Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chesapeake Utilities Corp (CPK, Financial) reported a 6% increase in adjusted earnings per share to $2.22 for the first quarter of 2025, compared to the same period in 2024.
- The company reaffirmed its full-year 2025 adjusted earnings per share guidance of $6.15 to $6.35.
- Chesapeake Utilities Corp (CPK) has already invested $113 million in capital growth projects in the first quarter of 2025, with a total plan of $325 to $375 million for the year.
- The company experienced strong customer growth in its service areas, with Delmarva and Florida regions seeing increases of nearly 4% and 3%, respectively.
- Chesapeake Utilities Corp (CPK) received an inaugural investment grade credit rating from Fitch Ratings, reflecting its commitment to prudent investment and disciplined balance sheet management.
Negative Points
- The Oyster Resiliency Upgrade (WRU) project faced a $20 million increase in capital investment costs, bringing the total expected project cost to approximately $100 million.
- The expected in-service date for the WRU project has been delayed from October 2025 to the second quarter of 2026, impacting anticipated margins.
- Chesapeake Utilities Corp (CPK) experienced increased operations and maintenance expenses, which reduced adjusted EPS by $0.20 per share in the first quarter of 2025.
- The company faced a $0.17 per share increase in depreciation and amortization expense, as there was no RA depreciation expense reduction this quarter compared to the first quarter of last year.
- Financing activities, including debt issuance and additional equity issuances, reduced adjusted EPS by $0.11 per share in the first quarter of 2025.
Q & A Highlights
Q: Can you talk about the natural gas infrastructure in Cape Canaveral, Florida, and any regulatory developments for the space industry?
A: There are no substantive updates in that area, but we have good news in Virginia with a $6.5 million grant for infrastructure expansion at Wallops Island. We continue to engage with parties involved in the Florida space launch effort, and there is substantial interest from the state, NASA, and other companies. We anticipate participating in the liquefied natural gas supply for rocket launches as this area is now part of our service territory.
Q: Is there ongoing expansion for Marlin Gas Services, and can you provide details on its footprint?
A: We continue to capitalize Marlin appropriately and are exploring growth opportunities, particularly in Ohio. While there is no large capital expansion program announced, we are investing in equipment like cabs, trailers, and mobile compressors to support long-term service contracts across the Mid-Atlantic and Southeast.
Q: How are tariffs affecting your business, and what adjustments have you made for the WRU project delay?
A: We have experienced minimal issues related to tariffs, but there is a general expectation of rising prices. The WRU project saw cost increases partly due to tariffs and labor constraints. Despite a $3 million margin drop from the WRU delay, we can manage the impact through operational adjustments and expect to recover costs through FERC rate adjustments.
Q: Are there concerns about foreign travel, tourism, or housing starts affecting your business in Delmarva and Florida?
A: We have not seen specific impacts from tourism on our business. Single-family residential developments continue, with a substantial backlog of contracted housing starts. While the multi-family market faces challenges, it has not significantly affected us.
Q: Can Chesapeake hit the midpoint of guidance without the WRU project margin for 2025?
A: We intend to be within the guidance range, despite the WRU margin shift. We are optimistic about our capital program and have not seen significant economic impacts on our business. The WRU margin is manageable, and we will continue to assess our position within the guidance range as the year progresses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
