On February 26, 2025, Chesapeake Utilities Corp (CPK, Financial) released its 8-K filing detailing its financial performance for the fiscal year 2024. Chesapeake Utilities Corp, a diversified energy delivery company, operates in natural gas transmission and distribution, electricity generation and distribution, propane gas distribution, and other energy services. The company is divided into two segments: Regulated Energy and Unregulated Energy.
Financial Performance and Challenges
For the full year 2024, Chesapeake Utilities Corp reported a net income of $118.6 million, translating to earnings per share (EPS) of $5.26. This result slightly exceeded the annual analyst estimate of $5.24 EPS. However, the fourth quarter EPS of $1.60 fell short of the estimated $1.61. The company's revenue for the year was $787.2 million, below the annual estimate of $803.50 million. The fourth quarter revenue was $215.0 million, also missing the quarterly estimate of $237.84 million.
The company's performance was bolstered by contributions from the acquisition of Florida City Gas (FCG), regulatory initiatives, and infrastructure programs. However, increased interest expenses related to the FCG acquisition and additional shares outstanding partially offset these gains.
Key Financial Achievements
Chesapeake Utilities Corp achieved an adjusted net income of $121.5 million and an adjusted EPS of $5.39 for 2024, excluding transaction and transition-related expenses from the FCG acquisition. The adjusted gross margin increased by $113.3 million, driven by organic growth in natural gas distribution and pipeline expansion projects.
The company maintained its capital structure, with an equity to total capitalization ratio of 48.4% as of December 31, 2024. This achievement is significant for a regulated utilities company, as it indicates financial stability and the ability to fund future growth projects.
Income Statement and Balance Sheet Insights
Operating income for 2024 was $228.2 million, a 51.3% increase from the previous year. The increase was primarily due to contributions from FCG and other growth initiatives. The company's operating expenses rose due to higher insurance costs, facilities maintenance, and vehicle expenses.
Chesapeake Utilities Corp's balance sheet reflects a strategic focus on capital investments, with total capital expenditures reaching $356 million, aligning with the upper end of the company's guidance range.
Commentary and Future Outlook
“2024 has been a transformational year for Chesapeake Utilities – we started the year focused on integrating Florida City Gas and ended the year with substantial progress toward capitalizing on this acquisition as well as expanding opportunities in our legacy operations,” said Jeff Householder, the Company's Chair of the Board, President and Chief Executive Officer.
The company reaffirmed its 2025 EPS guidance range of $6.15 to $6.35 per share, projecting continued growth driven by strategic investments and regulatory initiatives.
Analysis and Conclusion
Chesapeake Utilities Corp's fiscal year 2024 results highlight the company's ability to integrate acquisitions and drive growth through strategic initiatives. While the company faced challenges such as increased interest expenses, its strong operational performance and strategic investments position it well for future growth. The company's reaffirmed guidance for 2025 and beyond suggests confidence in its growth trajectory, making it a potentially attractive option for value investors in the regulated utilities sector.
Explore the complete 8-K earnings release (here) from Chesapeake Utilities Corp for further details.
