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Chesapeake Utilities reported a stronger first-quarter performance, driven by natural gas demand, infrastructure investments, updated rates and colder winter weather. The company said adjusted net income rose 16% year over year and adjusted earnings per share (EPS) increased 11% from the first quarter of 2025.
Jeffry M. Householder, chair, president and chief executive officer, said Chesapeake generated adjusted gross margin of approximately $206 million, up 13%, and adjusted net income of approximately $59 million. Adjusted EPS was $2.47.
Householder attributed incremental margin to transmission and infrastructure projects, which contributed $12 million, and to distribution system growth, updated rates and higher customer usage tied to colder winter weather, which contributed $11 million.
Householder said the company continued to see solid commercial customer growth and above-average residential customer growth. Residential customer growth was reported at 3.3% in Delmarva, 2.2% for Florida Public Utilities and 2% for Florida City Gas.
Chesapeake said increasing demand for natural gas and propane remains central to its long-term growth strategy, supported by population growth, homebuilding and customer needs across its delivery systems.
The company invested $122 million of capital through the end of the first quarter. It reiterated full-year 2026 capital expenditure guidance of $450 million to $500 million. Householder said major capital projects are expected to contribute about $31 million of gross margin in 2026 and an additional $20 million in 2027.
Householder provided an update on the company’s WRU liquefied natural gas storage facility in Bishopville, Maryland. He said construction has made significant progress, but the project’s schedule was affected by earlier regulatory timing, severe winter weather and design modifications intended to simplify future expansion.
He said snow, ice and freezing temperatures in January and February “significantly limited the pace of construction,” with the site inaccessible for several days due to roadway travel restrictions. While the cold weather benefited customer usage and margins in existing businesses, Householder said it was “not helpful” to the WRU construction timeline.
Chesapeake expects “significantly reduced” margin contributions from WRU in 2026. Householder said the impact will be partially offset by weather-related margin benefits and incremental Eastern Shore Natural Gas peaking capacity, but full-year EPS is expected to be reduced by approximately $0.10. The project remains expected to come online early next year and generate $17 million of 2027 margin.
Chesapeake filed a rate case on April 20 for Florida City Gas, according to James F. Moriarty, executive vice president, general counsel, corporate secretary and chief policy and risk officer. The company is requesting a base rate increase of approximately $47 million and a return on equity of 11.25%.
The filing also includes a request for interim rates of $16 million, which the company expects to be effective in the third quarter. A full procedural schedule has not yet been set, but Chesapeake expects a hearing in the fourth quarter of 2026 or early 2027, with full rates effective shortly thereafter.
Moriarty said the request updates cost recovery for capital investment, operating expense, insurance, depreciation and property taxes. He added that Chesapeake incorporated cost savings and efficiencies into its assumptions “wherever possible” and intends to work with Florida Public Service Commission staff and the Office of Public Counsel toward a constructive outcome.
Jeffrey S. Sylvester, senior vice president and chief operating officer and incoming chief financial officer, said regulated segment adjusted gross margin was approximately $148 million, up 15% from the prior-year quarter. Regulated operating income rose 18% to approximately $71 million.
In the unregulated energy segment, adjusted gross margin increased 8% to approximately $59 million, driven primarily by higher propane consumption and strong performance in the company’s Ohio Aspire operations. Unregulated operating income grew 8% to $28 million.
Sylvester said first-quarter adjusted EPS benefited from the following factors:
Sylvester said these gains were partly offset by higher payroll and benefits expense, increased operating expenses, higher credit, collections and customer service costs, depreciation and amortization, and financing activities.
At March 31, Sylvester said Chesapeake’s equity capitalization was 50%, with 107,000 shares issued during the first three months of the year. The company expects to issue $60 million of equity in 2026 through its at-the-market and waiver programs. Sylvester also said Chesapeake expects to refinance the first tranche of debt issued during the Florida City Gas acquisition, which should reduce overall interest expense.
Beth W. Cooper, executive vice president and chief financial officer, said the board approved a $0.20 annualized dividend increase, or 7.3%, raising the dividend from $2.74 per share to $2.94 per share. Cooper said this marks the company’s 66th consecutive year of dividend payments and 23rd consecutive year of dividend increases.
Cooper also said Chesapeake remains committed to a long-term earnings per share compound annual growth rate of 8% through 2028 and reaffirmed 2028 EPS guidance of $7.75 to $8.00 per share. The company expects to revisit its capital guidance range by February 2027.
The call marked Cooper’s final earnings call before her planned retirement at the end of June after 36 years with the company, including 18 years as CFO. Householder said Chesapeake recorded earnings growth every year during Cooper’s tenure.
Sylvester will assume the CFO role on July 1. He said one of his priorities is implementing the company’s “one company approach” and related operational and technology transformations.
During the question-and-answer session, Householder discussed potential growth areas including LNG opportunities near Cape Canaveral and Port Canaveral, data center-related gas demand in Ohio and other service areas, and possible intrastate pipeline expansion to increase natural gas capacity into South Florida.
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