Welcome to Chesapeake Utilities Corporation's First Quarter 2026 Earnings Conference Call. Operator provided instructions. I would now like to turn the call over to Lucia Dempsey, Head of Investor Relations.

Thank you, and good morning, everyone. Today's presentation can be accessed on our website under the Investors page and Events & Presentations subsection. After our prepared remarks, we will open up the call for questions. On Slide 2, we show our typical disclaimers, while I remind you that matters discussed on this conference call may include forward-looking statements that involve risks and uncertainties. Forward-looking statements and projections could differ materially from our actual results. The safe harbor for forward-looking statements section of our 2025 Annual Report on Form 10-K and in our first quarter Form 10-Q provide further information on the factors that could cause such statements to differ from our actual results. Additionally, the company evaluates its performance based on certain non-GAAP measures, including adjusted gross margin, adjusted net income and adjusted earnings per share, and the information presented today includes the appropriate disclosures in accordance with the SEC's Regulation G. A reconciliation of these non-GAAP measures to the related GAAP measures has been provided in the Appendix of this presentation, our earnings release and our first quarter Form 10-Q. Here at Chesapeake Utilities, safety is our first priority. We start all meetings with a safety moment, and we'll do so here as highlighted on Slide 3. May is Electrical Safety Month and a great time to ensure we are safely using the power of electricity. Be mindful of overloaded outlets, damaged cords and using electrical appliances near water. Also be sure to use lithium-ion batteries safely, only use the correct charger, avoid charging on beds or couches and never use damaged or overheating batteries. Small daily choices can prevent fires, injuries and protect ourselves, our homes and our loved ones. I'll now introduce our presenters today. Jeff Householder, Chair of the Board, President and Chief Executive Officer, will provide an update on this quarter's key accomplishments and our capital growth program. Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer, will discuss the Florida City Gas rate case and stakeholder engagement. Jeff Sylvester, current Senior Vice President and Chief Operating Officer and incoming Chief Financial Officer, joins us today for his first earnings call. Jeff will summarize our first quarter performance and financing updates. And Beth Cooper, Executive Vice President and Chief Financial Officer, who has announced her retirement at the end of June, joins us for her 71st and final earnings call. Beth will discuss dividend and earnings growth and then close with our value proposition. With that, it's my distinct pleasure to turn the call over to Jeff Householder.

Thank you, Lucia, and good morning, all. Let me start today by recognizing Beth Cooper, who announced her retirement in March following 36 years of service to the company. In the last 18 years as our Chief Financial Officer, Beth's strategic and financial leadership has led to incomparable growth, including a $3 billion increase in our market capitalization, 10x growth in total assets and net income as well as a 366% increase in earnings per share. Most importantly, Beth embodies the best of Chesapeake Utilities. She has an authentic passion for delivering results and an impressive ability to build connections and relationships internally and externally. So thank you, Beth. It's been an honor to work alongside you. We are eternally grateful for your significant contributions to this company. I'd also like to welcome Jeff Sylvester to our call, who will transition from COO to formally assume the CFO role on July 1 of this year. Jeff brings deep financial and operational knowledge of our business, along with valuable expertise in data analytics and process and technology transformation, all of which are fundamental to our next stage of growth and development. I look forward to continuing to work closely with Jeff as we remain focused on the three pillars of our growth strategy: prudent deployment of capital, a proactive regulatory agenda and business transformation actions that meet the energy delivery and service expectations of our customers and communities. I'll now move on to Slide 5. We had a strong start to the year, reporting a 16% increase in adjusted net income and an 11% increase in adjusted earnings per share compared with the first quarter of last year. We generated an incremental $12 million of margin from transmission and infrastructure projects and $11 million of margin from distribution system growth, updated rates and increased customer usage given the much colder winter we experienced in the first quarter. Slide 6 highlights the connection between growth in our service areas and our long-term growth strategy. I can continue to report a quarter of solid commercial customer growth and above-average residential customer growth, 3.3% in Delmarva, 2.2% for Florida Public Utilities and 2% for Florida City Gas. Increasing demand for natural gas and propane remains core to our long-term growth strategy. Population growth, homebuilding and the needs of our customers continue to provide investment opportunities to upgrade and expand our energy delivery systems and invest in technology that provides safe, reliable and affordable service to our customers. Investing in our delivery systems and continuously improving our business operations to realize meaningful service and value improvements will drive long-term earnings growth and enable us to appropriately scale the enterprise. Now let's shift to Slide 7, which summarizes our 2026 projected capital program and our progress to-date. Through the end of the first quarter, we've invested $122 million of capital across the business. This is in line with our full year 2026 capital expenditure guidance of $450 million to $500 million. Slide 8 shows additional detail on our major capital projects. We forecast these projects to contribute approximately $31 million of gross margin in 2026 and an additional $20 million in 2027. We've made some recent updates to one of the projects on the table on Slide 9, WRU, our LNG storage facility in Bishopville, Maryland. As you can see in the latest photos on Slide 9, there has been significant construction progress at the Delmarva site. You may recall that last fall, the FERC Notice to Proceed process took a couple of months longer than we expected. We had hoped to make up much of this time, but the severe winter weather in the first quarter and a few design modifications that will simplify future expansion kept us from accelerating construction. The snow, ice and freezing temperatures we experienced in January and February significantly limited the pace of construction. The site was actually totally inaccessible for several days due to roadway travel restrictions. While the winter weather boosted usage and margins in our existing businesses, it was not helpful to the WRU construction schedule. WRU is a substantial complex project that will deliver significant peak day service capabilities to Delmarva customers. The tanks and primary structural and control room facilities are in place. We're working to complete the control electronics, on-site piping and interconnections to our Eastern Shore Natural Gas Transmission System. Coming out of this winter, I spent quite a bit of time assessing our progress and the overall project schedule. I'm happy with the effort we're making to push the project to completion. I'm also realistic about where we stand today and the need to build an additional time for a FERC commissioning process that is not governed by a specific time requirement. We're engaged in a third-party pre-commissioning process, so I don't foresee any substantive FERC issues, but we're building in additional time in the schedule. So the schedule changes mean that we expect significantly reduced margin contributions from WRU in 2026. This impact is partially offset by the margin benefits from weather this quarter and incremental Eastern Shore Natural Gas peaking capacity, which will be online prior to the full in-service date of WRU. However, full year EPS will be reduced by approximately $0.10. The project is still on track to come online early next year and generate $17 million of 2027 margin. I will say that the extreme temperatures this winter only solidified the need for this project and will likely lead to a potential LNG facility expansion at the site in the near future. Increased storage at the southern end of our system will further improve reliability, reduce supply costs during peak usage times and enable continued system expansion to serve customer growth in the future. I'll now shift to Slide 10 to highlight several projects that are in progress or on the horizon. There are a number of potential expansion opportunities ahead of us that provide significant growth potential as we serve growing demand across our service areas. The first is the Delmarva Regional Enhancement, which we discussed on our last earnings call. This $75 million 20-mile project expands transmission infrastructure in our Delmarva region. Permitting has begun and construction is expected to start next year. We are also evaluating opportunities for potential expansions of this project as demand remains high. We've also discussed a project to explore the potential for extending our Eastern Shore natural gas system into Accomack County, Virginia. Supported by a $6.5 million grant, we're beginning feasibility and design studies to assess the opportunity to serve customers on Virginia's Eastern Shore, including the NASA Wallops Island facility. We also remain engaged with partners in the community at the Cape and Port of Canaveral to explore potential opportunities for LNG transportation and storage. We're continuing to identify and evaluate potential sites for storage as demand remains high for the space and cruise industries there. And lastly, we continue to evaluate multiple opportunities to expand transmission capacity into South Florida to serve the substantial population growth and energy demand in the Greater Miami area. We ultimately believe that a future expansion into this area is necessary and are evaluating numerous options to meet the growing demand in South Florida. With that, I'll turn to Jim to provide regulatory and stakeholder engagement updates.

Thank you, Jeff, and good to be with all of you today. I'll start with Slide 11. On April 20, we filed a rate case for our Florida City Gas business, requesting a base rate increase of approximately $47 million and an ROE of 11.25%. This request comes more than three years following FCG's last rate increase request prior to our acquisition and updates cost recovery for a number of key areas, including capital investment, operational expense, insurance, depreciation and property taxes. Included in our filing was a request for interim rates of $16 million, which we expect to be effective in the third quarter of this year. While a full procedural schedule has not yet been set, we expect the hearing to occur in the fourth quarter of 2026 or in early 2027, with full rates expected to be effective shortly thereafter. We remain conscious of the impact to our customers, so we have incorporated cost savings and efficiencies across the business into our overall assumptions wherever possible. We value the opportunity to serve our FCG customers and we'll continue to work together with the Florida PSC staff and Office of Public Counsel to achieve a constructive outcome. Speaking of customers, I'll now turn to Slide 12 to provide an update on stakeholder engagement. In March of this year, we published our 2025 Annual Report, which includes highlights of our 2025 stakeholder engagement work, including investments in our teammates, customers and communities. We believe that serving all stakeholders creates a virtuous and sustainable cycle of long-term performance and growth. So we remain focused on driving collaboration and value with all those we serve so that no one is left behind. With that, I am very pleased to turn the call to Jeff Sylvester, who will discuss our financial results in more detail.

Thanks, Jim, and good morning, everyone. I'm excited to be here today, and I'm honored to be stepping into the Chief Financial Officer role on July 1 of this year. I started my career in finance, so I'm looking forward to reengaging in our financial operations and expanding the collaboration between our finance and operational teams, the latter of which I've led for the last seven years. A top priority of mine over that period has been the implementation of our One Company approach and related operational and technological transformations. Slide 13 provides an overview of our business transformation themes, all of which form a stronger platform for efficient and effective operations as we become a much larger organization. Mike Galtman, who has served as our Chief Accounting Officer for the last seven years, has recently transitioned into a newly established Chief Transformation Officer role. His new responsibilities embed him deeply into our transformation efforts, including the One Core project and ongoing improvements across our finance, technology and operational areas. Melissa Barnes has recently joined the team as our new Chief Accounting Officer. Melissa brings a wealth of experience in technical accounting, external reporting, large-scale finance transformations and internal controls. She is already adding tremendous value, and we are excited to have her on board. Now shifting to the results for the quarter. As shown on Slide 14, our financial results continue to demonstrate strong performance and growth across all metrics. Adjusted gross margin was approximately $206 million, up 13% and adjusted net income was approximately $59 million, up 16% from the first quarter of 2025. Adjusted earnings per share were $2.47 this quarter, representing an 11% increase over the first quarter of 2025. Slide 15 provides additional detail on the key drivers of our first quarter performance. Continued demand for natural gas drove $0.27 of incremental adjusted EPS, including $0.21 related to transmission capital projects and $0.06 of distribution growth across our service areas. Margin from our infrastructure program investments contributed an additional $0.17 per share this quarter and permanent rates from our three rate cases added $0.13 in the first quarter 2026 adjusted EPS. Cold weather across our system, particularly in Delmarva region and in our Propane and Aspire businesses drove increased consumption that added $0.14 of earnings for the quarter. We also benefited from improved Aspire system performance driven by rate changes and higher gathering fees. We also had gains from off-system natural gas sales within the quarter, driving a combined $0.07 of incremental earnings per share. These gains were partially offset by a few factors, including $0.20 of higher payroll and benefit expenses, $0.29 increased operational expenses, $0.04 of higher credit collections and customer service costs. As I mentioned earlier, we were able to achieve a higher percentage increase in operating income and net income as compared to gross margin, demonstrating that we are effectively managing our cost structure despite the significant growth in margin. We also incurred $0.05 per share of increased depreciation and amortization expense, driven by increasing levels of capital investment as we actively deploy capital. Lastly, financing activities included in our debt and equity issuances over the last 12 months as we return to our target capital structure, reduced adjusted EPS by $0.05. Shifting to Slide 16; adjusted gross margin for our regulated segment was approximately $148 million this quarter, up 15% from the first quarter of last year. As mentioned earlier, our focus on cost management enabled similar growth in our regulated operating income, up 18% to approximately $71 million in the first quarter of 2026. Our Unregulated Energy segment also demonstrated strong margin growth relative to the first quarter of last year, with adjusted gross margin up 8% to approximately $59 million in the first quarter of 2026. This incremental margin was primarily driven by higher propane consumption and strong performance in our Ohio Aspire operations. Much of this fell to the bottom line, enabling unregulated operating income growth of 8% to $28 million for the first quarter of this year. I'll now move to Slide 17 to review our capital structure and financing activities. At March 31, our equity capitalization was 50% with 107,000 shares issued during the first three months of the year. We also continue to maintain strong liquidity and sufficient capacity to support growth with availability of 74% of our total debt capital of $793 million between our revolving credit facility and private placement shelf facilities as of March 31, 2026. To support our robust capital investment program, we expect to issue $60 million of equity throughout full year 2026 using our ATM and waiver programs. We also look forward to refinancing the first tranche of debt issued during the Florida City Gas acquisition, which should generate overall interest expense savings. With that, it's my distinct pleasure to turn the call over to Beth.

Thanks, Jeff, and good morning, everyone. As shown on Slide 18, yesterday, our Board of Directors approved a $0.20 or 7.3% increase in our annualized dividend payment from $2.74 per share to $2.94 per share. This reflects our 66th consecutive year of dividend payments and our 23rd consecutive year of dividend increases. Alongside our equity and debt plans, our dividend policy continues to be a key component of our capital allocation strategy as we fund growth capital investment to drive earnings growth and overall total shareholder return. Previously, our Board approved a dividend payout target range of 45% to 50% enabling us to deliver a long-term dividend CAGR of 9%, which aligns with our long-term earnings growth rate over that same 10-year time period. This payout ratio also enables us to retain 50% to 55% of earnings, which has been a meaningful part of our financing plan as we fund increasing levels of capital to drive sustainable business growth to meet increasing customer demand. Slide 19 demonstrates our track record of strong and consistent earnings growth over the last approximately 19 years, most of which made up my tenure as CFO. We remain committed to a long-term earnings per share compounded annual growth rate of 8% through 2028 and are reaffirming our 2028 earnings per share guidance of $7.75 to $8 per share. As we mentioned on previous calls, we expect to revisit our capital guidance range by February 2027, given the progress we have made in the last two years, coupled with our expectations for capital investment in 2026. Moving to Slide 20; there is no better way to close our call than to summarize what an amazing and wonderful place to work Chesapeake has been for me over the last 36 years. I am extremely grateful to have served as CFO for the last 18 years during such pivotal growth. Much of what has made my experience so special are the key drivers that often make Chesapeake a differentiated investment. Delivering on our promises and taking our commitment seriously has never wavered. We have driven significant growth over the last several decades, and I have complete confidence in the team's ability to continue this track record for years to come. Our talented team focused on our growth strategy is capable of great things. While these three pillars have been formalized in the last few years, they have always been core to our operations. We invest wisely, manage our regulatory agenda and continue to find new and better ways of working each and every year. Especially near and dear to me is our financial discipline. I participated in more than 20 acquisitions and over $2.5 billion of equity and debt raises across the last three decades and can assure you that each transaction is carefully planned and executed. We recognize the value of long-term relationships with our financial partners and prioritize our financial health, diligent financial planning and analysis as well as strategic alignment in all we do. And lastly, we are powered by our stakeholders, each and every one of you, our investors, our bankers, our partners, our teammates and our customers. We are nothing without our dedicated teammates, growing customers, close-knit communities and trusted partners. The bottom line is that the relationships we've built, both internally and externally are what matter the most. I will forever treasure the valuable connections I've made and will carry them with me as I embark on my next adventures. Thank you for your personal support and encouragement of me over the years. I have been humbled by the outreach of so many wonderful colleagues and friends. I remain committed to Chesapeake's mission and sincerely appreciate your continued interest, support and investment in the company as well. Thank you all. With that, we'll take your questions. Operator?

Operator provided instructions. Our first question today comes from Tate Sullivan with Maxim Group.

Congratulations, Beth, on all your achievements over the years at Chesapeake Utilities and pleasure working with you. Moving to some of the comments from the call. Jeff, did you mention a new LNG storage exploration project in Florida in the Cape or is that something you've mentioned before? And is it for LNG delivery and not regasification of that natural gas?

Yes. We've been looking, Tate, at the opportunity, certainly subsequent to our acquisition of Florida City Gas and the inclusion of that service territory around Cape Canaveral and the Port of Canaveral. Lots of cruise ships coming and going. They're already fueling with liquefied natural gas, many of them. Most of that gas is being barged in from Jacksonville. And there are certainly limits to the capacity that the LNG facility in Jacksonville can provide and folks keep launching rockets from the Spaceport there, utilizing LNG and they'd like to expand that. And so we've had the possibility of working potentially with someone else to develop an LNG facility at the Cape that would provide service to both of those industries, and we continue to do that. We have been looking at property up and down the intracoastal and even some inland sites. We thought we had — probably the best location is a facility that's on the canal that runs down to the Port of Canaveral, and we pursued that for some period of time. The port has other designs on that property, which is fine. That would have been the easiest, simplest, cheapest facility location, but there are many others that we're looking at, and we're pretty confident that we'll find something and develop that project.

Just one follow-up on that. Is Marlin currently delivering LNG in Florida or is that not the case?

No, certainly not in any quantity. We have some capability to move LNG with Marlin tankers but we are not serving either the port or the Spaceport in any meaningful quantity. Those supplies are coming principally on the cruise ship side down the intracoastal being barged in from Jacksonville and then truck deliveries from a variety of places into the Spaceport.

And one more, if I may. The customer growth rate is still an impressive growth rate, but the annual growth compared to the fourth quarter was down a little bit. Should I read into that in terms of where the range may fall in the EPS guide for 2028 or was that just a quarter of weakness?

No. I think that's probably as much weather as it is anything else, especially in Delmarva. We see those kinds of seasonal fluctuations in Florida as well. We have a lot of homebuilding activity on the books and certainly a lot of builder and developer agreements that we've executed for many thousands of residences, both on the Peninsula of Florida and the Peninsula of Delmarva. So we're not signaling anything other than the usual seasonal fluctuations in building activity.

Congratulations, Beth.

I appreciate it. It's been great working with you.

Our next question comes from J.C. Vidales with Ladenburg.

Beth, congratulations. It's been great to work with you.

Thank you, JC. It's been great with you as well.

So just a couple of questions. I think this is the first time we kind of see some equity guidance for the year. In terms of the total CapEx plan that you all have, are you all able to give us some color in terms of your equity assumptions for that plan?

So in terms of the total capital budget of $450 million to $500 million for the year, you'll recall that we have a substantial portion of our earnings that are getting reinvested because of our dividend payout policy. And so above and beyond that right now, given the level of CapEx range that's out there, we've indicated that we expect to issue about $60 million plus. It could be a little bit more than that. But generally, that's a good area right now to assume. And it's a small amount that we'll be able to manage through our ATM and our traditional waiver program.

Okay. And then just a follow-up. In terms of go-forward CapEx for 2028, is that a good assumption to use in terms of sizing equity needs for the following years?

Well, as we've indicated, we're going to be readdressing the entire guidance range in February of 2027, given our progress and where we actually come from an actual standpoint through 2025 and our guidance right now for 2026. If you were to look at what the run rate is in the base CapEx guidance range that is out there, it would be slightly less than this amount because the average CapEx that's assumed on an annual basis is lower than the $450 million to $500 million range.

Okay, great. And then just one last question for me. Should we expect or do you all expect to potentially issue 2026 EPS guidance following the decision on your interim rates here in Florida? I know maybe the depreciation ruling kind of potentially made you all not issue guidance for this year, but should we expect to change once you get an order on interim rates?

What we have typically done, we've given annual guidance only really one time in our history to date. We've been a long-term guidance company putting out long-term CAGRs because as you have seen, we have some fairly large transmission projects that don't necessarily make our earnings per share CAGRs a straight line as you look at it from year-to-year, but over the long term have generated that 8% plus from an EPS growth standpoint. What you will see us put out this year would be additional margin information if there were to be a final rate case settlement this year. And we've already provided some indication about our expectations with information that we know, but it's certainly subject to being fine-tuned on the interim rate side. So we build a lot of our earnings estimates in through the margin table, given those large projects and initiatives that we have underway.

That's it from me. Beth, once again, congrats and looking forward to catching up at AGA.

Our next question comes from Alex Kania with BTIG.

Again, congrats, Beth, and good luck to Jeff in the aftermath of that departure. A couple of questions on some projects. First, on the example of the small projects in Ohio with respect to the large load data center, do you see any other opportunities like that evolving across the system?

We hope to see that. Certainly, we're actively pursuing those opportunities in the areas that we currently serve. Ohio is an area of interest to us. We have facilities there and the agreement we've announced recently. It's an area that seems to be of great interest from a data center perspective. As you might imagine, we are actively interested in extending gas service to those data centers. I have nothing to report today, but we have great interest in that service area. There are other things going on in other places. It's interesting to see some potential activity in Florida, and we've had interest in data center locations on the Delmarva Peninsula. We'll see where all that goes. We're as interested in that as everybody else in the country is at this point. We think we're positioned well in the service areas that we're currently in.

Okay, great. That's helpful. And then just on the South Florida capacity expansion, are there any further downstream events or catalysts you might point to that would help assess the potential progress of that project? And to confirm, would that be treated as an intrastate project rather than having to go through a FERC process?

I'll take that in reverse order. I do think that for us that would be of interest as an intrastate pipeline. We have invested significantly in intrastate pipes in Florida. One of the things that was interesting about Florida City Gas and that acquisition was the full knowledge that there were capacity constraints in South Florida. Florida City Gas is not the only entity experiencing that. The growth in population, customers and demand requires that at some point we find a way to increase capacity capabilities in the South Florida area. We are in a good position to do that. We serve facilities in the West Palm Beach area, close to interstate transmission interconnections, and we believe there are possibilities to expand capacity down to South Florida. I look forward to someday being able to talk about a project that gets more gas down to that growing load center.

At this time, there are no further questions in queue. I will now turn the meeting back to Jeff Householder.

Thank you. We appreciate your continued interest in Chesapeake Utilities. So thank you for joining the call today. We look forward to seeing many of you here in a week or two in Scottsdale at the AGA Financial Forum. I'll end just by continuing to congratulate Beth on her very long years of service with Chesapeake Utilities. It's been a remarkable run. She's been a great colleague and a great friend. And I'll leave you with one last statistic. She served as CFO in our company for 18 years. In every one of those years, we had record earnings. I'll see you all in Arizona. Goodbye.

Thank you. This concludes Chesapeake Utilities Corporation's First Quarter 2026 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.