slide 13. With the addition of the Miami Interleague projects, we have now identified at least $1.4 billion of this total, and of this amount, more than 70% requires no additional regulatory approvals.
Speaker Change: <unk> through investments in operational programs artificial intelligence and cyber security.
Operator: And again, ladies and gentlemen, just a quick reminder, star one, please, for any further questions this morning, and we'll pause for just one.
Speaker Change: We will continue empowering our teammates to identify and implement operational changes that improve the accuracy efficiency and effectiveness of their work.
Speaker Change: Ensuring seamless operations, whether we are a $3 billion or $6 billion company.
Jeffrey Householder: Before I turn the call over to Beth, I'd like to give an update on our business transformation efforts as shown on slide 14. This third pillar in our growth strategy ensures that we are positioning the company to operate effectively as we rapidly scale. The acquisition of FCG and the implementation of our 1CX customer billing system in 2024 provided us an opportunity to assess our internal organizational structures and identify improvement opportunities to better operate under our one-company approach. This resulted in the consolidation, centralization, and standardization of a number of functions, including customer care, construction services, enterprise health and safety, and business information.
Jeff Householder: Ladies and gentlemen, I have no further questions coming in this morning. Mr. Householder, I'd like to turn the conference back to you, sir, for any closing comments.
Beth: With that I'll now turn the call to Beth to discuss our financial results in more detail.
Jeff Householder: Thank you, and thank all of you for joining our call this morning, and we certainly look forward to seeing many of you at our Investor Day that's coming up in a couple of weeks down in Cape Canaveral. We'll try to showcase certainly things that are going on across the company, but there's a lot happening in Florida these days, and so we'll be able to talk about that in more detail.
Beth: Thanks, Jeff and good morning, everyone. Our full year results as shown on slide 15 demonstrated exceptional operational and financial performance 2024, adjusted gross margin was $567 million up 25% from 2023.
Beth: Driven by the addition of Florida City gas.
Operator: Thanks again, and goodbye.
Operator: Thank you, Mr. Householder.
Beth: Infrastructure expansion than replacement distribution growth and our unregulated business portfolios performance.
Operator: Again, ladies and gentlemen, this does conclude Chesapeake Utility Corporation's fourth quarter and full year 2024 earnings call.
Operator: Again, thanks so much for joining us, everyone, and we wish you all a great day.
Beth: This strong margin growth coupled with operational efficiency drove significant growth in adjusted net income up 24% to approximately $122 million for full year 2024.
Jeffrey Householder: However, this is just the beginning. Looking ahead to 2025, we have a number of initiatives underway to continue this transformational work. We are preparing to transition our FCG operations to the new SAP Customer Billing System, which has also driven a number of related process standardizations. We're also in the early stages of assessing an Enterprise Resource Planning, or ERP, implementation, which represents a multi-year overhaul of a number of cross-functional systems, including accounting, finance, procurement, asset management, and human resources, among others. We're also strengthening our technology systems and security through investments in operational programs, artificial intelligence, and cybersecurity.
With this performance we were pleased to generate full year adjusted earnings per share of $5 39.
Speaker Change: Up eight cents over full year 2023, and in line with expectations as Jeff touched on this is such a significant accomplishment undertaking the transaction in the midst of a higher interest rate environment and pressure on utility valuations and then delivering squarely.
Speaker Change: In the middle of the guidance range. Despite the factors that Jeff mentioned is truly a testament to the conviction of our team to deliver.
Jeffrey Householder: We will continue empowering our teammates to identify and implement operational changes that improve the accuracy, efficiency, and effectiveness of their work. ensuring seamless operations, whether we are a $3 billion or a $6 billion company.
Speaker Change: I'll now turn to slide 16, and highlight some of the key drivers of our full year 2024 adjusted diluted EPS.
Speaker Change: Florida City gas generated a gross margin contribution of $2 88 per share with the first full year as a member of the Chesapeake family. Our regulated operations generated 61 cents of incremental EPS for the year and our unregulated operations.
Beth Cooper: With that, I'll now turn the call to Beth to discuss our financial results in more detail. Thanks, Jeff, and good morning, everyone. Our full-year results, as shown on slide 15, demonstrate exceptional operational and financial performance. 2024 adjusted gross margin was $567 million, up 25% from 2023, driven by the addition of Florida City Gas, infrastructure expansions and replacements, distribution growth, and our unregulated business portfolio's performance. This strong margin growth, coupled with operational efficiencies, drove significant growth in adjusted net income of 24% to approximately $122 million for full year 2024. With this performance, we were pleased to generate full-year adjusted earnings per share of $5.39, up 8 cents over full year 2023, and in line with expectations.
Speaker Change: <unk> generated an additional 19 per share.
Speaker Change: Increased operating expenses, partially offset this margin growth by a $1 52 per share. These expense increases were driven by the addition of Florida City gas higher insurance facilities in vehicle expense increased depreciation and amortization and the.
Speaker Change: Of a one time state tax benefit recorded in 2023.
Speaker Change: We also incurred increased interest expense of $1 15 per share and 96 cents per share of dilution due to increased shares outstanding driven by the financing of the Florida City gas acquisition and accelerating toward our target capital structure moves.
Speaker Change: Moving to slide 17, I'll provide additional detail on our regulated business performance adjusted gross margin for our regulated energy segment was approximately $439 million in 2024.
Beth Cooper: As Jeff touched on, this is such a significant accomplishment. Undertaking the transaction in the midst of a higher interest rate environment and pressure on utility valuations and then delivering squarely in the middle of the guidance range, despite the factors that Jeff mentioned, is truly a testament to the conviction of our team to deliver.
Speaker Change: $106 million or 32% from full year 2023.
Speaker Change: Excluding transaction and transition costs related to Florida City gas operating income also grew substantially up 47% to $200 million.
Beth Cooper: I'll now turn to slide 16 and highlight some of the key drivers of our full year 2024 adjusted diluted EPS. Florida City Gas generated a gross margin contribution of $2.88 per share with the first full year as a member of the Chesapeake family. Our regulated operations generated $0.61 of incremental EPS for the year and our unregulated operations generated an additional $0.19 per share. Increased operating expenses partially offset this margin growth by $1.52 per share. These expense increases were driven by the addition of Florida City gas, higher insurance, facilities and vehicle expense, increased depreciation and amortization, and the absence of a one-time state tax benefit recorded in 2023.
Speaker Change: This growth included.
Speaker Change: <unk> earnings contribution from Florida City gas incremental margin from reliability infrastructure investments organic growth in our natural gas distribution operations incremental margin from transmission service expansions and increases related to regulatory mechanisms and rate cases include.
Speaker Change: <unk> interim rates for Delaware and FP electric.
Speaker Change: As shown on slide 18, our unregulated energy segment also delivered exceptional growth relative to full year 2023, with adjusted gross margin up 6% to approximately $128 million and operating income up 30% to $32 million.
Speaker Change: Growing demand for our Marlin virtual pipeline services drove four $5 million of higher adjusted gross margin, while our sharp propane retail operations drove an additional $2 $5 million also in terms of adjusted gross margin.
Beth Cooper: We also incurred increased interest expense of $1.15 per share and $0.96 per share of dilution due to increased shares outstanding, driven by the financing of the Florida City Gas acquisition and accelerating toward our target capital structure.
Speaker Change: I'll now shift to slide 19 to review, our capital structure and financing plan.
Speaker Change: Throughout 2024, we maintained a strong balance sheet adequate liquidity and access to competitively priced capital, while accelerating our return to our capital structure and preparing the business for increasing levels of capital investment.
Beth Cooper: Moving to slide 17, I'll provide additional detail on our regulated business performance. Adjusted gross margin for our regulated energy segment was approximately $439 million in 2024, up $106 million or 32% from full year 2023. Excluding transaction and transition costs related to Florida City Gas, operating income also grew substantially, up 47% to $200 million.
Speaker Change: Our liquidity remains strong with total available liquidity of $505 million at the end of 2024, and we ended the year with an equity to total capitalization ratio of 48, 4% up from 47% at the end of 2012.
Beth Cooper: This growth included strong earnings contribution from Florida City Gas, incremental margin from reliability infrastructure investments, organic growth in our natural gas distribution operations, incremental margin from transmission service expansions, and increases related to regulatory mechanisms and rate cases, including interim rates for Delaware and FPU Electric. As shown on slide 18, our unregulated energy segment also delivered exceptional growth relative to full year 2023, with adjusted gross margin up 6% to approximately $128 million, and operating income up 30% to $32 million. Growing demand for our Marlin Virtual Pipeline services drove $4.5 million of higher adjusted gross margin, while our Sharp Propane retail operations drove an additional $2.5 million, also in terms of adjusted gross margin.
Speaker Change: <unk> three.
Speaker Change: Throughout the year, we issued over $81 million in equity primarily via our existing equity programs, including the dividend reinvestment and direct stock purchase plan.
We also established a $100 million at the market equity issuance in the fourth quarter to provide cost effective equity issuance optionality in 2025 and 2026.
Speaker Change: You will see us drive to 50% equity to total capitalization by the end of this year, while reaffirming our 2025 EPS guidance range.
Speaker Change: On the long term debt side, we successfully consummated a $100 million long term debt placement at a five 2% coupon and the latter part of 2024.
Speaker Change: Finally, we have previously committed to pursue a credit rating and we have made substantial progress and we look forward to providing additional updates in the coming weeks.
Beth Cooper: I'll now shift to slide 19 to review our Capital Structure and Financing Plan. Throughout 2024, we maintained a strong balance sheet, adequate liquidity, and access to competitively priced capital, while accelerating our return to our capital structure and preparing the business for increasing levels of capital investment. Our liquidity remained strong, with total available liquidity of $505 million at the end of 2024, and we ended the year with an equity to total capitalization ratio of 48.4%, up from 47% at the end of 2023. Throughout the year, we issued over $81 million in equity, primarily via our existing equity programs, including the Dividend Reinvestment and Direct Stock Purchase Plan.
Speaker Change: All of these efforts along with our three pronged financing strategy to successfully finance, our future growth and to ensure that we can capitalize on the capital investments inherent in our guidance.
Speaker Change: Slide 20 shows our strong history of consistent dividend growth of approximately 9%.
Speaker Change: Our dividend is a key component of our balanced capital allocation strategy and our current payout ratio is designed to return value to shareholders. While also allowing for earnings reinvestment to fund future growth capital investment.
Speaker Change: <unk> 24 is certainly indicative of this strategy annual dividend growth of eight 5%, while reinvesting approximately 55% of our earnings back into the company.
Speaker Change: We are fortunate that our dividend strategy is not an either or but a.
Beth Cooper: We also established a $100 million at-the-market equity issuance in the fourth quarter to provide cost-effective equity issuance optionality in 2025 and 2026.
Speaker Change: Both proposition, we can grow the dividend and also reinvest significant earnings back into the company, enabling our investors to benefit from both the long term top quartile earnings and dividend growth.
Beth Cooper: You will see us drive to 50% equity to total capitalization by the end of this year while reaffirming our 2025 EPS guidance range. On the long-term debt side, we successfully consummated a $100 million long-term debt placement at a 5.2% coupon in the latter part of 2024.
Speaker Change: Speaking of earnings growth Slide 21 demonstrates our consistent earnings per share performance with our 'twenty 'twenty EPS guidance range, reflecting a 10 year CAGR of approximately eight 5%.
Speaker Change: Our 2024 performance again was inline with expectations and we are pleased to continue reaffirming our 2025 guidance of $6 15 to $6 35 per share, indicating a 16% one year EPS growth rate.
Beth Cooper: Finally, we have previously committed to pursue a credit rating and we have made substantial progress and we look forward to providing additional updates in the coming weeks. All of these efforts, along with our three-pronged financing strategy to successfully finance our future growth and to ensure that we can capitalize on the capital investments inherent in our guidance.
Speaker Change: Based on the guidance midpoint.
Speaker Change: This is twice as high as the top growth rates currently reflected in the industry. We recognize this is a significant opportunity to demonstrate our ability to execute on our targets and advance our growth strategy with that it's my pleasure to turn the call over to Jim.
Beth Cooper: Slide 20 shows our strong history of consistent dividend growth of approximately 9%. Our dividend is a key component of our balanced capital allocation strategy and our current target payout ratio is designed to return value to shareholders while also allowing for earnings reinvestment to fund future growth capital investment. 2024 is certainly indicative of this strategy. Annual dividend growth of 8.5 percent while reinvesting approximately 55 percent of our earnings back into the company. We are fortunate that our dividend strategy is not an either-or but a both proposition. We can grow the dividend and also reinvest significant earnings back into the company, enabling our investors to benefit from both the long-term top quartile earnings and dividend growth.
Jim Moriarty: Thank you Beth and good morning, everyone.
Speaker Change: As Jeff discussed earlier, our proactive regulatory agenda is our second fundamental growth driver.
Speaker Change: And I would like to share several updates in this area as shown on slide 22.
Speaker Change: For our Maryland jurisdiction in September 2024, we received approval for a $2 6 million dollar revenue increase.
Speaker Change: In November of 2024, we filed a phase III proceeding to determine is schedule for incorporating this increase into customer rates and a hearing will be held next month.
Speaker Change: Last August we filed a rate case in our Delaware jurisdiction.
Speaker Change: Hosing, a $12 $1 million rate increase and an ROE of 11, 5%.
Beth Cooper: Speaking of earnings growth, slide 21 demonstrates our consistent earnings per share performance with our 2028 EPS guidance range reflecting a 10-year CAGR of approximately 8.5%. Our 2024 performance, again, was in line with expectations, and we are pleased to continue reaffirming our 2025 guidance of $6.15 to $6.35 per share, indicating a 16% one-year EPS growth rate based on the guidance midpoint. This is twice as high as the top growth rates currently reflected in the industry. We recognize this is a significant opportunity to demonstrate our ability to execute on our targets and advance our growth strategy.
Speaker Change: We subsequently received interim rate relief of two and a half million dollars, which was effective in October of last year.
Speaker Change: On Monday February 24th we filed a second interim rate increase for $8 $3 million, while we continue to work on resolving the rate proceeding here.
Speaker Change: The hearing is currently scheduled for May.
Speaker Change: We also filed a rate case for our Florida Electric operations last August.
Speaker Change: Posing a $12 $6 million rate increase and.
Speaker Change: And an 11, 3% Roe.
Speaker Change: Interim rates of $1 $8 million were approved and went into effect November one of 2024.
Speaker Change: Last week, we received an initial recommendation from the Florida, PSC staff, indicating a $9 $9 million increase in rates.
Jim Moriarty: With that, it's my pleasure to turn the call over to Jim. Thank you, Beth, and good morning, everyone.
Speaker Change: Which is subject to PSC Commission review and approval.
Jim Moriarty: As Jeff discussed earlier, a proactive regulatory agenda is our second fundamental growth driver.
Speaker Change: And finally earlier this week, we filed an updated depreciation study for Florida City gas.
Jim Moriarty: And I would like to share several updates in this area, as shown on slide 22. for our Maryland jurisdiction. In September 2024, we received approval for a $2.6 million revenue increase. In November of 2024, we filed a Phase 2 proceeding to determine a schedule for incorporating this increase. into customer rating. The hearing will be held next month.
Speaker Change: Requesting approval of revised annual depreciation rates.
Speaker Change: As well as a reduction related to a reserve and balance that would be amortized over a two year period.
Speaker Change: This filing reflects our transition to a typical strategy for depreciation expense.
Speaker Change: Slide 23 provides an update on our eastern shore Wister resiliency upgrade and.
Speaker Change: $80 million liquefied natural gas storage project.
Jim Moriarty: Last August, we filed a raid case in our Delaware jurisdiction. opposing a $12.1 million rate increase. and an ROE of 11.5 percent. subsequently received interim rate. of two and a half million dollars. which was effective in October of last year. On Monday, February 24th, we filed a second interim rate increase for $8.3 million while we continue to work on resolving the rate proceedings. The hearing is currently scheduled for May.
Speaker Change: And to support growth and resiliency at the southern end of our Delmarva system.
Speaker Change: As Jeff mentioned, we were pleased to receive FERC approval of the project in January of this year.
Speaker Change: Enabling us to remain on track with our construction schedule.
Speaker Change: The storage tanks are complete and are currently on their way for delivery to our service area.
Speaker Change: We continue to expect the project to be in service in the third quarter of 2025, just in time for next year's Winter peak.
Speaker Change: Turning now to slide 24, I would like to provide a recap on our community engagement efforts throughout 2024.
Jim Moriarty: We also filed a rate case for our Florida electric operations last August. opposing a $12.6 million rate increase. and an 11.3% ROE. Interim rates of $1.8 million were approved and went into effect November 1 of 2024. Last week, we received an initial recommendation. from the Florida PSC staff, indicating a $9.9 billion increase in rates. which is subject to PSC commission review and approval.
Speaker Change: I am continually impressed with the dedication of our teammates.
Speaker Change: Who shared their time and talents across nearly 7000 hours of volunteerism during the year.
Speaker Change: As a company. We also provided $575000 in charitable note donations and community sponsorships to over 75 organizations within our four focus areas of giving say.
Jim Moriarty: And finally, earlier this week, we filed an updated depreciation study for Florida City Gas. requesting approval of revised annual depreciation.
Speaker Change: Safety and health community development.
Speaker Change: Vacation and environmental stewardship.
Speaker Change: Delivering excellence for all stakeholders is the foundation for long term growth and success.
Jim Moriarty: as well as a reduction related to a reserve imbalance that would be amortized over a two-year period. This filing reflects our transition to a typical strategy for depreciation expenses.
Speaker Change: Enabling us to continue serving our customers and driving value for our stakeholders for years to come.
Speaker Change: So that no one is left behind.
Jeff Householder: With that I will turn the call to Jeff for concluding remarks.
Jim Moriarty: Slide 23 provides an update on our Eastern Shore Worcester resiliency upgrade.
Jeff Householder: Thanks, Jim 2024 has been an exciting turning point for the company and I believe we have successfully demonstrated our ability to integrate the meaningful acquisition of Florida City gas deliver on our 2024, EPS and capital guidance ranges.
Jim Moriarty: an $80 million liquefied natural gas storage project designed to support growth and resiliency at the southern end of our Delmarva system. As Jeff mentioned, we were pleased to receive FERC approval of the project in January of this year. enabling us to remain on track with our construction schedule. Storage tanks are complete and are currently on their way for delivery to our service area. We continue to expect the project to be in service in the third quarter of 2025, just in time for next year's winter.
Jeff Householder: And positioning the company to achieve the significant growth embedded in our 2025 EPS guidance.
Jeff Householder: And through significant capital investment proactive regulatory initiatives and continued business transformation initiatives put us on the path to achieve our longer term capital and EPS targets.
Jeff Householder: As I mentioned at the start of this call our theme for the year is delivering with purpose, reaching new heights, we have an exciting year ahead of us new goals to meet including at least 14% adjusted EPS growth and new opportunities to explore will be reaching new heights in 2025, and I look forward to updating you on our progress.
Jim Moriarty: Turning now to slide 24, I would like to provide a recap on our community engagement efforts throughout 2020. I am continually impressed with the dedication of our team. who shared their time and talent. across nearly 7,000 hours of volunteerism during the year. As a company, we also provided $575,000 in charitable donations. and Community Sponsorships to over 75 organizations within our four focus areas of giving. Safety and Health, Community Development, Education and Environmental Stewardship.
Jeff Householder: Throughout the year and sharing our successes a year from now.
Jeff Householder: With that we'll take your questions operator.
Speaker Change: Thank you ladies and gentlemen at this time the floor is open for your questions. If you do have a question or comment. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from the queue by pressing star too again, we ask that you. Please pick up your handset when posing your questions to provide optimal sound quality.
Jim Moriarty: Delivering excellence for all stakeholders is the foundation for long-term growth and success. enabling us to continue serving our customers and driving value for our stakeholders for years to come. so that no one is left behind.
Chris: First this morning, too Chris selling house at Siebert Williams Schenk, Chris. Please go ahead.
Hey, good morning, everybody.
Chris: Mark.
Chris: Jeff.
Speaker Change: All the executive orders that have been coming out, particularly things like tariffs and just energy policy in general have you got any thoughts.
Jeffrey Householder: With that, I will turn the call to Jeff for concluding remarks. Thanks, Jim. 2024 has been an exciting turning point for the company. And I believe we've successfully demonstrated our ability to integrate the meaningful acquisition of Florida City Gas, deliver on our 2024 EPS and capital guidance ranges, and position the company to achieve the significant growth embedded in our 2025 EPS guidance, and through significant capital investment, proactive regulatory initiatives and continued business transformation initiatives, put us on the path to achieve our longer term capital EPS target.
Speaker Change: What you seen in does it change anything in terms of your strategic thinking.
Speaker Change: Good morning, It doesn't we've as you might imagine have been.
Speaker Change: [laughter] actively reviewing and trying to understand what those executive orders are.
Speaker Change: <unk> are doing.
Speaker Change: <unk>.
Speaker Change: We're generally encouraged.
Speaker Change: On one hand that we're going to be able to.
Speaker Change: Put projects into service, a hopefully a little quicker than we might have otherwise anticipated, we'll see if that actually happens.
Speaker Change: No.
Jeffrey Householder: As I mentioned at the start of this call, our theme for the year is delivering with purpose, reaching new heights. We have an exciting year ahead of us, new goals to meet, including at least 14% adjusted EPS growth, and new opportunities to explore. We'll be reaching new heights in 2025, and I look forward to updating you on our progress throughout the year and sharing our successes a year from now.
Speaker Change: It's certainly a little bit.
Speaker Change: Chaotic at this point trying to think your way through what is occurring there, but we've got lots of people that are on top of that including Jim Moriarty, who has been following all of those for us fairly closely so Jeremy you might want to jump in here Yeah. Good morning, Chris I think what I would say is that the.
Jeremy: Tone and content of the executive orders are very.
Operator: With that, we'll take your questions.
Speaker Change: Favorable.
Operator: Operator? Thank you, ladies and gentlemen. At this time, the floor is open for your questions. If you do have a question or comment, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. Again, we ask that you please pick up your handset when posing your questions to provide...
Speaker Change: <unk>.
Speaker Change: The industry energy generally natural gas specifically.
Speaker Change: So we see a lot of opportunity there I think there is an attempt to rebalance power between the executive branch the Legislative branch and the federal agencies.
Speaker Change: We've been able to work with everybody and.
Christopher Ellinghaus: We'll go first this morning to Chris Ellinghaus at Siebert William Schenck. Hey, good morning, everybody.
Speaker Change: And we take seriously our responsibilities to each of those agencies and our elected members.
Speaker Change: So we see it overall is positive.
Christopher Ellinghaus: Jeff All the executive orders that have been coming out, particularly things like tariffs and just energy policy in general, have you got any thoughts on, you know, what you've seen and does it change anything in terms of your strategic thinking?
Speaker Change: Okay, and just to add to that.
Speaker Change: I mean, our strategy has not changed we are trying to deploy capital pretty effectively doing that frankly.
Speaker Change: See lot of opportunities in the future to continue to do that.
Speaker Change: We have a very proactive regulatory agenda as we mentioned earlier, we've been very successful along those lines and we continue to transform the company to make sure that our administrative capabilities.
Jeffrey Householder: Good morning. It doesn't, as you might imagine, have been actively reviewing and trying to understand what those executive orders are doing. We're generally encouraged, on one hand, that we're going to be able to put projects into service, hopefully a little quicker than we might have otherwise anticipated. We'll see if that actually happens. It's certainly a little bit chaotic at this point, trying to think your way through what is occurring there.
Speaker Change: Keep pace with the growth and so not to sound like a broken record, but it's kind of those three things that we're focused on at this point nothing in the executive orders or what we see coming down the road today.
Speaker Change: Is going to.
Speaker Change: Keep us from doing any of those things.
Jeff Householder: Okay, Jeff you're a Florida expert.
Speaker Change: What.
Speaker Change: Do you have any.
Speaker Change: Thoughts about the <unk>.
Speaker Change: Florida Supreme Court.
Jim Moriarty: But we've got lots of people that are on top of that, including Jim Moriarty, who's been following all of those for us fairly closely. So, Jim, you might want to jump in here. Yeah, good morning, Chris. I think what I would say is that the tone and content of the executive orders are very favorable to the industry, energy generally, natural gas specifically. And so we see a lot of opportunity there. I think there's an attempt to rebalance power between Executive Branch, the Legislative Branch, and Federal Agency. We've been able to work with everybody. and we take seriously our responsibilities to each of those agencies and our elected So we see it overall as positive.
Speaker Change: Oral argument from December.
Speaker Change: On the our Sam issue, yes.
Speaker Change:
Speaker Change: Sure.
Speaker Change: All kinds of thoughts on that I will tell you, though that the I don't believe are going to be.
Speaker Change: Particularly instructive for us moving forward.
Speaker Change: The <unk> was an interesting mechanism.
Speaker Change: We filed a day or two ago, a sort of a typical depreciation study for Florida City gas.
Speaker Change: I ask for a little bit of an accelerated treatment on the excess depreciation which would in fact deal with that additional 25% or $26 million.
Jeffrey Householder: Just to cap that off, our strategy has not changed. We're trying to deploy capital and pretty effectively doing that, frankly. I see a lot of opportunities in the future to continue to do that. We have a very proactive regulatory agenda, as we mentioned earlier, and we've been very successful along those lines, and we continue to transform the company to make sure that our administrative capabilities keep pace with the growth. Not to sound like a broken record, but it's kind of those three things that we're focused on. At this point, nothing in the executive orders or what we see coming down the road today is going to keep us from doing any of this.
Speaker Change: That was left over when the first tranche of our Sam was completed and so our Sam for US we completed the initial tranche of our Sam in 2020 for.
Speaker Change: The visa city gas had employees as part of the Nextera rate case that they did.
Speaker Change: And we've moved on to a more traditional.
Speaker Change: Oh, depreciation study, which we find compelling for us in many ways.
Speaker Change: And I think the the.
Speaker Change: The commission will find the same way and so again it accelerates.
Speaker Change: Normally as kind of a five year depreciation of that excess depreciation amount to two years, which would be.
Jeffrey Householder: Jeff, you're a Florida expert. Thoughts about the Florida Supreme Court oral argument from December. on the RSAM issue, yeah. Um Sure, I have all kinds of thoughts on that. I will tell you, though, that they, I don't believe, are going to be particularly instructive for us moving forward. The RSAM was an interesting mechanism. We filed a day or two ago a sort of a typical depreciation study for Florida City Gas and asked for a little bit of an accelerated treatment on the excess depreciation which would in fact deal with that additional $25 or $26 million that was left over when the first tranche of RSAM was completed.
Speaker Change: A great thing for us if we can get it and we believe that we'll be successful there. So.
Speaker Change: Not to be flipping about the Supreme Court.
Jim Moriarty: Notion and Jim I don't know you may want to weigh in on that as well, yes, I mean, I think I think the.
Jim Moriarty: The court is seriously looking at the statute and what the agency did and the support that was in the four corners of the decision.
Jim Moriarty: So I think if the if the commission were I'm sorry, the court were to remanded it would probably be to allow the commission another opportunity to address the issue, which we've kind of done here going forward.
Jim Moriarty: Okay.
Jim Moriarty: Jim Let me ask you another question.
Jim Moriarty: With the FERC decision on the LNG project.
Jim Moriarty: The error and they once you had filed for <unk>.
Speaker Change: Clarification, they corrected that very quickly, but it seemed like it took a long time for you to make that filing which seems kind of peculiar to me is there a reason for that.
Speaker Change: No I think if you look at the calendar, we read the decision carefully when we got it and then almost immediately filed for that clarification. We also were weighing the pending rehearing period, which as you know is 30 days from the decision and we're gratified that no rehearings were protests were fine.
Jeffrey Householder: And so RSAM for us, we completed the initial tranche of RSAM in 2024, the piece that City Gas had in place as part of the next era rate case that they did. And we moved on to a more traditional depreciation study, which we find compelling for us in many ways. And I think the Commission will find the same way. And so again, it accelerates what normally is kind of a five-year depreciation of that excess depreciation amount to two years, which would be a great thing for us if we can get it. And we believe that we'll be successful there.
Speaker Change: Phil.
Speaker Change: So we're now in the next phase but.
Speaker Change: We're very thankful to the commission for issuing the decision.
Speaker Change: Okay.
Speaker Change: And one last thing Beth can you sort of give us some.
Speaker Change: Color on weather for the quarter and how that influenced results.
Speaker Change: In terms of coming up for the fourth quarter and how that impacted results overall.
Jim Moriarty: So I'm not to be flippant about the Supreme Court notion, and Jim, he may want to weigh in on that as well. Yeah. I mean, I think the Court is seriously looking at the statute and what the agency did and the support that was in the four corners of the decision.
Speaker Change: It's particularly thinking about propane because it was kind of a.
Speaker Change: The relatively mild quarter. So just wanted to get your thoughts.
Speaker Change: Sure. It was Chris as we started the quarter I will tell you that as we you know.
Speaker Change: And we ended up getting closer to the end of the year, there was a little bit more favorable weather from a propane standpoint that that positively impacted so.
Jim Moriarty: So, I think if the commission were, I'm sorry, if the court were to remand it, it would probably be to allow the commission another opportunity to address which we've kind of done here going forward. Okay.
Speaker Change: Not certainly as much as we've seen as we're coming into the first quarter here, but there was the last two weeks of December.
Jim Moriarty: Jim, let me ask you another question. With the FERC decision on the LNG project, they had the error, and they, once you had filed for clarification, they corrected that very quickly, but it seemed like it took a long time for you to make that filing, which seemed kind of peculiar to me. Is there a reason for that? No, I think if you look at the calendar, we read the decision carefully when we got it and then almost immediately filed for that clarification. We also were weighing the pending rehearing period, which as you know is 30 days from the decision, and we're gratified that no rehearings or protests were filed.
Speaker Change: There were favorable in that regard.
Speaker Change: Okay. Thank you guys. Appreciate the color. Thank you for your questions Chris.
Speaker Change: Thank you we'll go next now to dealing with Ladenburg.
Speaker Change: Good morning Dillon.
Speaker Change: Congrats on a great quarter. All my questions were answered I thought I hung up on it but looking forward to speaking you guys soon.
Speaker Change: Great sounds great. Thank you Bill and thank you doing.
Speaker Change: Thank you and again, ladies and gentlemen, just a quick reminder, star one please for any further questions. This morning, and we will pause for just one moment.
Beth Cooper: So we're now in the next phase, but we're very thankful to the commission for issuing Okay, and one last thing, Beth, can you sort of give us some color on weather for the quarter and how that influenced results? In terms of coming up for the fourth quarter and how that impacted results overall, Yeah, I was particularly thinking about propane because it was kind of a relatively mild quarter, so I just wanted to get your thoughts. Sure, it was, Chris, as we started the quarter, I will tell you that as we ended up getting closer to the end of the year, there was a little bit more favorable weather from a propane standpoint that positively impacted us.
Speaker Change: And ladies and gentlemen, I have no further questions coming in this morning, Mr householder I'd like to turn the conference back to you Sir for any closing comments.
Speaker Change: Thank you and thank all of you for joining our call. This morning, and we certainly look forward to seeing many of you at our Investor day, that's coming up in a couple of weeks don't in Cape Canaveral, We'll try to showcase are certainly things that are going on across the company, but there's a lot happening in Florida. These days and so we will be able to talk about that and more.
Speaker Change: Detail, Thanks, again and goodbye.
Speaker Change: Thank you Mr householder again, ladies and gentlemen, this does conclude Chesapeake utility Corporation's fourth quarter and full year 2024 earnings call again, thanks, so much for joining US everyone and we wish you all a great.
Beth Cooper: So not certainly as much as we've seen as we're coming into the first quarter here, but there was the last two weeks of December were favorable in that regard.
Operator: Okay, thank you guys.
Operator: I appreciate the color. Thank you for your questions, Chris. Appreciate it.
Operator: Thank you.
Dylan Lipner: We'll go next now to Dylan Lipner of Latin. Good morning, Dylan. Hey, good morning.
Dylan Lipner: Congrats on a great quarter. All my questions were answered.
Dylan Lipner: I thought I hung up on it, but looking forward to speaking to you guys soon. That sounds great. Thank you, Dylan. Thank you.
Operator: And again, ladies and gentlemen, just a quick reminder, star one, please, for any further questions this morning and we'll pause. Ladies and gentlemen, I have no further questions coming in this morning.
Jeffrey Householder: Mr. Householder, I'd like to turn the conference back to you, sir, for any closing comments. Thank you, and thank all of you for joining our call this morning, and we certainly look forward to seeing many of you at our Investor Day that's coming up in a couple of weeks down in Cape Canaveral. We'll try to showcase certainly things that are going on across the company, but there's a lot happening in Florida these days, and so we'll be able to talk about that in more detail.
Operator: Thanks again, and goodbye.
Operator: Thank you, Mr. Householder.
Operator: Again, ladies and gentlemen, this does conclude Chesapeake Utility Corporation's fourth quarter and full year 2024 earnings call. Again, thanks so much for joining us, everyone, and we wish you all a great day.
Operator: A humble presentation of Premier'szeit © Tate Sullivan, Beth Cooper, Jeffery Householder, James Moriarty