Chesapeake Utilities Q3 Earnings Call Highlights

Key Points

• Third-quarter earnings increased: Adjusted EPS rose 9% year over year to $0.89, and adjusted net income grew 11% to about $22 million, supported by infrastructure investment, customer growth and Florida City Gas interim rates. Higher operating and financing costs partly offset the gains.
• Major infrastructure spending continues: Chesapeake reaffirmed 2026 capital investment guidance of $550 million to $600 million and expects its five-year program to exceed $2.2 billion. Its Florida Energy Pathway project remains on track for 2030, while the Worcester LNG facility is expected to enter service in the first quarter of 2027; its estimated cost has risen to about $125 million.
• Outlook and rates: The company reaffirmed 2028 EPS guidance of $7.75 to $8.00. A final Florida City Gas rate-case order is expected in early January 2027; interim rates contributed $2.7 million of margin in the quarter.

Chesapeake Utilities NYSE: CPK reported higher third-quarter earnings as natural gas infrastructure investments, customer growth and interim rates at Florida City Gas helped offset rising operating costs.

The company posted adjusted earnings of $0.89 per share, up 9% from a year earlier, while adjusted net income rose 11% to approximately $22 million. Adjusted gross margin increased 9% to about $149 million, Chief Financial Officer Jeff Sylvester said on the company’s third-quarter 2026 earnings call.

For the first nine months of the year, adjusted net income increased 12% and adjusted earnings per share rose 8% from the same period in 2025, Chair, President and CEO Jeff Householder said.

Chesapeake invested $151 million in the third quarter, bringing spending through September to $413 million. The company reaffirmed its 2026 capital investment guidance of $550 million to $600 million, a range it raised by $100 million last quarter, and its expectation that spending under its current five-year capital program will exceed $2.2 billion.

Infrastructure projects advance

Householder said Chesapeake continues to expect its $1.2 billion Florida Energy Pathway gas transmission project to enter service in 2030. The company recently announced NextEra Energy Resources as a joint venture partner; Chesapeake’s PPC will retain a 51% interest, while NextEra Energy Resources will acquire 49%.

Three anchor shippers—Florida Power & Light, Florida Public Utilities and Florida City Gas—have contracted for capacity totaling 250,000 dekatherms per day. Householder said permitting is expected to take 12 to 18 months, with construction beginning afterward.

Asked about additional demand, Householder said the pipeline could ultimately expand capacity through compression without substantial additional capital or much additional pipe. He said data centers were not a key consideration in the project’s design or future load expectations.

At the Worcester Resiliency Upgrade liquefied natural gas storage facility in Maryland, mechanical and electrical construction is essentially complete and pre-commissioning is underway, Householder said. The company raised its expected project cost to approximately $125 million from $100 million and received Federal Energy Regulatory Commission approval for updated rates.

Chesapeake expects the facility to come online in the first quarter of 2027, subject to completion of federal commissioning work. Its full-year margin contribution is now expected to be $19.7 million, while the company’s 2027 margin expectation remains relatively consistent at $17.2 million.

Florida rate case nears decision

Florida City Gas interim rates took effect in August and contributed $2.7 million of margin in the third quarter, said Jim Moriarty, executive vice president and general counsel. Florida Public Service Commission staff recommendations are expected November 18, with revenue requirement and rate conferences in early to mid-December and a final commission order expected in early January 2027.

Householder said during the question-and-answer session that Chesapeake remains open to settlement discussions but does not consider a settlement likely. The rate case seeks recovery of investments in infrastructure and technology.

Customer growth also supported results. Residential customer counts rose year to date by 2.7% in Delmarva, 2% at Florida Public Utilities and 1.7% at Florida City Gas, Householder said.

Costs, financing and outlook

Sylvester said natural gas transmission expansion projects, rate increases and infrastructure programs contributed to third-quarter earnings growth. Those gains were partly offset by higher payroll and benefit costs, operations and maintenance expenses, depreciation and financing costs.

Healthcare claims were higher than typical during the quarter. Sylvester said the company was reviewing whether the costs should be reflected in future expectations, though he leaned toward viewing the quarter as an anomaly.

Chesapeake expects to issue $250 million in long-term debt in the fourth quarter, with part of the proceeds refinancing $100 million of debt due in December. The company also increased its revolving credit capacity by $200 million to $650 million in August.

Sylvester reaffirmed the company’s 2028 earnings-per-share guidance of $7.75 to $8.00. Chesapeake plans to provide 2027 capital guidance, a 2027–2031 capital plan and an earnings-per-share growth rate for that period on its full-year earnings call in February.

About Chesapeake Utilities (NYSE:CPK)

Chesapeake Utilities Corporation is an energy delivery company that provides natural gas, propane, electricity and related services to residential, commercial, industrial and institutional customers. Its operations include regulated utility businesses as well as unregulated energy and infrastructure activities.

The company distributes natural gas and electricity, transports natural gas through pipeline systems, and supplies propane and other fuels. It also develops and operates energy infrastructure and provides renewable natural gas and other energy solutions through its portfolio of operating subsidiaries.

Founded in 1859, Chesapeake Utilities serves customers primarily in Delaware, Maryland, Pennsylvania, Virginia, Florida and Ohio.

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