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Chesapeake Utilities Corporation Reports Higher Earnings For The Second Quarter

- Second quarter net income increased to $5.1 million, or $0.53 per share

DOVER, Del., Aug. 7, 2014 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) today reported second quarter financial results. The Company's net income for the three months ended June 30, 2014 was $5.1 million, or $0.53 per share. This represents an increase of $778,000, or $0.08 per share, over the same quarter in 2013. 

For the six months ended June 30, 2014, the Company reported net income of $22.8 million, or $2.35 per share. This represents an increase of $3.6 million, or $0.36 per share, compared to the same period in 2013.

"On both a quarter and year-to-date basis, our performance has been strong.  Our results have been generated largely as a result of additional gross margin generated from recent natural gas service expansions, other capital investments, and the acquisitions that were completed near the end of the second quarter of 2013," stated Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. "We have expanded our internal capabilities to manage and cultivate growth, and to continue to aggressively pursue both regulated and unregulated energy opportunities that will position the Company for continued growth in 2015 and beyond," Mr. McMasters added.

A more detailed discussion and analysis of the Company's results for each segment are provided in the following pages.

Comparative Results for the Quarters Ended June 30, 2014 and 2013

The Company's operating income for the three months ended June 30, 2014 was $10.5 million, an increase of $1.3 million over the same quarter in 2013.  Gross margin increased by $4.1 million due primarily to: (a) $2.1 million of additional gross margin generated by natural gas service expansions and other customer growth; (b) $1.0 million as a result of acquisitions completed in 2013; and (c) $643,000 related to continued implementation of the Florida Gas Reliability Infrastructure Program ("GRIP"). Other operating expenses increased by $2.8 million as a result of: (a) $1.5 million in increased payroll costs to support recent growth and expand the Company's capabilities to cultivate future growth and from a change in vacation policy in 2013 which reduced the accrual for that year; (b) $1.1 million in additional costs associated with the operation of new acquisitions; (c) $852,000 in increased depreciation and property tax costs due to new capital investments; and (d) $661,000 in higher benefits costs. These increases in other operating expenses were partially offset by the absence of $759,000 in a one-time sales tax expense incurred in the second quarter of 2013 related to the acquisition of certain operating assets of Eastern Shore Gas and its affiliates ("ESG"), which are not related to, or affiliated with, the Company's interstate natural gas transmission subsidiary, Eastern Shore Natural Gas Company ("Eastern Shore").

Regulated Energy

Operating income for the regulated energy segment increased by $2.1 million to $10.7 million for the quarter ended June 30, 2014, compared to the same quarter in 2013.  Additional gross margin of  $3.9 million more than offset a $1.8 million increase in other operating expenses. The significant components of the gross margin increase included:

  • $1.5 million of new margin generated from major natural gas service expansions completed in 2013 and 2014;
  • $966,000 generated by Sandpiper Energy, Inc. ("Sandpiper"), which acquired the operating assets of ESG and its affiliates in May 2013;
  • $643,000 generated by the Florida GRIP; and
  • $572,000 generated as a result of other growth in natural gas distribution and transmission services.

The increase in other operating expenses was due primarily to: (a) $832,000 in higher depreciation, amortization, asset removal and property tax costs associated with capital investments to support growth and maintain system integrity; (b) $782,000 in other operating expenses associated with Sandpiper's operations; (c) $439,000 in higher payroll costs incurred primarily to support recent growth and expand the Company's capabilities to cultivate future growth; (d) $399,000 in higher benefits costs; and (e) $419,000 in higher payroll costs in Florida due primarily to a vacation policy change in 2013, which reduced the accrual for that year. These increases in other operating expenses were partially offset by the absence of a one-time sales tax expense of $759,000 in the second quarter of 2013 related to the acquisition of ESG.

Unregulated Energy

The unregulated energy segment reported an operating loss of $43,000 for the quarter ended June 30, 2014, compared to operating income of $447,000 in the same quarter of 2013. Due to the seasonal nature of the propane distribution operations, the unregulated energy segment typically reports an operating loss or modest operating income in the second quarter. A gross margin increase of $210,000 was offset by increased other operating expenses of $700,000 of which $466,000 is attributable to higher payroll and benefits costs principally attributed to resources added to support growth. 

Other

The "Other" segment, which consists primarily of BravePoint®, Inc. ("BravePoint"), reported an operating loss of $211,000 for the quarter ended June 30, 2014, compared to operating income of $86,000 in the same quarter in 2013.  This increased loss resulted from a $339,000 increase in operating expenses partially offset by a $42,000 increase in gross margin. The increased operating expenses were due primarily to augmented  sales resources for BravePoint.

Comparative Results for the Six Months Ended June 30, 2014 and 2013

The Company's operating income for the six months ended June 30, 2014 was $42.1 million, an increase of $6.4 million over the same period in 2013. Gross margin increased by $15.8 million, which was partially offset by an increase of $9.4 million in other operating expenses. Acquisitions completed in 2013 generated $5.8 million of additional gross margin and $3.2 million of other operating expenses during the six months ended June 30, 2014. The remaining increase in gross margin was due primarily to: (a) $3.0 million in new gross margin generated from natural gas service expansions; (b) $2.3 million from increased natural gas usage due to colder temperatures on the Delmarva Peninsula (c) $1.3 million in additional revenue related to continued implementation of the Florida GRIP; (d) $1.3 million in increased wholesale propane sales; (e) $1.2 million in other natural gas customer growth; and (f) $930,000 in higher profit from increased propane wholesale marketing activity. Other operating expense increases included: (a) $2.7 million in increased payroll to support recent and future growth and from a change in vacation policy in 2013 which reduced the accrual for that year; (b) $1.7 million in higher benefits costs as a result of healthcare costs and other employee-related expenses; (c) $1.6 million in increased depreciation and property tax costs associated with new capital investments; and (d) $742,000 in increased accruals for incentive bonuses as a result of the Company's financial performance to date. These increases in other operating expenses were partially offset by the absence of a one-time sales tax expense of $759,000 in the second quarter of 2013 related to the ESG acquisition.

Regulated Energy

Operating income for the regulated energy segment increased by $5.9 million to $31.8 million for the six months ended June 30, 2014, compared to the same period in 2013.  A gross margin increase of $11.8 million was partially offset by a $5.9 million increase in other operating expenses. The significant components of the gross margin increase included:

  • $5.3 million generated by Sandpiper, which acquired the operating assets of ESG in May 2013;
  • $3.0 million generated from major natural gas service expansions completed in 2013 and 2014;
  • $1.3 million generated by the Florida GRIP;
  • $1.2 million from other growth in natural gas distribution and transmission services; and
  • $524,000 from higher customer consumption due to colder temperatures.

The increase in other operating expenses was due primarily to: (a) $2.2 million in other operating expenses associated with Sandpiper's operations; (b) $1.6 million in higher depreciation, amortization, asset removal and property tax costs associated with capital investments to support growth and maintain system integrity;  (c) $1.1 million in higher benefits costs; (d) $864,000 in higher payroll costs due primarily to support recent growth and expand the Company's capabilities to cultivate future growth; and (e) $610,000 in higher payroll costs in Florida principally resulting from a change in vacation policy in 2013 which reduced the accrual for that year.  These increases in other operating expenses were partially offset by the absence of a one-time sales tax expense of $759,000 in 2013 related to the ESG acquisition.

Unregulated Energy

Operating income for the unregulated energy segment increased by $999,000 to $10.8 million for the six months ended June 30, 2014, compared to the same period in 2013.  A $3.8 million increase in gross margin was partially offset by a $2.8 million increase in other operating expenses. The significant components of the gross margin increase included:

  • $1.7 million in higher margin as a result of higher consumption by retail propane customers due to colder temperatures;
  • $1.3 million in increased wholesale propane sales due primarily to sales to an affiliate of ESG; and
  • $930,000 in higher profit from Xeron, Inc. ("Xeron"), the Company's propane wholesale marketing subsidiary, as higher volatility in wholesale propane prices resulted in higher profit on trading activity.

The increase in other operating expenses was due primarily to: (a) $905,000 in additional expenses incurred by the entities acquired in 2013; (b) $857,000 in higher payroll expense due to increased seasonal overtime and additional resources to support growth; and (c) $256,000 in increased accruals for incentive bonuses as a result of strong financial performance on a year-to-date basis. 

Other

The "Other" segment reported an operating loss of $538,000 and $39,000 for the six months ended June 30, 2014 and 2013, respectively. BravePoint's gross margin increased by $240,000 as a result of higher consulting revenues, while its other operating expenses increased by $725,000 as a result of higher payroll due primarily to the addition of sales resources and benefits expenses.

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 most recent 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 information is presented on a diluted basis.

Conference Call

Chesapeake Utilities Corporation will host a conference call on August 8, 2014 at 10:00 a.m. Eastern Time to discuss the Company's financial results for the quarter ended June 30, 2014. To participate in this call, dial 866.821.5457 and reference Chesapeake Utilities Corporation's 2014 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.

About Chesapeake Utilities Corporation

Chesapeake Utilities Corporation is a diversified energy company engaged in natural gas distribution, transmission and marketing, electricity distribution, propane gas distribution and wholesale marketing, advanced information services and other related services. Information about Chesapeake Utilities Corporation and the Chesapeake family of businesses is available at http://www.chpk.com.

For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799

 


Financial Summary

(in thousands, except per share)






Three Months Ended


Six Months Ended


June 30,


June 30,


2014



2013



2014



2013


Gross Margin (1)












  Regulated Energy

$

36,974



$

33,101



$

84,832



$

73,052


  Unregulated Energy

8,301



8,091



29,115



25,275


  Other

2,108



2,066



4,141



3,955


 Total Gross Margin

$

47,383



$

43,258



$

118,088



$

102,282














Operating Income (Loss)












   Regulated Energy

$

10,711



$

8,619



$

31,802



$

25,925


   Unregulated Energy

(43)



447



10,815



9,816


   Other

(211)



86



(538)



(39)


 Total Operating Income

10,457



9,152



42,079



35,702














Other Income, net of other expenses

405



24



413



312


Interest Charges

2,303



2,016



4,459



4,088


Income Taxes

3,425



2,804



15,218



12,701


 Net Income

$

5,134



$

4,356



$

22,815



$

19,225














Earnings Per Share of Common Stock












Basic

$

0.53



$

0.45



$

2.36



$

2.00


Diluted

$

0.53



$

0.45



$

2.35



$

1.99


















(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. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. Chesapeake 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 the Company under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. Chesapeake's management uses gross margin in measuring its business units' performance and has historically analyzed and reported gross margin information publicly. Other companies may calculate gross margin in a different manner.

 

 

Financial Summary Highlights








Key variances for the three months ended June 30, 2014 included:








(in thousands, except per share)


Pre-tax

Income


Net

Income


Earnings

Per Share

Second Quarter of 2013 Reported Results


$

7,160



$

4,356



$

0.45


Adjusting for unusual items:










One-time sales tax expensed by Sandpiper associated with the acquisition


759



462



0.05




759



462



0.05


Increased Gross Margins:










Major Projects (See Major Projects Highlights table)










Service expansions


1,545



939



0.10


Contribution from Sandpiper


966



588



0.06


GRIP


643



391



0.04


Other natural gas growth


572



348



0.04


Contribution from other acquisitions


53



32






3,779



2,298



0.24


(Increased) Decreased Other Operating Expenses:










Higher payroll costs


(1,509)



(918)



(0.09)


Expenses from acquisitions


(1,098)



(668)



(0.07)


Higher depreciation, asset removal and property tax costs due to new capital investments


(852)



(519)



(0.05)


Higher benefits costs


(661)



(402)



(0.04)


Lower accrual for incentive bonuses


316



193



0.02




(3,804)



(2,314)



(0.23)


Net Other Changes


665



332



0.02


Second Quarter of 2014 Reported Results


$

8,559



$

5,134



$

0.53


 

 

Key variances for the six months ended June 30, 2014 included:








(in thousands, except per share)


Pre-tax

Income


Net

Income


Earnings

Per Share

Six months ended June 30, 2013 Reported Results


$

31,926



$

19,225



$

1.99


Adjusting for unusual items:










Weather impact (due primarily to colder temperatures in 2014)


2,266



1,365



0.14


One-time sales tax expensed by Sandpiper associated with the acquisition


759



457



0.05




3,025



1,822



0.19


Increased Gross Margins:










Major Projects (See Major Projects Highlights table)










Contribution from Sandpiper


5,255



3,165



0.33


Service expansions


2,970



1,789



0.18


GRIP


1,310



789



0.08


Increased wholesale propane sales


1,286



774



0.08


Other natural gas growth


1,159



698



0.07


Propane wholesale marketing


930



560



0.06


Contributions from other acquisitions


555



334



0.03




13,465



8,109



0.83


Increased Other Operating Expenses:










Expenses from acquisitions


(3,214)



(1,935)



(0.20)


Higher payroll costs


(2,664)



(1,605)



(0.17)


Higher benefits costs


(1,709)



(1,030)



(0.11)


Higher depreciation, asset removal costs and property tax costs due to new capital investments


(1,631)



(982)



(0.10)


Larger accrual for incentive bonuses


(742)



(447)



(0.05)




(9,960)



(5,999)



(0.63)


Net Other Changes


(423)



(342)



(0.03)


Six months ended June 30, 2014 Reported Results


$

38,033



$

22,815



$

2.35


 

The following information highlights certain key factors contributing to the Company's results for the quarter and six months ended June 30, 2014:

Major Projects

Acquisition

In May 2013, the Company completed the purchase of the operating assets of ESG.  Approximately 11,000 residential and commercial underground propane distribution system customers acquired in this transaction are now being served by Sandpiper under the tariff approved by the Maryland Public Service Commission ("PSC"). The Company is evaluating the potential conversion of some of the underground propane distribution systems to natural gas distribution and has begun to convert some of the customers.  This acquisition was accretive to earnings per share in the first full year of operations, generating $0.22 in additional earnings per share to the Company.  The Company generated $966,000 and $5.3 million, in additional gross margin from Sandpiper for the three and six months ended June 30, 2014, respectively, and incurred $782,000 and $2.2 million in additional other operating expenses for the three and six months ended June 30, 2014, respectively. Additionally, in the second quarter of 2013, the Company recorded $759,000 in a one-time sales tax expense associated with the acquisition of ESG.

Service Expansions

During 2013, Eastern Shore commenced new natural gas transmission services to local distribution utilities and industrial customers in Delaware and Maryland. These new services generated additional gross margins of $740,000 and $2.0 million for the three and six months ended June 30, 2014, respectively, compared to the same periods in 2013.

Eastern Shore also executed a one-year contract with another industrial customer to provide 50,000 dekatherms per day of additional transmission service from April 2014 to April 2015. This short-term contract generated $599,000 in the second quarter of 2014 and is expected to generate $1.9 million and $767,000 of gross margin in 2014 and 2015, respectively.

Eastern Shore is constructing a pipeline lateral to an industrial customer facility in Kent County, Delaware. Upon completion of this lateral, which is expected to be operational in October 2014, this new service is expected to generate annual gross margin of approximately $1.2 million to $1.8 million.  During 2014, the Company expects to generate $463,000 in additional gross margin from this new service. The new facilities include approximately 5.5 miles of pipeline lateral and metering facilities, which will extend from Eastern Shore's mainline to the new industrial customer facility.

In August 2013, Peninsula Pipeline Company, Inc., the Company's intrastate natural gas transmission subsidiary, commenced a new firm transportation service in Florida with an unaffiliated utility. This new service generated $210,000 and $420,000 in gross margin for the three and six months ended June 30, 2014, respectively, compared to the same periods in 2013.

GRIP

In August 2012, the Florida PSC approved the GRIP, which is designed to recover capital and other program-related-costs, inclusive of a return on investment, to replace older pipes in the Company's Florida service territories. The Company received approval to invest $75.0 million to replace qualifying distribution mains and services (any material other than coated steel or plastic). Since the program's inception in August 2012, the Company has invested $29.3 million.  During the first half of 2014, the Company invested $9.5 million and expects to invest an additional $12.4 million during the second half of 2014.  These investments generated additional gross margin of $643,000 and $1.3 million for the three and six months ended June 30, 2014, respectively, compared to the same periods in 2013.

Investing in Growth

The Company has continued to expand its resources and capabilities to support growth. The Company's Delmarva natural gas distribution operation has initiated natural gas distribution expansions in Sussex County in Delaware, and Worcester and Cecil County in Maryland, which require the construction and conversion of distribution facilities, as well as the conversion of residential customers' appliances and equipment. To support this growth as well as future expansions, our Delmarva natural gas distribution operation has increased staffing. Eastern Shore also increased its staffing.  Finally, resources have been added in the Company's corporate shared services departments to increase the Company's overall capabilities to support sustained future growth. The additional staffing increased payroll expenses for the Company's Regulated Energy segment by $439,000 and $864,000, respectively, for the three and six months ended June 30, 2014, compared to the same periods in 2013.  The Company expects to make additional investments in human resources, as needed, to further develop our capability to capitalize on future growth opportunities.

Weather and Consumption

Weather was not a significant factor in the second quarter. Temperatures on the Delmarva Peninsula and in Florida during the first quarter of 2014 were significantly colder than the first quarter of 2013, which positively affected the Company's year-to-date results in 2014.  The following tables highlight the heating degree-day ("HDD") and cooling degree-day ("CDD") information for the three and six months ended June 30, 2014 and 2013 and the gross margin variance resulting from the weather fluctuation in those periods.

HDD and CDD Information

 


Three Months Ended





Six Months Ended





June 30,





June 30,





2014



2013



Variance


2014



2013



Variance

Delmarva


















Actual HDD

456



490



(34)



3,173



2,897



276


10-Year Average HDD ("Normal")

459



473



(14)



2,820



2,850



(30)


Variance from Normal

(3)



17






353



47























Florida


















Actual HDD

17



19



(2)



574



487



87


10-Year Average HDD ("Normal")

26



28



(2)



555



569



(14)


Variance from Normal

(9)



(9)






19



(82)























Florida


















Actual CDD

928



865



63



970



946



24


10-Year Average CDD ("Normal")

908



911



(3)



982



986



(4)


Variance from Normal

20



(46)






(12)



(40)





 

Gross Margin Variance attributed to Weather

 

(in thousands)

Q2 2014 vs. Q2
2013


Q2 2014 vs.
Normal


YTD 2014 vs.
YTD 2013


YTD 2014 vs.
Normal

Delmarva












Regulated Energy

$

(256)



$

19



$

255



$

636


Unregulated Energy

(39)



(46)



1,694



1,096


Florida












Regulated Energy

(56)



(116)



269



(322)


Unregulated Energy





48



81


Total

$

(351)



$

(143)



$

2,266



$

1,491


 

Propane

During 2014, retail propane margins on the Delmarva Peninsula reverted to more normal levels as a significant increase in wholesale prices in late 2013 and early 2014 increased our average propane inventory cost.  This reduced our Delmarva gross margin by $75,000 and $891,000 for the three and six months ended June 30, 2014, respectively.  In Florida, higher retail propane margins as a result of local market conditions increased its gross margin by $312,000 and $637,000 for the three and six months ended June 30, 2014.

Wholesale propane sales increased, generating additional gross margin of $254,000 and $1.3 million, for the three and six months ended June 30, 2014, respectively, primarily due to sales to an affiliate of ESG.

Xeron, which benefits from wholesale price volatility by entering into trading transactions, did not have a significant impact on the quarter-over-quarter variance for the three months ended June 30, 2014 due to lower wholesale price volatility.  On a year-to-date basis, Xeron generated an increase in gross margin of $930,000, compared to the same period in 2013. This increase was due to higher wholesale price volatility, primarily during the winter heating season, which resulted in increased trading activity and higher profits on executed trades.

 


Chesapeake Utilities Corporation and Subsidiaries

Major Project Highlights (Unaudited)


Major Projects Initiated (dollars in thousands):


Gross Margin


Q2 2014


YTD 2014


2014 (1)

Acquisition:









ESG acquisition being served by Sandpiper in Worcester County, Maryland (2)

$

1,504



$

5,794



$

9,817


Service Expansions









Natural Gas Distribution:









Long-term









Sussex County, Delaware (3)

$

155



$

359



$

694


Natural Gas Transmission:









Short-term









New Castle County, Delaware (4) (5)

$

599



$

599



$

1,862


Kent County, Delaware (5)






Total Short-term

$

599



$

599



$

1,862


Long-term









Sussex County, Delaware (6)

$

431



$

863



$

1,725


New Castle County, Delaware (6) (7)

741



1,482



2,964


Nassau County, Florida (6)

328



655



1,300


Worcester County, Maryland (6)

137



274



547


Cecil County, Maryland (6)

287



574



1,147


Indian River County, Florida

210



420



840


Kent County, Delaware

665



1,330



3,123


Total Long-term

$

2,799



$

5,598



$

11,646











Total Service Expansions

$

3,553



$

6,556



$

14,202











Total Major Projects

$

5,057



$

12,350



$

24,019











Less: 2013 Margin

$

2,545



$

4,124



$

13,176


Incremental Margin in 2014 over 2013

$

2,512



$

8,226



$

10,843











(1) The figures provided represent the estimated annual gross margin.

(2) During the three and six months ended June 30, 2014, we incurred $782,000 and $2.2 million, respectively, in other operating expenses related to Sandpiper's operation. We expect to incur a total of $6.3 million in other operating expenses for all of 2014.

(3) These services generated $153,000 and $355,000 in gross margin for the three and six months ended June 30, 2013, respectively.

(4) Expected gross margin in 2014 includes $1.9 million from a new short-term contract for 50,000 Dts/d for one year, which began in April 2014.

(5) We provided short-term service for New Castle County and generated $128,000 and $168,000 in gross margin for the three and six months ended June 30, 2013, respectively.  We also provided short-term service for Kent County and generated $386,000 in gross margin for three and six months ended June 30, 2013.  These short-term services were displaced by the new long-term services in November 2013.

(6) Gross margin generated by these services for the three months ended June 30, 2013 was $345,000 for Sussex County, Delaware; $343,000 for New Castle County, Delaware; $334,000 for Nassau County, Florida; $98,000 for Worcester County Maryland and $220,000 for Cecil County, Maryland. Gross margin generated by these services for the six months ended June 30, 2013 was $690,000 for Sussex County, Delaware; $686,000 for New Castle County, Delaware; $665,000 for Nassau County, Florida; $195,000 for Worcester County Maryland and $441,000 for Cecil County, Maryland.

(7) Gross margin generated from this service expansion replaces the 10,000 Dts/d contract, which expired in November 2012. This expired contract had annualized gross margin of $1.1 million.

 

 


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,


2014



2013



2014



2013


Operating Revenues












Regulated Energy

$

61,646



$

55,216



$

163,812



$

136,783


Unregulated Energy

34,321



36,025



114,294



91,016


Other

4,530



2,905



8,728



7,075


Total Operating Revenues

100,497



94,146



286,834



234,874


Operating Expenses












Regulated energy cost of sales

24,672



22,115



78,979



63,730


Unregulated energy and other cost of sales

28,442



28,773



89,766



68,861


   Operations

24,615



22,822



51,242



44,577


   Maintenance

2,457



1,820



4,606



3,542


   Depreciation and amortization

6,736



5,977



13,371



11,797


   Other taxes

3,118



3,487



6,791



6,665


Total operating expenses

90,040



84,994



244,755



199,172


Operating Income

10,457



9,152



42,079



35,702


Other income, net of other expenses

405



24



413



312


Interest charges

2,303



2,016



4,459



4,088


Income Before Income Taxes

8,559



7,160



38,033



31,926


Income taxes

3,425



2,804



15,218



12,701


Net Income

$

5,134



$

4,356



$

22,815



$

19,225














Weighted Average Common Shares Outstanding:












Basic

9,704,161



9,621,580



9,681,422



9,611,610


Diluted

9,737,852



9,695,470



9,715,762



9,687,253














Earnings Per Share of Common Stock:












Basic

$

0.53



$

0.45



$

2.36



$

2.00


Diluted

$

0.53



$

0.45



$

2.35



$

1.99


 

 

Chesapeake Utilities Corporation and Subsidiaries

 

Condensed Consolidated Balance Sheets (Unaudited)

Assets


June 30,
2014


December 31, 2013

(in thousands, except shares)







 Property, Plant and Equipment







 Regulated energy


$

710,444



$

691,522


 Unregulated energy


78,616



76,267


 Other


21,677



21,002


 Total property, plant and equipment


810,737



788,791


 Less:  Accumulated depreciation and amortization


(186,663)



(174,148)


 Plus:  Construction work in progress


36,615



16,603


 Net property, plant and equipment


660,689



631,246


 Current Assets







 Cash and cash equivalents


2,529



3,356


Accounts receivable (less allowance for uncollectible accounts of $1,819 and $1,635, respectively)


44,858



75,293


 Accrued revenue


7,631



13,910


 Propane inventory, at average cost


6,836



10,456


 Other inventory, at average cost


3,382



4,880


 Storage gas prepayments


3,131



4,318


 Prepaid expenses


4,229



6,910


 Income taxes receivable




2,609


 Mark-to-market energy assets


136



385


 Regulatory assets


5,822



2,436


 Deferred income taxes


1,657



1,696


 Other current assets


203



160


 Total current assets


80,414



126,409


 Deferred Charges and Other Assets







 Investments, at fair value


3,542



3,098


 Regulatory assets


66,300



66,584


 Goodwill


4,625



4,354


 Other intangible assets, net


2,775



2,975


 Receivables and other deferred charges


2,740



2,856


 Total deferred charges and other assets


79,982



79,867


Total Assets


$

821,085



$

837,522


 

 

Chesapeake Utilities Corporation and Subsidiaries

 

Condensed Consolidated Balance Sheets (Unaudited)

Capitalization and Liabilities


June 30,
2014


December 31,
2013

(in thousands, except shares and per share data)







 Capitalization







 Stockholders' equity







 Common stock, par value $0.4867 per share







(authorized 25,000,000 shares)


$

4,727



$

4,691


 Additional paid-in capital


154,619



152,341


 Retained earnings


139,350



124,274


 Accumulated other comprehensive loss


(2,473)



(2,533)


 Deferred compensation obligation


1,202



1,124


 Treasury stock


(1,202)



(1,124)


 Total stockholders' equity


296,223



278,773


 Long-term debt, net of current maturities


165,370



117,592


 Total capitalization


461,593



396,365


 Current Liabilities







 Current portion of long-term debt


11,117



11,353


 Short-term borrowing


47,870



105,666


 Accounts payable


30,184



53,482


 Accrued compensation


5,495



8,394


 Accrued interest


1,352



1,235


 Dividends payable


3,933



3,710


 Income taxes payable


695




 Mark-to-market energy liabilities


32



127


 Regulatory liabilities


5,875



4,157


 Customer deposits and refunds


23,482



26,140


 Other accrued liabilities


9,978



7,678


 Total current liabilities


140,013



221,942


 Deferred Credits and Other Liabilities







 Deferred income taxes


142,766



142,597


 Deferred investment tax credits


57



74


 Regulatory liabilities


3,975



4,402


 Accrued asset removal cost - Regulatory liability


39,991



39,510


 Environmental liabilities


9,076



9,155


 Other pension and benefit costs


20,123



21,000


 Other liabilities


3,491



2,477


 Total deferred credits and other liabilities


219,479



219,215


Total Capitalization and Liabilities


$

821,085



$

837,522


 

 


Chesapeake Utilities Corporation and Subsidiaries

Distribution Utility Statistical Data (Unaudited)


For the Three Months Ended June 30, 2014


For the Three Months Ended June 30, 2013


Delmarva NG
Distribution(2)

Chesapeake Florida NG Division

FPU NG Distribution

FPU Electric Distribution


Delmarva NG

Distribution

Chesapeake Florida NG Division

FPU NG Distribution

FPU Electric Distribution

Operating Revenues

(in thousands)
















  Residential

$

12,113


$

1,144


$

5,756


$

8,961



$

9,971


$

1,112


$

5,523


$

9,584


  Commercial

7,103


1,069


8,333


8,855



5,290


1,045


8,519


9,552


  Industrial

1,468


1,266


3,224


1,001



1,278


1,237


2,890


662


  Other (1)

(3,972)


739


(1,670)


(281)



(2,960)


504


(1,528)


(2,498)


Total Operating Revenues

$

16,712


$

4,218


$

15,643


$

18,536



$

13,579


$

3,898


$

15,404


$

17,300




















Volume (in Dts/MWHs)
















  Residential

619,752


72,960


280,610


65,100



554,374


71,869


295,806


66,856


  Commercial

690,650


323,371


621,159


74,619



609,632


321,842


712,567


77,213


  Industrial

998,147


3,302,814


1,016,923


7,240



883,855


3,719,671


849,383


5,560


  Other

19,524



(53,204)


6,351



17,096



(118,579)


8,548


Total

2,328,073


3,699,145


1,865,488


153,310



2,064,957


4,113,382


1,739,177


158,177




















Average Customers
















  Residential

62,055


14,387


50,939


23,894



60,581


13,974


49,556


23,835


  Commercial

6,540


1,363


4,392


7,412



6,447


1,294


4,542


7,415


  Industrial

108


59


1,273


2



113


55


999


2


  Other

7






6





Total

68,710


15,809


56,604


31,308



67,147


15,323


55,097


31,252

























































For the Six Months Ended June 30, 2014


For the Six Months Ended June 30, 2013


Delmarva NG Distribution(2)

Chesapeake Florida NG Division

FPU NG Distribution

FPU Electric Distribution


Delmarva NG

Distribution

Chesapeake Florida NG Division

FPU NG Distribution

FPU Electric Distribution

Operating Revenues

(in thousands)
















  Residential

$

45,841


$

2,581


$

13,742


$

20,514



$

33,163


$

2,448


$

12,779


$

19,564


  Commercial

22,751


2,302


17,896


17,466



15,337


2,240


17,905


18,005


  Industrial

3,004


2,560


6,667


2,433



3,038


2,515


6,185


2,390


  Other (1)

(3,682)


1,575


(1,015)


(3,569)



(2,739)


1,137


(3,202)


(4,133)


Total Operating Revenues

$

67,914


$

9,018


$

37,290


$

36,844



$

48,799


$

8,340


$

33,667


$

35,826




















Volume (in Dts/MWHs)
















  Residential

2,778,338


209,616


764,767


149,590



2,204,146


198,706


743,022


136,631


  Commercial

2,380,520


729,069


1,421,313


146,423



1,990,316


730,823


1,536,752


144,124


  Industrial

2,172,339


7,030,959


2,145,937


16,870



2,014,397


7,636,487


2,060,972


16,780


  Other

26,052



(83,207)


(6,016)



22,748



(152,895)


11,289


Total

7,357,249


7,969,644


4,248,810


306,867



6,231,607


8,566,016


4,187,851


308,824




















Average Customers
















  Residential

62,379


14,368


50,826


23,855



60,825


13,967


49,368


23,751


  Commercial

6,572


1,354


4,403


7,414



6,477


1,284


4,551


7,403


  Industrial

107


60


1,247


2



113


57


958


2


  Other

7






5





Total

69,065


15,782


56,476


31,271



67,420


15,308


54,877


31,156




















 

(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.

(2) Sandpiper is now included within the Delmarva NG Distribution results, which also includes the Delaware and Maryland Divisions.

 

SOURCE Chesapeake Utilities Corporation

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