DOVER, Del., Aug. 3, 2017
/PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK)
("Chesapeake Utilities" or the "Company") today reported second
quarter financial results. The Company's net income for the quarter
ended June 30, 2017 was $6.0
million, compared to $8.0
million in the same quarter of 2016. Earnings per share
("EPS") for the quarter ended June 30, 2017 were $0.37 per share, compared to $0.52 for the same quarter of 2016. The decline
in net income reflected expenses incurred and investments to
generate and support growth as well as the impact of weather on the
Delmarva Peninsula that was 41 percent warmer than the prior
quarter. These factors were partially offset by higher margins from
natural gas transmission and distribution operations in
Florida and on the Delmarva
Peninsula, the Eight Flags Energy LLC ("Eight Flags") combined heat
and power ("CHP") plant and Aspire Energy of Ohio, LLC ("Aspire Energy").
For the six months ended June 30, 2017, the Company
reported net income of $25.2 million,
or $1.54 per share. This represents a
decrease of $3.2 million, or
$0.31 per share, compared to the same
period in 2016. Similar to the second quarter of 2017, the decline
in net income for the first six months of 2017 principally
reflected higher expenses incurred and investments to generate and
support growth, as well as the impact of warmer weather. These
factors were partially offset by higher margins from the Eight
Flags CHP plant, natural gas transmission and distribution
operations in Florida and on the
Delmarva Peninsula, Aspire Energy, and the Company's natural gas
marketing operation, Peninsula Energy Services Company, Inc.
("PESCO"). An increase in outstanding shares as a result of
the equity issuance in September 2016
lowered EPS by approximately $0.10
per share for the six months ended June
30, 2017.
"Growth in our businesses will drive our future earnings.
We have continued to expand our internal capabilities to manage and
cultivate growth, while aggressively pursuing opportunities that
will position the Company for future growth," stated Michael P. McMasters, President and Chief
Executive Officer of Chesapeake Utilities Corporation. "Earnings
growth and costs incurred to support business growth do not always
move in tandem. Our results for the second quarter and year-to-date
should be viewed in the context of the major growth projects and
initiatives recently completed and those currently underway, in
addition to the negative impact of warmer weather. Our employees
have completed several significant projects in 2017 and are laying
the groundwork to commence Eastern Shore Natural Gas Company's
("Eastern Shore") largest ever expansion project in addition to
several other key projects and initiatives that are also scheduled
to go into service in 2018," he added.
A more detailed discussion and analysis of the Company's results
for each segment is provided in the following pages.
Comparative Results for the Quarters Ended June 30, 2017
and 2016
Operating income for the second quarter decreased by
$2.1 million to $13.7 million compared to the same period in
2016, as higher expenses to support growth exceeded increased gross
margins for the quarter. Gross margin increased by $2.6 million during the quarter, despite the
negative impact of warmer weather, which reduced margin by
approximately $675,000. The
$1.3 million increase in
depreciation, amortization and property taxes and $3.4 million increase in other operating expenses
largely reflect higher expenses to support growth of the Company's
businesses and costs associated with pursuing additional growth
initiatives. Costs such as depreciation and employee costs are
recognized evenly over the four quarters of each year, while gross
margin from most of the Company's businesses is driven by
deliveries, which are concentrated in the first and fourth
quarters.
Regulated Energy Segment
Operating income for the Regulated Energy segment decreased by
$1.5 million, or 9.8 percent,
compared to the same period in 2016, due principally to warmer
weather and the level and timing of costs associated with growth.
Gross margin increased by $1.1
million during the quarter, despite the impact of warmer
weather, which reduced gross margin by approximately $354,000 for the three months. The $1.2 million increase in depreciation,
amortization and property taxes and $1.4
million increase in other operating expenses, largely
reflect costs associated with recently completed and planned growth
projects. Specifically, of the total $2.6
million increase in costs, $1.5
million is associated with Eastern Shore's recently
completed projects as well as initiatives underway.
The significant components of the $1.1
million gross margin increase included:
- $532,000 generated from
additional GRIP investments in the Florida natural gas distribution
operations;
- $478,000 generated from recently
completed natural gas transmission expansions, which are more fully
discussed in the "Major Projects and Initiatives" section later in
this press release; and
- $325,000 from customer growth in
natural gas distribution and transmission services over and above
recent service expansions.
The foregoing increases were offset by $354,000 from lower customer consumption of
energy for the Company's regulated energy distribution operations
in Florida and on the Delmarva
Peninsula.
The significant components of the increase in other operating
expenses included:
- $1.2 million in higher
depreciation, asset removal and property tax costs associated with
recent capital investments;
- $358,000 in higher outside
services to support growth and higher facility maintenance costs
to maintain system integrity;
- $295,000 in increased regulatory
expenses, due primarily to costs associated with Eastern Shore's
rate case filing in 2017; and
- $255,000 in higher benefits and
employee-related costs, while payroll costs remained flat in the
second quarter of 2017. As the Company is self-insured,
benefits costs will fluctuate depending upon actual claims
experience.
Unregulated Energy Segment
Operating income for the Unregulated Energy segment decreased
$450,000 compared to the same period
in 2016, as increased operating income from Eight Flags and Aspire
Energy were offset by lower results from PESCO and the propane
distribution businesses. Gross margin increased by $1.7 million, despite the impact of warmer
weather, which reduced margin by approximately $321,000 for the three months. The $2.1 million increase in other operating
expenses, largely reflects operating costs for Eight Flags and
higher expenses to support growth initiatives.
The significant components of the $1.7
million gross margin increase were as follows:
- $2.1 million of additional
gross margin from Eight Flags' CHP plant, which commenced
operations in June 2016; and
- $271,000 of additional gross
margin from Aspire Energy as a result of pricing amendments to
long-term gas sales agreements.
The above gross margin increases were offset by the following
factors:
- $450,000 of lower margin from
PESCO, due primarily to a customer supply agreement that expired on
March 31, 2017; and
- $368,000 from lower customer
consumption of energy for the Company's propane distribution
operations in Florida and on the
Delmarva Peninsula.
The significant components of the increase in other operating
expenses included:
- $1.3 million incurred by Eight
Flags' CHP plant, which commenced operations in June 2016; and
- $645,000 in higher staffing and
associated costs for additional personnel to support growth.
As the Company is self-insured, benefits costs will fluctuate
depending upon actual claims experience.
The Company also incurred $346,000
in non-operating expenses to complete the wind-down of Xeron's
operations.
Comparative Results for the Six Months Ended June 30,
2017 and 2016
Operating income for the six months ended June 30, 2017
decreased by $3.8 million to
$48.3 million compared to the same
period in 2016. Gross margin increased by $9.4 million, or 7.0 percent, net of the negative
impact of warmer weather, which reduced margin by approximately
$1.4 million for the first six
months. The $2.7 million increase in
depreciation, amortization and property taxes and $10.5 million increase in other operating
expenses reflects, higher expenses to support growth of the
Company's businesses, costs associated with the wind-down of
Xeron's operations and costs associated with pursuing additional
growth initiatives.
Regulated Energy Segment
Operating income for the Regulated Energy segment decreased by
$2.8 million, or 7.1 percent,
compared to the same period in 2016 due principally to warmer
weather and the level and timing of costs associated with growth.
Gross margin increased by $4.2
million, despite the impact of warmer weather, which reduced
margin by approximately $452,000 for
the six months ended June 30, 2017. The $2.1 million increase in depreciation,
amortization and taxes and $4.9
million increase in other operating expenses largely
reflects costs associated with recently completed and planned
growth projects. Of the total $7.0
million increase in other operating expenses, $3.8 million is associated with Eastern Shore's
recently completed projects as well as initiatives underway.
The significant components of the $4.2
million gross margin increase included:
- $1.2 million generated from
recently completed natural gas transmission expansions, which are
more fully discussed in the "Major Projects and Initiatives"
section later in this press release;
- $1.2 million generated by
additional GRIP investments in the Florida natural gas distribution
operations;
- $1.1 million from customer growth
in natural gas distribution and transmission services over and
above the growth attributable to recent service expansions;
- $535,000 from new natural gas
transmission and distribution services provided to Eight Flags' CHP
plant; and
- $417,000 generated as a result of
the settlement of the Company's Delaware division's rate case.
The foregoing increases were offset by $797,000 from lower customer consumption of
energy for the Company's distribution operations in Florida and on the Delmarva Peninsula, due
primarily to warmer weather, particularly during the first quarter,
which was the third warmest first quarter on the Delmarva Peninsula
in the past fifty years.
The significant components of the increase in other operating
expenses included:
- $2.1 million in higher
depreciation, asset removal and property tax costs associated with
recent capital investments;
- $1.5 million in higher outside
services to support growth and higher facility maintenance costs
to maintain system integrity;
- $1.3 million in higher payroll
costs for additional personnel to support growth;
- $1.2 million in higher benefits
and employee-related costs in 2017 (as the Company is
self-insured, benefits costs will fluctuate depending upon actual
claims experience); and
- $664,000 in increased regulatory
expenses, due primarily to costs associated with Eastern Shore's
rate case filing in 2017.
Unregulated Energy Segment
Operating income for the Unregulated Energy segment for the six
months ended June 30, 2017 was
$11.5 million, a decrease of
$855,000 compared to the same period
in 2016, as contributions from Eight Flags, Aspire Energy, and
PESCO, were exceeded by the impact of warmer weather, lower retail
propane margins per gallon and higher expenses associated with
recent and future growth. Gross margin increased by $5.4 million, net of the impact of warmer
weather, which reduced margins by $912,000 for the six months ended June 30,
2017.
The significant components of the $5.4
million gross margin increase were as follows:
- $3.9 million of additional
gross margin from Eight Flags' CHP plant, which commenced
operations in June 2016;
- $1.7 million from PESCO, due to
an increase in the number of contracts and customers served as well
as additional revenue from providing natural gas to a customer in
Ohio under a supplier agreement,
which expired on March 31, 2017;
and
- $844,000 of additional gross
margin from Aspire Energy as a result of pricing amendments to
long-term gas sales agreements.
The above gross margin increases were offset by the
following:
- $836,000 of lower gross margin
due to warmer than normal temperatures in Ohio and on the Delmarva Peninsula, resulting
in less consumption of propane and lower sales of natural gas by
Aspire Energy; and
- $305,000 of lower gross margin
from the Company's propane distribution operations as propane
retail margins per gallon were slightly lower than 2016
levels.
The significant components of the increase in other operating
expenses included:
- $2.5 million incurred by Eight
Flags' CHP plant, which commenced operations in June 2016;
- $935,000 in higher payroll costs
for additional personnel to support growth;
- $809,000 in higher benefits and
employee-related costs in 2017 (as the Company is
self-insured, benefits costs will fluctuate depending upon actual
claims experience);
- $609,000 in higher depreciation
expense, of which $382,000 relates to
a credit adjustment in 2016 recorded in conjunction with the final
valuation for Aspire Energy;
- $514,000 in higher outside
services costs associated primarily with growth and ongoing
compliance activities; and
- $355,000 in higher operating
expenses associated with the wind-down of Xeron's operations.
The Company also incurred $346,000
in non-operating expenses to complete the wind-down of Xeron's
operations.
Matters discussed 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 2016 Annual Report on Form 10-K for further
information on the risks and uncertainties related to the Company's
forward-looking statements.
The discussions of the results use the term "gross margin," a
non-Generally Accepted Accounting Principles ("GAAP") financial
measure, which management uses to evaluate the performance of the
Company's business segments. For an explanation of the calculation
of "gross margin," see the footnote to the Financial
Summary.
Unless otherwise noted, earnings per share are presented on a
diluted basis.
Conference Call
Chesapeake Utilities will host a conference call on Friday,
August 4, 2017, at 10:30 a.m. Eastern
Time to discuss the Company's financial results for the
quarter and six months ended June 30, 2017. To participate in
this call, dial 855.801.6270 and reference Chesapeake Utilities'
2017 Second Quarter Financial Results Conference Call. To access
the replay recording of this call, please visit the Company's
website at http://investor.chpk.com/results.cfm or download
the replay on your mobile device by accessing the Audio cast
section of the Company's IR App.
About Chesapeake Utilities Corporation
Chesapeake Utilities is a diversified energy company engaged in
natural gas distribution, transmission, gathering and processing,
and marketing; electricity generation and distribution; propane gas
distribution; and other businesses. Information about Chesapeake
Utilities and its family of businesses is available at
http://www.chpk.com or through its IR App.
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. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799
Financial
Summary
|
(in thousands,
except per share data)
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Gross Margin
(1)
|
|
|
|
|
|
|
|
Regulated
Energy segment
|
$
|
46,829
|
|
|
$
|
45,760
|
|
|
$
|
104,239
|
|
|
$
|
100,071
|
|
Unregulated
Energy segment
|
13,736
|
|
|
12,077
|
|
|
40,555
|
|
|
35,178
|
|
Other
businesses and eliminations
|
(154)
|
|
|
(64)
|
|
|
(221)
|
|
|
(109)
|
|
Total Gross
Margin
|
$
|
60,411
|
|
|
$
|
57,773
|
|
|
$
|
144,573
|
|
|
$
|
135,140
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
|
|
|
|
|
Regulated Energy segment
|
$
|
13,730
|
|
|
$
|
15,226
|
|
|
$
|
36,747
|
|
|
$
|
39,545
|
|
Unregulated Energy segment
|
(38)
|
|
|
412
|
|
|
11,492
|
|
|
12,347
|
|
Other
businesses and eliminations
|
(26)
|
|
|
104
|
|
|
102
|
|
|
230
|
|
Total
Operating Income
|
13,666
|
|
|
15,742
|
|
|
48,341
|
|
|
52,122
|
|
|
|
|
|
|
|
|
|
Other Expense,
net
|
(607)
|
|
|
(8)
|
|
|
(884)
|
|
|
(42)
|
|
Interest
Charges
|
3,073
|
|
|
2,624
|
|
|
5,811
|
|
|
5,274
|
|
Pre-tax
Income
|
9,986
|
|
|
13,110
|
|
|
41,646
|
|
|
46,806
|
|
Income
Taxes
|
3,940
|
|
|
5,081
|
|
|
16,456
|
|
|
18,410
|
|
Net
Income
|
$
|
6,046
|
|
|
$
|
8,029
|
|
|
$
|
25,190
|
|
|
$
|
28,396
|
|
|
|
|
|
|
|
|
|
Earnings Per Share
of Common Stock
|
|
|
|
|
|
|
|
Basic
|
$
|
0.37
|
|
|
$
|
0.52
|
|
|
$
|
1.54
|
|
|
$
|
1.86
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.52
|
|
|
$
|
1.54
|
|
|
$
|
1.85
|
|
(1) "Gross margin" is determined by
deducting the cost of sales from operating revenue. Cost of sales
includes the purchased fuel cost for natural gas, electricity and
propane and the cost of labor spent on direct revenue-producing
activities and excludes depreciation, amortization and accretion.
Gross margin should not be considered an alternative to operating
income or net income, which are determined in accordance with GAAP.
Chesapeake Utilities believes that gross margin, although a
non-GAAP measure, is useful and meaningful to investors as a basis
for making investment decisions. It provides investors with
information that demonstrates the profitability achieved by
Chesapeake Utilities under its allowed rates for regulated
operations and under its competitive pricing structure for
non-regulated segments. Chesapeake Utilities' management uses gross
margin in measuring its business units' performance. Other
companies may calculate gross margin in a different manner.
Financial Summary
Highlights
|
Key variances between
the three months ended June 30, 2016 and 2017 included:
|
|
|
|
|
|
|
|
(in thousands,
except per share data)
|
|
Pre-tax
Income
|
|
Net
Income
|
|
Earnings
Per Share
|
Second Quarter of
2016 Reported Results
|
|
$
|
13,110
|
|
|
$
|
8,029
|
|
|
$
|
0.52
|
|
|
|
|
|
|
|
|
Adjusting for
unusual items:
|
|
|
|
|
|
|
Weather
impact
|
|
(675)
|
|
|
(409)
|
|
|
(0.03)
|
|
Wind-down of Xeron
operations
|
|
(351)
|
|
|
(213)
|
|
|
(0.01)
|
|
|
|
(1,026)
|
|
|
(622)
|
|
|
(0.04)
|
|
Increased
(Decreased) Gross Margins:
|
|
|
|
|
|
|
Eight Flags' CHP
plant*
|
|
2,128
|
|
|
1,289
|
|
|
0.08
|
|
GRIP*
|
|
532
|
|
|
322
|
|
|
0.02
|
|
Service
expansions*
|
|
478
|
|
|
289
|
|
|
0.02
|
|
Natural gas
marketing
|
|
(450)
|
|
|
(272)
|
|
|
(0.02)
|
|
Natural gas growth
(excluding service expansions)
|
|
325
|
|
|
197
|
|
|
0.01
|
|
Pricing amendments to
Aspire Energy's long-term agreements
|
|
271
|
|
|
164
|
|
|
0.01
|
|
|
|
3,284
|
|
|
1,989
|
|
|
0.12
|
|
Increased Other
Operating Expenses:
|
|
|
|
|
|
|
Higher depreciation,
asset removal and property tax costs due to new capital
investments
|
|
(1,337)
|
|
|
(810)
|
|
|
(0.05)
|
|
Eight Flags'
operating expenses
|
|
(1,260)
|
|
|
(763)
|
|
|
(0.05)
|
|
Higher staffing and
associated costs
|
|
(976)
|
|
|
(591)
|
|
|
(0.04)
|
|
Higher outside
services and facilities maintenance costs
|
|
(335)
|
|
|
(203)
|
|
|
(0.01)
|
|
Higher regulatory
expenses
|
|
(295)
|
|
|
(179)
|
|
|
(0.01)
|
|
|
|
(4,203)
|
|
|
(2,546)
|
|
|
(0.16)
|
|
|
|
|
|
|
|
|
Interest
charges
|
|
(449)
|
|
|
(272)
|
|
|
(0.02)
|
|
Change in other
expense
|
|
(253)
|
|
|
(153)
|
|
|
(0.01)
|
|
Net other
changes
|
|
(477)
|
|
|
(379)
|
|
|
(0.02)
|
|
|
|
(1,179)
|
|
|
(804)
|
|
|
(0.05)
|
|
|
|
|
|
|
|
|
EPS impact of
increase in outstanding shares due to September 2016
offering
|
|
—
|
|
|
—
|
|
|
(0.02)
|
|
Second Quarter of
2017 Reported Results
|
|
$
|
9,986
|
|
|
$
|
6,046
|
|
|
$
|
0.37
|
|
*See the Major Projects and Initiatives table later
in this press release.
Key variances between the six months ended June 30, 2016 and 2017 included:
|
|
|
|
|
|
|
(in thousands,
except per share data)
|
|
Pre-tax
Income
|
|
Net
Income
|
|
Earnings
Per Share
|
Six Months Ended
June 30, 2016 Reported Results
|
|
$
|
46,806
|
|
|
$
|
28,396
|
|
|
$
|
1.85
|
|
|
|
|
|
|
|
|
Adjusting for
unusual items:
|
|
|
|
|
|
|
Weather
impact
|
|
(1,363)
|
|
|
(825)
|
|
|
(0.05)
|
|
Wind-down of Xeron
operations
|
|
(886)
|
|
|
(536)
|
|
|
(0.03)
|
|
|
|
(2,249)
|
|
|
(1,361)
|
|
|
(0.08)
|
|
Increased
(Decreased) Gross Margins:
|
|
|
|
|
|
|
Eight Flags' CHP
plant*
|
|
4,424
|
|
|
2,676
|
|
|
0.17
|
|
Natural gas
marketing
|
|
1,704
|
|
|
1,031
|
|
|
0.07
|
|
Service
expansions*
|
|
1,237
|
|
|
748
|
|
|
0.05
|
|
GRIP*
|
|
1,213
|
|
|
734
|
|
|
0.05
|
|
Natural gas growth
(excluding service expansions)
|
|
1,130
|
|
|
683
|
|
|
0.04
|
|
Pricing amendments to
Aspire Energy's long-term agreements
|
|
844
|
|
|
510
|
|
|
0.03
|
|
Implementation of
Delaware Division new rates*
|
|
417
|
|
|
252
|
|
|
0.02
|
|
Lower retail propane
margins
|
|
(305)
|
|
|
(184)
|
|
|
(0.01)
|
|
|
|
10,664
|
|
|
6,450
|
|
|
0.42
|
|
Increased Other
Operating Expenses:
|
|
|
|
|
|
|
Higher depreciation,
asset removal and property tax costs due to new capital
investments
|
|
(2,696)
|
|
|
(1,631)
|
|
|
(0.11)
|
|
Eight Flags'
operating expenses
|
|
(2,528)
|
|
|
(1,529)
|
|
|
(0.10)
|
|
Higher payroll
expense
|
|
(2,219)
|
|
|
(1,342)
|
|
|
(0.09)
|
|
Higher outside
services and facilities maintenance costs
|
|
(2,054)
|
|
|
(1,243)
|
|
|
(0.08)
|
|
Higher benefits and
other employee-related expenses
|
|
(1,966)
|
|
|
(1,189)
|
|
|
(0.08)
|
|
Higher regulatory
expenses
|
|
(664)
|
|
|
(401)
|
|
|
(0.03)
|
|
|
|
(12,127)
|
|
|
(7,335)
|
|
|
(0.49)
|
|
|
|
|
|
|
|
|
Interest
charges
|
|
(537)
|
|
|
(325)
|
|
|
(0.02)
|
|
Change in other
expense
|
|
(476)
|
|
|
(288)
|
|
|
(0.02)
|
|
Net other
changes
|
|
(435)
|
|
|
(347)
|
|
|
(0.02)
|
|
|
|
(1,448)
|
|
|
(960)
|
|
|
(0.06)
|
|
|
|
|
|
|
|
|
EPS impact of
increase in outstanding shares due to September 2016
offering
|
|
—
|
|
|
—
|
|
|
(0.10)
|
|
Six Months Ended
June 30, 2017 Reported Results
|
|
$
|
41,646
|
|
|
$
|
25,190
|
|
|
$
|
1.54
|
|
*See the Major Projects and Initiatives table later in this
press release.
Major Projects and Initiatives
The following table summarizes gross margin for the Company's
major projects and initiatives recently completed and initiatives
currently underway, but which will be completed in the future.
Gross margin reflects operating revenue less cost of sales,
excluding depreciation, amortization and accretion (dollars in
thousands):
|
Gross Margin for
the Period
|
|
Three Months
Ended
|
Six Months
Ended
|
|
Year
Ended
|
|
|
|
|
|
|
|
June
30,
|
June
30,
|
|
December
31,
|
|
Estimate
for
|
|
2017
|
|
2016
|
|
Variance
|
2017
|
|
2016
|
|
Variance
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
Major Projects and
Initiatives Recently Completed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Investment
Projects
|
$
|
9,601
|
|
|
$
|
6,463
|
|
|
$
|
3,138
|
|
$
|
18,922
|
|
|
$
|
12,049
|
|
|
$
|
6,873
|
|
|
$
|
29,819
|
|
|
$
|
35,393
|
|
|
$
|
32,125
|
|
|
$
|
33,035
|
|
Settled Delaware
Division Rate Case
|
425
|
|
|
555
|
|
|
(130)
|
|
1,295
|
|
|
878
|
|
|
417
|
|
|
1,487
|
|
|
2,250
|
|
|
2,250
|
|
|
2,250
|
|
Total Major
Projects and Initiatives Recently Completed
|
10,026
|
|
|
7,018
|
|
|
3,008
|
|
20,217
|
|
|
12,927
|
|
|
7,290
|
|
|
31,306
|
|
|
37,643
|
|
|
34,375
|
|
|
35,285
|
|
Future Major
Projects and Initiatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Investment
Projects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Eastern Shore
System Expansion
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
126
|
|
|
9,313
|
|
|
15,799
|
|
Northwest Florida
Expansion
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
3,970
|
|
|
5,100
|
|
Eastern Shore System
Reliability (1)
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
1,875
|
|
|
4,500
|
|
|
4,500
|
|
Total Future Major
Projects and Initiatives
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
2,001
|
|
|
17,783
|
|
|
25,399
|
|
Total
|
$
|
10,026
|
|
|
$
|
7,018
|
|
|
$
|
3,008
|
|
$
|
20,217
|
|
|
$
|
12,927
|
|
|
$
|
7,290
|
|
|
$
|
31,306
|
|
|
$
|
39,644
|
|
|
$
|
52,158
|
|
|
$
|
60,684
|
|
(1) In January 2017,
Eastern Shore, filed a rate case with the Federal Energy Regulatory
Commission ("FERC"). The outcome of the rate case is not known at
this time. This table assumes recovery in the rate case of the
costs of the System Reliability Project only, as further discussed
below.
Major Projects and Initiatives Recently
Completed
The following table summarizes gross margin generated from the
Company's major projects and initiatives recently completed
(dollars in thousands):
|
Gross Margin for
the Period (1)
|
|
Three Months
Ended
|
Six Months
Ended
|
Year
Ended
|
|
|
|
|
|
|
|
June
30,
|
June
30,
|
December
31,
|
|
Estimate
for
|
|
2017
|
|
2016
|
|
Variance
|
2017
|
|
2016
|
|
Variance
|
2016
|
|
2017
|
|
2018
|
|
2019
|
Capital Investment
Projects:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
Expansions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term contracts
(Delaware)
|
$
|
1,194
|
|
|
$
|
2,648
|
|
|
$
|
(1,454)
|
|
$
|
3,857
|
|
|
$
|
5,191
|
|
|
$
|
(1,334)
|
|
$
|
11,454
|
|
|
$
|
5,689
|
|
|
$
|
1,407
|
|
|
$
|
1,407
|
|
Long-term contracts
(Delaware)
|
2,387
|
|
|
455
|
|
|
1,932
|
|
3,481
|
|
|
911
|
|
|
2,570
|
|
1,815
|
|
|
7,611
|
|
|
7,605
|
|
|
7,583
|
|
Total Service
Expansions
|
3,581
|
|
|
3,103
|
|
|
478
|
|
$
|
7,338
|
|
|
$
|
6,102
|
|
|
$
|
1,236
|
|
13,269
|
|
|
13,300
|
|
|
9,012
|
|
|
8,990
|
|
Florida
GRIP
|
3,341
|
|
|
2,809
|
|
|
532
|
|
6,609
|
|
|
5,396
|
|
|
1,213
|
|
11,552
|
|
|
13,727
|
|
|
14,407
|
|
|
15,085
|
|
Eight Flags' CHP
Plant
|
2,679
|
|
|
551
|
|
|
2,128
|
|
4,975
|
|
|
551
|
|
|
4,424
|
|
4,998
|
|
|
8,366
|
|
|
8,706
|
|
|
8,960
|
|
Total Capital
Investment Projects
|
9,601
|
|
|
6,463
|
|
|
3,138
|
|
18,922
|
|
|
12,049
|
|
|
6,873
|
|
29,819
|
|
|
35,393
|
|
|
32,125
|
|
|
33,035
|
|
Settled Delaware
Division Rate Case
|
425
|
|
|
555
|
|
|
(130)
|
|
1,295
|
|
|
878
|
|
|
417
|
|
1,487
|
|
|
2,250
|
|
|
2,250
|
|
|
2,250
|
|
Total Major
Projects and Initiatives Recently Completed
|
$
|
10,026
|
|
|
$
|
7,018
|
|
|
$
|
3,008
|
|
$
|
20,217
|
|
|
$
|
12,927
|
|
|
$
|
7,290
|
|
$
|
31,306
|
|
|
$
|
37,643
|
|
|
$
|
34,375
|
|
|
$
|
35,285
|
|
(1) Does not include gross margin of $3.5 million and $9.3
million for the three and six months ended June 30, 2017, respectively, and $13.9 million for the year ended
December 31, 2016, which consists
primarily of gross margin attributable to Aspire Energy for those
periods. The acquisition of Aspire Energy was previously disclosed
as a major project; however, the gross margin attributable to
Aspire Energy is now being excluded from this table.
Service Expansions
In August
2014, Eastern Shore entered into a precedent agreement with
an electric power generator in Kent
County, Delaware, to provide, upon the satisfaction of
certain conditions, a 20-year natural gas transmission service for
45,000 dekatherms per day ("Dts/d") deliverable to the lateral
serving the customer's facility. In July
2016, the FERC authorized Eastern Shore to construct and
operate the proposed project, which consists of 5.4 miles of
16-inch pipeline looping and new compression capability in
Delaware. Eastern Shore provided
interim services to this customer pending construction of
facilities. Construction of the project is complete, and long-term
service commenced on March 1, 2017,
pursuant to a 20-year OPT 90 ≤ service agreement. This service
generated an additional gross margin of $106,000 during the six months ended
June 30, 2017 compared to the same period in 2016. There was
no incremental margin change during the second quarter as the
margin generated from the permanent services equated to the margin
generated from providing interim services during the second quarter
of 2016. This service is expected to generate gross margin of
$7.0 million for 2017 and between
$5.8 million and $7.8 million
annually through the remaining term of the agreement.
In October 2015, Eastern Shore
submitted an application to the FERC to make certain meter tube and
control valve replacements and related improvements at its Texas
Eastern Transmission, LP ("TETLP") interconnect facilities, which
would enable Eastern Shore to increase natural gas receipts from
TETLP by 53,000 Dts/d, for a total capacity of 160,000 Dts/d. In
December 2015, the FERC authorized
Eastern Shore to proceed with this project, which was completed and
placed in service in March 2016.
Approximately 35 percent of the increased capacity has been
subscribed on a short-term firm service basis through October 2017. This service generated an
additional gross margin of $540,000
and $1.2 million for the three and
six months ended June 30, 2017, respectively, compared to the
same periods in 2016. The remaining capacity is available for firm
or interruptible service.
GRIP
GRIP is a natural gas pipe replacement program
approved by the Florida Public Service Commission ("PSC"), designed
to expedite the replacement of qualifying distribution mains and
services (any material other than coated steel or plastic) to
enhance the reliability and integrity of the Company's Florida natural gas distribution systems. This
program allows recovery, through regulated rates, of capital and
other program-related costs, inclusive of a return on investment,
associated with the replacement of the mains and services. Since
the program's inception in August
2012, the Company has invested $108.1
million to replace 240 miles of qualifying distribution
mains, including $5.2 million during
the first six months of 2017. The increased investment in GRIP
generated additional gross margin of $532,000 and $1.2
million for the three and six months ended June 30,
2017, respectively, compared to the same periods in 2016.
Eight Flags' CHP plant
In June
2016, Eight Flags completed construction of a CHP plant on
Amelia Island, Florida. This CHP plant, which consists of a
natural-gas-fired turbine and associated electric generator,
produces approximately 20 megawatts of base load power and includes
a heat recovery steam generator capable of providing approximately
75,000 pounds per hour of residual steam. In June 2016, Eight Flags began selling power
generated from the CHP plant to Florida Public Utilities Company
("FPU"), the Company's wholly-owned subsidiary, pursuant to a
20-year power purchase agreement for distribution to FPU's retail
electric customers. In July 2016, it
also started selling steam to the industrial customer that owns the
property on which Eight Flags' CHP plant is located, pursuant to a
separate 20-year contract.
The CHP plant is powered by natural gas transported by FPU
through its distribution system and by Peninsula Pipeline Company,
Inc. ("Peninsula Pipeline"), the Company's wholly-owned
Florida intrastate pipeline
subsidiary. For the three and six months ended June 30, 2017,
Eight Flags and other affiliates of Chesapeake Utilities generated
$2.1 million and $4.4 million, respectively, in additional gross
margin as a result of these services that began in June 2016. This amount includes gross margin of
$43,000 and $535,000 for the three and six months ended
June 30, 2017, respectively, attributable to natural gas
distribution and transportation services provided to the CHP plant
by the Company's regulated affiliates.
Major Projects and Initiatives Currently
Underway
Northwest Florida Expansion
Project: Peninsula Pipeline and the Company's
Florida natural gas division are
constructing a pipeline in Escambia
County, Florida that will interconnect with Florida Gas
Transmission Company's ("FGT") pipeline. The project consists of 33
miles of 12-inch transmission line from the FGT interconnect that
will be operated by Peninsula Pipeline and 8 miles of 8-inch
lateral distribution lines that will be operated by the Company's
Florida natural gas division. The
Company has signed agreements to serve two industrial customers.
The estimated annual gross margin associated with this project,
once in service, is approximately $5.1
million.
2017 Expansion Project: In May
2016, Eastern Shore submitted a request to the FERC to
initiate the FERC's pre-filing process for its proposed 2017
expansion project. This project, which will expand Eastern Shore's
firm service capacity by 26 percent, will provide 61,162 Dts/d of
additional firm natural gas transportation service on Eastern
Shore's pipeline system with an additional 52,500 Dts/d of firm
transportation service at certain Eastern Shore receipt facilities
pursuant to precedent agreements Eastern Shore entered into with
seven existing customers including three affiliates of the Company.
Facilities required to provide this new service will consist of:
(i) approximately 23 miles of pipeline looping in Pennsylvania, Maryland and Delaware; (ii) upgrades to existing metering
facilities in Lancaster County,
Pennsylvania; (iii) installation of an additional
3,750-horsepower compressor unit at Eastern Shore's existing
Daleville compressor station in
Chester County, Pennsylvania; and
(iv) approximately 17 miles of new mainline extension and two
pressure control stations in Sussex
County, Delaware. The project will generate approximately
$15.8 million of gross margin in the
first full year after the new transportation services go into
effect. The estimated investment in this expansion project is
$98.6 million.
System Reliability Project: In July 2016, the FERC authorized Eastern Shore to
construct and operate its proposed System Reliability Project,
which will consist of approximately 10.1 miles of 16-inch pipeline
looping and auxiliary facilities in New
Castle and Kent Counties,
Delaware, and a new compressor at
its existing Bridgeville
compressor station in Sussex County,
Delaware. A 2.5 mile looping segment was completed and
placed into service in December 2016.
The remaining looping and the new compressor were completed and
placed in service in the second quarter of 2017. This project was
included in Eastern Shore's January
2017 base rate case filing with the FERC. We have assumed
recovery of this project's costs beginning in August 2017, coinciding with the proposed
effectiveness of new rates, subject to refund pending final
resolution of the base rate case. The Company expects to
generate approximately $4.5 million
in annual gross margin once new rates go into effect.
Other major factors influencing gross margin
Weather and Consumption
Warmer temperatures in
2017 had a negative impact on the Company's earnings. As compared
to the prior year, warmer temperatures during 2017 reduced gross
margin for the quarter and six months ended June 30, 2017 by $675,000 and $1.4
million, respectively, compared to the same periods in 2016.
Warmer than normal temperatures for the quarter and six months
ended June 30, 2017, reduced gross
margin by $1.1 million and
$4.3 million, respectively, compared
to the same periods in 2016. The following table summarizes heating
degree-day ("HDD") and cooling degree-day ("CDD") variances from
the 10-year average HDD/CDD ("Normal") for the three and six months
ended June 30, 2017 and 2016.
HDD and CDD
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Six months
ended
|
|
|
|
June
30,
|
|
|
|
June
30,
|
|
|
|
2017
|
|
2016
|
|
Variance
|
|
2017
|
|
2016
|
|
Variance
|
Delmarva
|
|
|
|
|
|
|
|
|
|
|
|
Actual HDD
|
288
|
|
|
485
|
|
|
(197)
|
|
|
2,246
|
|
|
2,579
|
|
|
(333)
|
|
10-Year Average HDD
("Delmarva Normal")
|
429
|
|
|
452
|
|
|
(23)
|
|
|
2,783
|
|
|
2,854
|
|
|
(71)
|
|
Variance from
Delmarva Normal
|
(141)
|
|
|
33
|
|
|
|
|
(537)
|
|
|
(275)
|
|
|
|
Florida
|
|
|
|
|
|
|
|
|
|
|
|
Actual HDD
|
13
|
|
|
9
|
|
|
4
|
|
|
298
|
|
|
514
|
|
|
(216)
|
|
10-Year Average HDD
("Florida Normal")
|
19
|
|
|
19
|
|
|
—
|
|
|
602
|
|
|
553
|
|
|
49
|
|
Variance from Florida
Normal
|
(6)
|
|
|
(10)
|
|
|
|
|
(304)
|
|
|
(39)
|
|
|
|
Ohio
|
|
|
|
|
|
|
|
|
|
|
|
Actual HDD
|
508
|
|
|
766
|
|
|
(258)
|
|
|
2,992
|
|
|
3,557
|
|
|
(565)
|
|
10-Year Average HDD
("Ohio Normal")
|
637
|
|
|
630
|
|
|
7
|
|
|
3,774
|
|
|
3,762
|
|
|
12
|
|
Variance from Ohio
Normal
|
(129)
|
|
|
136
|
|
|
|
|
(782)
|
|
|
(205)
|
|
|
|
Florida
|
|
|
|
|
|
|
|
|
|
|
|
Actual CDD
|
935
|
|
|
986
|
|
|
(51)
|
|
|
1,080
|
|
|
1,113
|
|
|
(33)
|
|
10-Year Average CDD
("Florida CDD Normal")
|
955
|
|
|
948
|
|
|
7
|
|
|
1,037
|
|
|
1,025
|
|
|
12
|
|
Variance from Florida
CDD Normal
|
(20)
|
|
|
38
|
|
|
|
|
43
|
|
|
88
|
|
|
|
Propane prices
Lower retail propane margins
per gallon for the Company's Delmarva and Florida propane distribution operations
decreased gross margin by $23,000 and
$305,000 for the three and six months
ended June 30, 2017, respectively, of which $8,000 and $204,000
is associated with the Company's Delmarva operations. The Company
continues to assume normal levels of margins in its long-term
financial plans and forecasts.
PESCO
PESCO provides natural gas supply and
supply management services to residential, commercial, industrial
and wholesale customers. PESCO operates primarily in Florida, on the Delmarva Peninsula, and in
Ohio. PESCO competes with
regulated utilities and other unregulated third-party marketers to
manage natural gas supplies directly to residential, commercial and
industrial customers through competitively-priced contracts. PESCO
does not currently own or operate any natural gas transmission or
distribution assets but sells gas that is delivered to retail or
wholesale customers through affiliated and non-affiliated local
distribution company systems and transmission pipelines.
In 2017, the Company's Delmarva natural gas distribution
operations entered into asset management agreements with PESCO to
manage a portion of their natural gas transportation and storage
capacity. The asset management agreements were effective
April 1, 2017, and each has a
three-year term, expiring on March 31, 2020. As a result of
these agreements, PESCO manages capacity on regional pipelines as
well as third-party storage contracts for the Company's Delmarva
natural gas distribution operations in conjunction with PESCO's
asset management services.
For the three months ended June 30,
2017 PESCO's gross margin decreased by $450,000, due primarily to the absence of a
supplier agreement that expired on March 31,
2017 and was not renewed due to lower margin expectations.
For the six months ended June 30,
2017, PESCO generated additional gross margin of
$1.7 million, compared to the same
period in 2016 as a result of revenues from the supplier agreement
as well as additional customers in Florida partially offset by lower margin in
the Mid-Atlantic region. Under the supplier agreement, PESCO
delivered the highest volumes during the first quarter of 2017,
while fixed storage and pipeline fees were paid over the entire
twelve-month period from April 1,
2016 to March 31, 2017.
Xeron
As disclosed previously, the Company's
management determined that there was no viable strategy to restore
Xeron to profitability in the near term and, accordingly, wound
down Xeron's operations shortly after the first quarter. The
Company recorded $522,000 and
$1.1 million in pre-tax losses from
Xeron in the three and six months ended June
30 2017, respectively, driven primarily by non-recurring
employee severance costs and costs associated with termination of
leased office space in Houston,
Texas. The Company does not anticipate incurring any
additional costs that will have a material impact associated with
winding down Xeron's operations. With the wind-down of Xeron, the
operating loss generated in the latter half of 2016 will be avoided
later this year.
Other Natural Gas Growth - Distribution
Operations
In addition to service expansions, the
Company's natural gas distribution operations on the Delmarva
Peninsula generated $128,000 and
$649,000 in additional gross margin
for the three and six months ended June 30, 2017,
respectively, compared to the same periods in 2016, due to an
increase in residential, commercial and industrial customers
served. The average number of residential customers on the Delmarva
Peninsula increased by 3.6 percent and 3.8 percent, respectively,
during the three and six months ended June 30, 2017 compared
to the same periods in 2016. The Company's natural gas distribution
operations in Florida generated
$328,000 and $804,000 in additional gross margin for the three
and six months ended June 30, 2017, respectively, compared to
the same periods in 2016, due primarily to an increase in
commercial and industrial customers in Florida.
Regulatory Proceedings
Delaware Division Rate Case
In December 2016, the Delaware PSC approved a
settlement agreement as recommended by the Hearing Examiner's
report. The settlement agreement, among other things, provided for
an increase in the Company's Delaware division revenue requirement of
$2.25 million and a rate of return on
common equity of 9.75 percent. The new authorized rates went into
effect on January 1, 2017. Any
amounts collected through 2016 interim rates in excess of the
respective portion of the $2.25
million were refunded to the ratepayers in March 2017.
Eastern Shore Rate Case
In January 2017, Eastern Shore filed a base rate
proceeding with the FERC, as required by the terms of its 2012 rate
case settlement agreement. Eastern Shore's proposed rates were
based on a cost of service of approximately $60 million, resulting in an overall requested
revenue increase of approximately $18.9
million and a requested rate of return on common equity of
13.75 percent. The FERC issued a notice of the filing in
January 2017, and the comment period
ended in February 2017. Fourteen
parties intervened in the proceeding, with six of those parties
filing protests of some aspect of the rate filing. The FERC issued
an order suspending the effectiveness of the proposed tariff rates
for the usual five-month period. A settlement conference was held
on July 27, 2017, in which the
parties reviewed the latest proposals and further discussed their
positions. Another settlement conference is scheduled for
August 30 and 31, 2017. Eastern Shore
has filed the requisite notice with the FERC to implement interim
rates effective August 1, 2017.
Investing for Future Growth
To support and
continue its growth, the Company has expanded, and will continue to
expand, its resources and capabilities. Eastern Shore has expanded,
and has announced significant additional expansions to, its
transmission system, and is therefore increasing its staffing. We
requested recovery of most of Eastern Shore's increased staffing
costs in its 2017 rate case. Growth in non-regulated energy
businesses, including Aspire Energy, PESCO and Eight Flags,
requires additional staff as well as corporate resources to support
the increased level of business operations. Finally, to allow the
Company to continue to identify and move growth initiatives forward
and to assist in developing additional initiatives, resources have
been added in the Company's corporate shared services departments.
In the three and six months ended June 30,
2017, the Company's staffing and associated costs increased
by $976,000 and $4.2 million, or five percent and 12 percent,
respectively, compared to the same period in 2016. The Company is
prudently managing the pace and magnitude of the investments being
made while ensuring that it appropriately expands its human
resources and systems capabilities to capitalize on future growth
opportunities.
Chesapeake
Utilities Corporation and Subsidiaries
Condensed
Consolidated Statements of Income (Unaudited)
(in thousands,
except shares and per share data)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Operating
Revenues
|
|
|
|
|
|
|
|
Regulated
Energy
|
$
|
70,996
|
|
|
$
|
67,395
|
|
|
$
|
168,650
|
|
|
$
|
156,611
|
|
Unregulated Energy
and other
|
54,088
|
|
|
34,947
|
|
|
141,594
|
|
|
92,027
|
|
Total Operating
Revenues
|
125,084
|
|
|
102,342
|
|
|
310,244
|
|
|
248,638
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
Regulated Energy cost
of sales
|
24,167
|
|
|
21,635
|
|
|
64,411
|
|
|
56,540
|
|
Unregulated Energy
and other cost of sales
|
40,505
|
|
|
22,934
|
|
|
101,260
|
|
|
56,958
|
|
Operations
|
30,408
|
|
|
28,087
|
|
|
63,321
|
|
|
55,246
|
|
Maintenance
|
3,403
|
|
|
2,904
|
|
|
6,634
|
|
|
5,383
|
|
Gain from a
settlement
|
(130)
|
|
|
(130)
|
|
|
(130)
|
|
|
(130)
|
|
Depreciation and
amortization
|
9,094
|
|
|
7,780
|
|
|
17,906
|
|
|
15,283
|
|
Other
taxes
|
3,971
|
|
|
3,390
|
|
|
8,501
|
|
|
7,236
|
|
Total operating
expenses
|
111,418
|
|
|
86,600
|
|
|
261,903
|
|
|
196,516
|
|
Operating
Income
|
13,666
|
|
|
15,742
|
|
|
48,341
|
|
|
52,122
|
|
Other expense,
net
|
(607)
|
|
|
(8)
|
|
|
(884)
|
|
|
(42)
|
|
Interest
charges
|
3,073
|
|
|
2,624
|
|
|
5,811
|
|
|
5,274
|
|
Income Before
Income Taxes
|
9,986
|
|
|
13,110
|
|
|
41,646
|
|
|
46,806
|
|
Income
taxes
|
3,940
|
|
|
5,081
|
|
|
16,456
|
|
|
18,410
|
|
Net
Income
|
$
|
6,046
|
|
|
$
|
8,029
|
|
|
$
|
25,190
|
|
|
$
|
28,396
|
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
16,340,665
|
|
|
15,315,020
|
|
|
16,329,009
|
|
|
15,300,931
|
|
Diluted
|
16,382,207
|
|
|
15,352,702
|
|
|
16,373,038
|
|
|
15,342,287
|
|
Earnings Per Share
of Common Stock:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.37
|
|
|
$
|
0.52
|
|
|
$
|
1.54
|
|
|
$
|
1.86
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.52
|
|
|
$
|
1.54
|
|
|
$
|
1.85
|
|
Chesapeake
Utilities Corporation and Subsidiaries
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
Assets
|
|
June 30,
2017
|
|
December 31,
2016
|
(in thousands,
except shares and per share data)
|
|
|
|
|
Property,
Plant and Equipment
|
|
|
|
|
Regulated
Energy
|
|
$
|
1,038,929
|
|
|
$
|
957,681
|
|
Unregulated
Energy
|
|
202,707
|
|
|
196,800
|
|
Other businesses and
eliminations
|
|
25,623
|
|
|
21,114
|
|
Total property,
plant and equipment
|
|
1,267,259
|
|
|
1,175,595
|
|
Less:
Accumulated depreciation and amortization
|
|
(260,428)
|
|
|
(245,207)
|
|
Plus:
Construction work in progress
|
|
44,556
|
|
|
56,276
|
|
Net property,
plant and equipment
|
|
1,051,387
|
|
|
986,664
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
2,419
|
|
|
4,178
|
|
Accounts receivable
(less allowance for uncollectible accounts of $862 and $909,
respectively)
|
|
41,113
|
|
|
62,803
|
|
Accrued
revenue
|
|
11,812
|
|
|
16,986
|
|
Propane inventory, at
average cost
|
|
4,649
|
|
|
6,457
|
|
Other inventory, at
average cost
|
|
9,996
|
|
|
4,576
|
|
Regulatory
assets
|
|
7,167
|
|
|
7,694
|
|
Storage gas
prepayments
|
|
4,415
|
|
|
5,484
|
|
Income taxes
receivable
|
|
14,409
|
|
|
22,888
|
|
Prepaid
expenses
|
|
3,939
|
|
|
6,792
|
|
Mark-to-market energy
assets
|
|
229
|
|
|
823
|
|
Other current
assets
|
|
2,287
|
|
|
2,470
|
|
Total current
assets
|
|
102,435
|
|
|
141,151
|
|
Deferred
Charges and Other Assets
|
|
|
|
|
Goodwill
|
|
15,070
|
|
|
15,070
|
|
Other intangible
assets, net
|
|
1,664
|
|
|
1,843
|
|
Investments, at fair
value
|
|
5,952
|
|
|
4,902
|
|
Regulatory
assets
|
|
76,128
|
|
|
76,803
|
|
Receivables and other
deferred charges
|
|
4,352
|
|
|
2,786
|
|
Total deferred
charges and other assets
|
|
103,166
|
|
|
101,404
|
|
Total
Assets
|
|
$
|
1,256,988
|
|
|
$
|
1,229,219
|
|
Chesapeake
Utilities Corporation and Subsidiaries
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
Capitalization and
Liabilities
|
|
June 30,
2017
|
|
December 31,
2016
|
(in thousands,
except shares and per share data)
|
|
|
|
|
Capitalization
|
|
|
|
|
Stockholders\'
equity
|
|
|
|
|
Preferred stock, par
value $0.01 per share (authorized 2,000,000 shares), no shares
issued and outstanding
|
|
$
|
—
|
|
|
$
|
—
|
|
Common stock, par
value $0.4867 per share (authorized 25,000,000 shares)
|
|
7,955
|
|
|
7,935
|
|
Additional
paid-in capital
|
|
252,071
|
|
|
250,967
|
|
Retained
earnings
|
|
206,896
|
|
|
192,062
|
|
Accumulated
other comprehensive loss
|
|
(5,244)
|
|
|
(4,878)
|
|
Deferred
compensation obligation
|
|
3,336
|
|
|
2,416
|
|
Treasury
stock
|
|
(3,336)
|
|
|
(2,416)
|
|
Total
stockholders' equity
|
|
461,678
|
|
|
446,086
|
|
Long-term debt,
net of current maturities
|
|
201,590
|
|
|
136,954
|
|
Total
capitalization
|
|
663,268
|
|
|
583,040
|
|
Current
Liabilities
|
|
|
|
|
Current portion of
long-term debt
|
|
12,124
|
|
|
12,099
|
|
Short-term
borrowing
|
|
145,591
|
|
|
209,871
|
|
Accounts
payable
|
|
52,101
|
|
|
56,935
|
|
Customer deposits and
refunds
|
|
30,725
|
|
|
29,238
|
|
Accrued
interest
|
|
1,637
|
|
|
1,312
|
|
Dividends
payable
|
|
5,312
|
|
|
4,973
|
|
Accrued
compensation
|
|
6,683
|
|
|
10,496
|
|
Regulatory
liabilities
|
|
5,609
|
|
|
1,291
|
|
Mark-to-market energy
liabilities
|
|
188
|
|
|
773
|
|
Other accrued
liabilities
|
|
12,084
|
|
|
7,063
|
|
Total current
liabilities
|
|
272,054
|
|
|
334,051
|
|
Deferred
Credits and Other Liabilities
|
|
|
|
|
Deferred income
taxes
|
|
234,716
|
|
|
222,894
|
|
Regulatory
liabilities
|
|
42,427
|
|
|
43,064
|
|
Environmental
liabilities
|
|
8,457
|
|
|
8,592
|
|
Other pension and
benefit costs
|
|
31,920
|
|
|
32,828
|
|
Deferred investment
tax credits and other liabilities
|
|
4,146
|
|
|
4,750
|
|
Total deferred
credits and other liabilities
|
|
321,666
|
|
|
312,128
|
|
Total
Capitalization and Liabilities
|
|
$
|
1,256,988
|
|
|
$
|
1,229,219
|
|
Chesapeake
Utilities Corporation and Subsidiaries
Distribution
Utility Statistical Data (Unaudited)
|
|
|
|
For the Three
Months Ended June 30, 2017
|
|
For the Three
Months Ended June 30, 2016
|
|
|
Delmarva NG
Distribution
|
|
Chesapeake
Utilities
Florida
NG
Division
|
|
FPU NG
Distribution
|
|
FPU Electric
Distribution
|
|
Delmarva NG
Distribution
|
|
Chesapeake
Utilities
Florida
NG
Division
|
|
FPU NG
Distribution
|
|
FPU Electric
Distribution
|
Operating
Revenues
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
11,096
|
|
|
$
|
1,365
|
|
|
$
|
7,633
|
|
|
$
|
10,477
|
|
|
$
|
10,480
|
|
|
$
|
1,267
|
|
|
$
|
6,294
|
|
|
$
|
10,418
|
|
Commercial
|
|
6,424
|
|
|
1,395
|
|
|
7,449
|
|
|
10,075
|
|
|
5,779
|
|
|
1,230
|
|
|
6,926
|
|
|
10,280
|
|
Industrial
|
|
1,849
|
|
|
1,577
|
|
|
4,775
|
|
|
733
|
|
|
1,658
|
|
|
1,590
|
|
|
5,041
|
|
|
661
|
|
Other
(1)
|
|
(3,136)
|
|
|
966
|
|
|
(1,271)
|
|
|
(207)
|
|
|
(1,740)
|
|
|
840
|
|
|
(1,578)
|
|
|
(1,471)
|
|
Total Operating
Revenues
|
|
$
|
16,233
|
|
|
$
|
5,303
|
|
|
$
|
18,586
|
|
|
$
|
21,078
|
|
|
$
|
16,177
|
|
|
$
|
4,927
|
|
|
$
|
16,683
|
|
|
$
|
19,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (in
Dts/MWHs)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
583,108
|
|
|
76,365
|
|
|
304,669
|
|
|
69,298
|
|
|
612,620
|
|
|
74,658
|
|
|
290,174
|
|
|
67,872
|
|
Commercial
|
|
614,311
|
|
|
2,710,729
|
|
|
459,354
|
|
|
74,766
|
|
|
670,593
|
|
|
1,356,421
|
|
|
532,434
|
|
|
75,071
|
|
Industrial
|
|
1,206,698
|
|
|
1,501,779
|
|
|
1,100,430
|
|
|
4,750
|
|
|
1,175,665
|
|
|
2,797,836
|
|
|
1,004,336
|
|
|
4,900
|
|
Other
|
|
20,216
|
|
|
—
|
|
|
(23,024)
|
|
|
1,874
|
|
|
26,581
|
|
|
—
|
|
|
(16,406)
|
|
|
1,961
|
|
Total
|
|
2,424,333
|
|
|
4,288,873
|
|
|
1,841,429
|
|
|
150,688
|
|
|
2,485,459
|
|
|
4,228,915
|
|
|
1,810,538
|
|
|
149,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
68,442
|
|
|
15,786
|
|
|
54,352
|
|
|
24,582
|
|
|
66,085
|
|
|
15,328
|
|
|
53,286
|
|
|
24,268
|
|
Commercial
|
|
6,836
|
|
|
1,430
|
|
|
4,072
|
|
|
7,429
|
|
|
6,745
|
|
|
1,388
|
|
|
4,265
|
|
|
7,410
|
|
Industrial
|
|
144
|
|
|
78
|
|
|
2,055
|
|
|
2
|
|
|
122
|
|
|
72
|
|
|
1,749
|
|
|
2
|
|
Other
|
|
7
|
|
|
—
|
|
|
—
|
|
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
75,429
|
|
|
17,294
|
|
|
60,479
|
|
|
32,013
|
|
|
72,956
|
|
|
16,788
|
|
|
59,300
|
|
|
31,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chesapeake
Utilities Corporation and Subsidiaries
Distribution
Utility Statistical Data (Unaudited)
|
|
|
|
For the Six Months
Ended June 30, 2017
|
|
For the Six Months
Ended June 30, 2016
|
|
|
Delmarva NG
Distribution
|
|
Chesapeake
Utilities
Florida
NG
Division
|
|
FPU NG
Distribution
|
|
FPU Electric
Distribution
|
|
Delmarva NG
Distribution
|
|
Chesapeake
Utilities
Florida
NG
Division
|
|
FPU NG
Distribution
|
|
FPU Electric
Distribution
|
Operating
Revenues
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
36,806
|
|
|
$
|
2,917
|
|
|
$
|
18,401
|
|
|
$
|
19,804
|
|
|
$
|
31,747
|
|
|
$
|
2,838
|
|
|
$
|
15,582
|
|
|
$
|
21,725
|
|
Commercial
|
|
17,836
|
|
|
2,918
|
|
|
17,043
|
|
|
19,489
|
|
|
15,440
|
|
|
2,646
|
|
|
15,160
|
|
|
19,822
|
|
Industrial
|
|
3,683
|
|
|
3,336
|
|
|
10,702
|
|
|
1,204
|
|
|
3,579
|
|
|
3,227
|
|
|
10,573
|
|
|
1,478
|
|
Other
(1)
|
|
(1,678)
|
|
|
1,866
|
|
|
(4,054)
|
|
|
(1,796)
|
|
|
(1,088)
|
|
|
1,757
|
|
|
(3,411)
|
|
|
(3,604)
|
|
Total Operating
Revenues
|
|
$
|
56,647
|
|
|
$
|
11,037
|
|
|
$
|
42,092
|
|
|
$
|
38,701
|
|
|
$
|
49,678
|
|
|
$
|
10,468
|
|
|
$
|
37,904
|
|
|
$
|
39,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (in
Dts/MWHs)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
2,391,008
|
|
|
199,640
|
|
|
775,480
|
|
|
130,624
|
|
|
2,318,217
|
|
|
213,130
|
|
|
797,086
|
|
|
141,795
|
|
Commercial
|
|
1,995,719
|
|
|
5,668,445
|
|
|
1,060,557
|
|
|
140,628
|
|
|
2,069,483
|
|
|
2,804,168
|
|
|
1,224,765
|
|
|
143,186
|
|
Industrial
|
|
2,580,496
|
|
|
3,269,209
|
|
|
2,289,693
|
|
|
7,910
|
|
|
2,545,306
|
|
|
6,091,648
|
|
|
2,130,091
|
|
|
11,580
|
|
Other
|
|
30,754
|
|
|
—
|
|
|
(15,876)
|
|
|
3,747
|
|
|
40,085
|
|
|
—
|
|
|
23,976
|
|
|
4,599
|
|
Total
|
|
6,997,977
|
|
|
9,137,294
|
|
|
4,109,854
|
|
|
282,909
|
|
|
6,973,091
|
|
|
9,108,946
|
|
|
4,175,918
|
|
|
301,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
68,572
|
|
|
15,725
|
|
|
54,196
|
|
|
24,510
|
|
|
66,084
|
|
|
15,285
|
|
|
53,165
|
|
|
24,218
|
|
Commercial
|
|
6,874
|
|
|
1,420
|
|
|
4,123
|
|
|
7,438
|
|
|
6,771
|
|
|
1,383
|
|
|
4,263
|
|
|
7,398
|
|
Industrial
|
|
143
|
|
|
77
|
|
|
1,997
|
|
|
2
|
|
|
121
|
|
|
72
|
|
|
1,732
|
|
|
2
|
|
Other
|
|
6
|
|
|
—
|
|
|
—
|
|
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
75,595
|
|
|
17,222
|
|
|
60,316
|
|
|
31,950
|
|
|
72,980
|
|
|
16,740
|
|
|
59,160
|
|
|
31,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Operating Revenues from "Other" sources include unbilled revenue,
under (over) recoveries of fuel cost, conservation revenue, other
miscellaneous charges, fees for billing services provided to third
parties and adjustments for pass-through taxes.
View original
content:http://www.prnewswire.com/news-releases/chesapeake-utilities-corporation-reports-second-quarter-results-300498778.html
SOURCE Chesapeake Utilities Corporation