Chesapeake Utilities Corporation Reports Third Quarter Results

The Regulated Energy segment operating income grew by $1.3 million compared to the same period in 2015. The increased operating income resulted from a $4.7 million increase in gross margin, partially offset by a $3.4 million increase in other operating expenses. The significant components of the gross margin increase included:

• $1.6 million generated from natural gas transmission expansions completed in 2015 and 2016, as well as interim services to customers pending construction of facilities, which are discussed in the "Major Projects and Initiatives" section below;
• $943,000 from customer growth in natural gas distribution and transmission services unrelated to recent service expansions;
• $920,000 generated by additional Gas Reliability Infrastructure Program ("GRIP") investments in the Florida natural gas distribution operations;
• $469,000 generated from the implementation of interim rates for the Company's Delaware natural gas distribution division;
• $464,000 from new natural gas transmission and distribution services provided to the Company's Eight Flags' CHP plant; and
• $226,000 related to higher margins from system improvement rates for the Company's subsidiary, Sandpiper Energy, Inc., ("Sandpiper") resulting from the continuing conversion of the Sandpiper system from propane service to natural gas service.

Other operating expenses increased by $3.4 million. The significant components of the increase in other operating expenses included:

• $1.3 million in higher payroll and benefits costs for additional personnel to support growth;
• $702,000 in higher outside services costs primarily associated with growth and ongoing compliance activities;
• $517,000 in higher facilities costs to support growth; and
• $401,000 in higher depreciation, asset removal and property tax costs associated with recent capital investments to support growth and system integrity.

Unregulated Energy Segment

The Unregulated Energy segment reported an operating loss of $3.1 million in the third quarter of 2016 compared to a loss of $1.0 million in the same period for 2015. The Unregulated Energy segment typically reports an operating loss in the third quarter due to the seasonal nature of a large portion of the businesses included in this segment. As shown below, gross margin was largely unchanged from period to period as a result of the gross margin added by the Eight Flags CHP plant; results were impacted by the following:

• $1.6 million of additional gross margin from Eight Flags' CHP plant, which commenced operations in June 2016; offset by:
• $613,000 in additional fixed pipeline and storage costs associated with natural gas supply contracts entered into by Peninsula Energy Services Company, Inc. ("PESCO"), where a significant portion of the sales volume will occur during the winter months;
• $414,000 less gross margin for the Company's propane distribution operations of which $344,000 is associated with the Delmarva Peninsula propane distribution operation where retail margins per gallon returned to more normal levels. The Company has assumed more normal levels of margins in its long-term financial plans and forecasts;
• $413,000 of lower gross margin from Xeron on executed trades; and
• $407,000 of decreased gross margin from Aspire Energy as a result of increased deliveries and imbalance positions that favorably impacted Aspire Energy in the third quarter of 2015, which are non-recurring. Lower margin associated with system volumes and imbalance positions in third quarter of 2016, also contributed to the decrease.

Other operating expenses increased by $2.1 million. The significant components of the increase in other operating expenses included:

• $1.1 million in other operating expenses incurred by Eight Flags' CHP plant;
• $545,000 in higher payroll and benefits costs for additional personnel to support growth; and
• $225,000 in higher outside services costs primarily associated with growth and ongoing compliance activities.

Comparative Results for the Nine Months Ended September 30, 2016 and 2015

Operating income for the nine months ended September 30, 2016 increased by $690,000 to $62.3 million for the nine months ended September 30, 2016, compared to $61.6 million for the same period in 2015. The increase in operating income was driven by a $10.9 million increase in gross margin, which was partially offset by a $10.2 million increase in other operating expenses. Excluding the net non-recurring gain associated with the billing system settlement recognized during the first nine months of 2015, operating income increased by $2.1 million for the nine months ended September 30, 2016.

Regulated Energy Segment

Operating income for the Regulated Energy segment for the nine months ended September 30, 2016 increased by $5.0 million. The increase in operating income was driven by an increase in gross margin of $11.4 million, which was partially offset by an increase of $6.4 million in other operating expenses. The significant components of the gross margin increase included:

• $5.5 million generated from natural gas transmission expansions completed in 2015 and 2016, as well as interim services to customers pending construction of facilities, which are more fully discussed in the "Major Projects and Initiatives" section below;
• $3.1 million generated by additional GRIP investments in the Florida natural gas distribution operations;
• $2.6 million from customer growth in natural gas distribution and transmission services unrelated to recent service expansions;
• $1.4 million generated from the implementation of interim rates for the Company's Delaware natural gas distribution division;
• $892,000 from new natural gas transmission and distribution services provided to Eight Flags' CHP plant; and
• $618,000 related to higher margins from system improvement rates for Sandpiper resulting from the continued conversion of its distribution system from propane service to natural gas service.

The above increases were partially offset by $2.1 million in lower gross margin due to reduced consumption of natural gas and electricity, largely as a result of warmer weather during the first quarter of 2016, compared to the same period in 2015.

Other operating expenses increased by $6.4 million. The significant components of the increase in other operating expenses included:

• $2.0 million in higher payroll and benefits costs for additional personnel to support growth;
• $1.4 million due to the absence of a $1.5 million gain from the payment received by the Company in the customer billing system settlement, recorded in 2015, which was partially offset by an associated gain of $130,000 during the third quarter of 2016, representing an additional current portion of the contingent recovery in connection with such settlement;
• $1.4 million in higher depreciation, asset removal and property tax costs associated with recent capital investments to support growth and system integrity; and
• $817,000 in higher outside services costs primarily associated with growth and ongoing compliance activities.

Unregulated Energy Segment

The Unregulated Energy segment reported operating income of $9.3 million for the nine months ended September 30, 2016, compared to operating income of $13.7 million for the same period in 2015. The $4.4 million decrease in operating income resulted from a $549,000 decrease in gross margin and a $3.9 million increase in other operating expenses. Income generated from ongoing execution of the Company's growth strategy through Aspire Energy, the Eight Flags CHP plant and customer growth generated by PESCO, offset the negative effect of warmer weather experienced primarily in the first quarter and retail margins per gallon on the Delmarva Peninsula returning to more normal levels.

Gross margin increased as a result of the following:

• $4.5 million of additional gross margin from Aspire Energy as the first nine months of 2015 reflect only six months of margin for Aspire Energy, which became a wholly-owned subsidiary of Chesapeake Utilities on April 1, 2015. In addition, Aspire Energy generated additional margins as a result of pricing amendments to long-term gas sales agreements, additional management fees and the optimization of gathering system receipts and deliveries;
• $1.7 million of additional gross margin from Eight Flags' CHP plant, which commenced operations in June 2016; and
• $1.1 million in additional gross margin from PESCO due to customer growth and favorable supply management activities.

Gross margin decreases offsetting the above increases included the following:

• $4.1 million of lower gross margin due to lower customer consumption of propane. The decrease was driven mainly by weather as a result of warmer temperatures on the Delmarva Peninsula primarily during the first quarter of 2016 compared to colder temperatures during the first quarter of 2015;
• $2.2 million of lower gross margin for the Company's Delmarva propane distribution operation as retail margins per gallon returned to more normal levels; accordingly, the Company has assumed more normal levels of margins in its long-term financial plans and forecasts;
• $436,000 of lower gross margin due to decreased sales of propane to a third party who supplies Sandpiper Energy, as a result of significantly warmer weather in 2016 compared to 2015 as well as conversions to natural gas; and
• $419,000 of lower gross margin from Xeron on executed trades.

Other operating expenses increased by $3.9 million. The significant components of the increase in other operating expenses included:

• $2.5 million in other operating expenses incurred by Aspire Energy, given the additional quarter's results included in 2016, compared to only six months of results in the nine months ended September 30, 2015; and
• $1.1 million in other operating expenses incurred by Eight Flags since it commenced operations in June 2016.

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 2015 Annual 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 is presented on a diluted basis.

Conference Call

Chesapeake Utilities will host a conference call on Friday, November 4, 2016, at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter and nine months ended September 30, 2016. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2016 Third 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 or download the replay on your mobile device by accessing the Audio cast section of the Company's IR App.

About Chesapeake Utilities Corporation

Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution and wholesale marketing; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.

Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.

For more information, contact:

Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799

Financial Summary
(in thousands, except per share data)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2016				2015				2016				2015
Gross Margin (1)
Regulated Energy segment	$	45,375			$	40,635			$	145,446			$	134,024
Unregulated Energy segment	10,202				10,207				45,380				45,929
Other businesses and eliminations	(57)				(49)				(166)				(157)
Total Gross Margin	$	55,520			$	50,793			$	190,660			$	179,796
Operating Income
Regulated Energy segment	$	13,115			$	11,828			$	52,660			$	47,616
Unregulated Energy segment	(3,080)				(1,022)				9,267				13,666
Other businesses and eliminations	121				103				350				305
Total Operating Income	10,156				10,909				62,277 Werbung Mehr Nachrichten zur Chesapeake Utilities Aktie kostenlos abonnieren E-Mail-Adresse Bitte überprüfe deine die E-Mail-Adresse. Benachrichtigungen von ARIVA.DE (Mit der Bestellung akzeptierst du die Datenschutzhinweise) -1 Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink. Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Andere Nutzer interessierten sich auch für folgende News 03:37 - PR Newswire Tellworth Investments LLP - Form 8.3 - Gresham Technologies Plc 24.04.24 - ARIVA.DE Redaktion Dow Jones tritt auf der Stelle (38.500 Pkt.) SolarBank    Wie die Revolution der sauberen Energie eine solide Investitionsmöglichkeit bieten könnte weiterlesen» Anzeige wo-site-teaser-box-16755_site-teaser-box_2024-04-25_09%253A00%253A00_2024-04-26_09%253A00%253A59