CHESAPEAKE UTILITIES CORPORATION REPORTS THIRD QUARTER 2024 RESULTS

DOVER, Del., Nov. 7, 2024 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK ) ("Chesapeake Utilities" or the "Company") today announced financial results for the three and nine months ended September 30, 2024.

Net income for the third quarter of 2024 was $17.5 million ($0.78 per share) compared to $9.



4 million ($0.53 per share) in the third quarter of 2023. Excluding transaction and transition-related expenses associated with the fourth quarter 2023 acquisition of FCG, adjusted net income was $18.

1 million ($0.80 per share) or approximately 16 percent higher per share compared to the prior-year period. The higher results for the third quarter of 2024 were largely attributable to incremental contributions from FCG, additional margin from regulated infrastructure programs, continued pipeline expansion projects to support distribution growth, growth in the Company's natural gas distribution businesses and increased levels of virtual pipeline services.

The financing impacts of the FCG acquisition, including increased interest expense related to debt issued and additional shares outstanding, partially offset the increases. During the first nine months of 2024, net income was $81.9 million ($3.

66 per share) compared to $61.9 million ($3.47 per share) in the prior-year period.

Excluding the transaction and transition-related expenses, adjusted net income was $84.2 million ($3.76 per share) compared to $64.

8 million ($3.63 per share) for the same period in 2023. Year-to-date earnings for 2024 were primarily impacted by the factors discussed for the third quarter as well as additional adjusted gross margin from increased customer consumption experienced earlier in the year and contributions from the Company's unregulated businesses.

"Chesapeake Utilities delivered strong financial performance and sustained operational excellence in the third quarter as we continued to execute on the three pillars that drive long-term earnings growth and shareholder value: prudently deploying record levels of capital, proactively advancing our regulatory agenda and continually executing on business transformation," said Jeff Householder, chair, president and CEO. "In the third quarter alone, we invested nearly $100 million in capital expenditures, filed for rate increases in Delaware and in Florida for our electric operations and successfully implemented our new enterprise-wide customer billing system." "In the third quarter of 2024, adjusted earnings per share was up 16 percent relative to the same period in 2023, attributable to adjusted gross margin growth of close to 30 percent and continued cost management driven by our business transformation efforts and focus on a "one company" approach.

Some of the larger margin drivers include the addition of FCG, which we continue to effectively integrate, strong customer growth of approximately 4 percent in both Delmarva and Florida, incremental margin related to transmission expansions and increased virtual pipeline services and depreciation savings related to regulatory initiatives," continued Householder. "I'm proud of our teammates' consistent dedication to prioritizing service and safety to deliver performance in line with our expectations. This commitment enables us to affirm our full-year 2024 adjusted EPS and capital guidance.

" Earnings and Capital Investment Guidance The Company continues to affirm its 2024 EPS guidance of $5.33 to $5.45 in adjusted earnings per share given the incremental margin opportunities present across the Company's businesses, investment opportunities within and surrounding FCG, regulatory initiatives and operating synergies.

The Company also affirms its previously-announced 2024 capital expenditure guidance of $300 million to $360 million, as well as the capital expenditure guidance for the five-year period ended 2028 that will range from $1.5 billion to $1.8 billion.

This investment forecast is projected to result in a 2025 EPS guidance range of $6.15 to $6.35, as well as a 2028 EPS guidance range of $7.

75 to $8.00. This implies an EPS growth rate of approximately 8 percent from the 2025 EPS guidance range.

*Unless otherwise noted, EPS and Adjusted EPS information are presented on a diluted basis. Non-GAAP Financial Measures **This press release including the tables herein, include references to both Generally Accepted Accounting Principles ("GAAP") and non-GAAP financial measures, including Adjusted Gross Margin, Adjusted Net Income and Adjusted EPS. A "non-GAAP financial measure" is generally defined as a numerical measure of a company's historical or future performance that includes or excludes amounts, or that is subject to adjustments, so as to be different from the most directly comparable measure calculated or presented in accordance with GAAP.

Our management believes certain non-GAAP financial measures, when considered together with GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. The Company calculates Adjusted Gross Margin by deducting the purchased cost of natural gas, propane and electricity and the cost of labor spent on direct revenue-producing activities from operating revenues. The costs included in Adjusted Gross Margin exclude depreciation and amortization and certain costs presented in operations and maintenance expenses in accordance with regulatory requirements.

The Company calculates Adjusted Net Income and Adjusted EPS by deducting costs and expenses associated with significant acquisitions that may affect the comparison of period-over-period results. These non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures. The Company believes that these non-GAAP measures are useful and meaningful to investors as a basis for making investment decisions, and provide investors with information that demonstrates the profitability achieved by the Company under allowed rates for regulated energy operations and under the Company's competitive pricing structures for unregulated energy operations.

The Company's management uses these non-GAAP financial measures in assessing a business unit and Company performance. Other companies may calculate these non-GAAP financial measures in a different manner. The following tables reconcile Gross Margin, Net Income, and EPS, all as defined under GAAP, to our non-GAAP measures of Adjusted Gross Margin, Adjusted Net Income and Adjusted EPS for each of the periods presented.

Adjusted Gross Margin For the Three Months Ended September 30, 2024 (in thousands) Regulated Energy Unregulated Energy Other and Eliminations Total Operating Revenues $ 130,633 $ 35,567 $ (6,062) $ 160,138 Cost of Sales: Natural gas, propane and electric costs (28,366) (15,868) 6,033 (38,201) Depreciation & amortization (12,301) (4,553) 3 (16,851) Operations & maintenance expenses (1) (10,722) (8,058) - (18,780) Gross Margin (GAAP) 79,244 7,088 (26) 86,306 Operations & maintenance expenses (1) 10,722 8,058 - 18,780 Depreciation & amortization 12,301 4,553 (3) 16,851 Adjusted Gross Margin (Non-GAAP) $ 102,267 $ 19,699 $ (29) $ 121,937 For the Three Months Ended September 30, 2023 (in thousands) Regulated Energy Unregulated Energy Other and Eliminations Total Operating Revenues $ 102,411 $ 34,970 $ (5,834) $ 131,547 Cost of Sales: Natural gas, propane and electric costs (26,518) (16,381) 5,805 (37,094) Depreciation & amortization (13,192) (4,420) 2 (17,610) Operations & maintenance expenses (1) (4,819) (7,532) (382) (12,733) Gross Margin (GAAP) 57,882 6,637 (409) 64,110 Operations & maintenance expenses (1) 4,819 7,532 382 12,733 Depreciation & amortization 13,192 4,420 (2) 17,610 Adjusted Gross Margin (Non-GAAP) $ 75,893 $ 18,589 $ (29) $ 94,453 For the Nine Months Ended September 30, 2024 (in thousands) Regulated Energy Unregulated Energy Other and Eliminations Total Operating Revenues $ 429,684 $ 160,089 $ (17,619) $ 572,154 Cost of Sales: Natural gas, propane and electric costs (105,662) (70,928) 17,532 (159,058) Depreciation & amortization (39,495) (12,257) 8 (51,744) Operations & maintenance expenses (1) (35,713) (24,373) 1 (60,085) Gross Margin (GAAP) 248,814 52,531 (78) 301,267 Operations & maintenance expenses (1) 35,713 24,373 (1) 60,085 Depreciation & amortization 39,495 12,257 (8) 51,744 Adjusted Gross Margin (Non-GAAP) $ 324,022 $ 89,161 $ (87) $ 413,096 For the Nine Months Ended September 30, 2023 (in thousands) Regulated Energy Unregulated Energy Other and Eliminations Total Operating Revenues $ 345,822 $ 158,886 $ (19,439) $ 485,269 Cost of Sales: Natural gas, propane and electric costs (105,692) (75,068) 19,282 (161,478) Depreciation & amortization (39,179) (12,923) 6 (52,096) Operations & maintenance expenses (1) (23,346) (23,528) (377) (47,251) Gross Margin (GAAP) 177,605 47,367 (528) 224,444 Operations & maintenance expenses (1) 23,346 23,528 377 47,251 Depreciation & amortization 39,179 12,923 (6) 52,096 Adjusted Gross Margin (Non-GAAP) $ 240,130 $ 83,818 $ (157) $ 323,791 (1) Operations & maintenance expenses within the condensed consolidated statements of income are presented in accordance with regulatory requirements and to provide comparability within the industry. Operations & maintenance expenses which are deemed to be directly attributable to revenue producing activities have been separately presented above in order to calculate Gross Margin as defined under US GAAP. Adjusted Net Income and Adjusted EPS Three Months Ended September 30, (in thousands, except per share data) 2024 2023 Net Income (GAAP) $ 17,507 $ 9,407 FCG transaction and transition-related expenses, net (1) 593 2,804 Adjusted Net Income (Non-GAAP) $ 18,100 $ 12,211 Weighted average common shares outstanding - diluted (2) 22,564 17,858 Earnings Per Share - Diluted (GAAP) $ 0.

78 $ 0.53 FCG transaction and transition-related expenses, net (1) 0.02 0.

16 Adjusted Earnings Per Share - Diluted (Non-GAAP) $ 0.80 $ 0.69 Nine Months Ended September 30, (in thousands, except per share data) 2024 2023 Net Income (GAAP) $ 81,946 $ 61,884 FCG transaction and transition-related expenses, net (1) 2,276 2,898 Adjusted Net Income (Non-GAAP) $ 84,222 $ 64,782 Weighted average common shares outstanding - diluted (2) 22,402 17,847 Earnings Per Share - Diluted (GAAP) $ 3.

66 $ 3.47 FCG transaction and transition-related expenses, net (1) 0.10 0.

16 Adjusted Earnings Per Share - Diluted (Non-GAAP) $ 3.76 $ 3.63 (1) Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transaction costs, transition services, consulting, system integration, rebranding and legal fees.

(2) Weighted average shares for the three and nine months ended September 30, 2024 reflect the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG. Operating Results for the Quarters Ended September 30, 2024 and 2023 Consolidated Results Three Months Ended September 30, (in thousands) 2024 2023 Change Percent Change Adjusted gross margin** $ 121,937 $ 94,453 $ 27,484 29.

1 % Depreciation, amortization and property taxes 24,998 23,800 1,198 5.0 % FCG transaction and transition-related expenses 819 3,899 (3,080) (79.0) % Other operating expenses 55,202 46,526 8,676 18.

6 % Operating income $ 40,918 $ 20,228 $ 20,690 102.3 % Operating income for the third quarter of 2024 was $40.9 million, an increase of $20.

7 million compared to the same period in 2023. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $17.6 million or 73.

0 percent compared to the prior-year period. An increase in adjusted gross margin in the third quarter of 2024 was driven by contributions from the acquisition of FCG, incremental margin from regulated infrastructure programs, continued pipeline expansion projects, increased demand for virtual pipeline services and natural gas organic growth. Higher operating expenses were driven largely by the operating expenses of FCG and increased payroll, benefits and other employee-related expenses compared to the prior-year period.

Increases in depreciation, amortization and property taxes attributable to growth projects and FCG were partially offset by a $3.2 million reserve surplus amortization mechanism ("RSAM") adjustment from FCG and lower depreciation from our electric operations and Maryland natural gas division due to revised rates from approved depreciation studies. Regulated Energy Segment Three Months Ended September 30, (in thousands) 2024 2023 Change Percent Change Adjusted gross margin** $ 102,267 $ 75,893 $ 26,374 34.

8 % Depreciation, amortization and property taxes 19,853 18,891 962 5.1 % FCG transaction and transition-related expenses 819 3,899 (3,080) (79.0) % Other operating expenses 37,660 28,191 9,469 33.

6 % Operating income $ 43,935 $ 24,912 $ 19,023 76.4 % The key components of the increase in adjusted gross margin** are shown below: (in thousands) Contribution from FCG $ 23,399 Margin from regulated infrastructure programs 1,806 Natural gas transmission service expansions, including interim services 1,548 Natural gas growth including conversions (excluding service expansions) 1,013 Changes in customer consumption (361) Other variances (1,031) Quarter-over-quarter increase in adjusted gross margin** $ 26,374 The major components of the increase in other operating expenses are as follows: (in thousands) FCG operating expenses $ 7,476 Payroll, benefits and other employee-related expenses 1,223 Insurance related costs 222 Other variances 548 Quarter-over-quarter increase in other operating expenses $ 9,469 Unregulated Energy Segment Three Months Ended September 30, (in thousands) 2024 2023 Change Percent Change Adjusted gross margin** $ 19,699 $ 18,589 $ 1,110 6.0 % Depreciation, amortization and property taxes 5,144 4,902 242 4.

9 % Other operating expenses 17,616 18,410 (794) (4.3) % Operating loss $ (3,061) $ (4,723) $ 1,662 35.2 % Operating results for the second and third quarters historically have been lower due to reduced customer demand during warmer periods of the year.

The impact to operating income may not align with the seasonal variations in adjusted gross margin as many of the operating expenses are recognized ratably over the course of the year. The major components of the increase in adjusted gross margin** are shown below: (in thousands) Propane Operations Contributions from acquisition $ 135 CNG/RNG/LNG Transportation and Infrastructure Increased level of virtual pipeline services 1,098 Other variances (123) Quarter-over-quarter increase in adjusted gross margin** $ 1,110 The major components of the decrease in other operating expenses are as follows: (in thousands) Payroll, benefits and other employee-related expenses $ (515) Other variances (279) Quarter-over-quarter decrease in other operating expenses $ (794) Operating Results for the Nine Months Ended September 30, 2024 and 2023 Consolidated Results Nine Months Ended September 30, (in thousands) 2024 2023 Change Percent Change Adjusted gross margin** $ 413,096 $ 323,791 $ 89,305 27.6 % Depreciation, amortization and property taxes 77,811 70,918 6,893 9.

7 % FCG transaction and transition-related expenses 3,114 3,899 (785) (20.1) % Other operating expenses 170,878 145,486 25,392 17.5 % Operating income $ 161,293 $ 103,488 $ 57,805 55.

9 % Operating income for the first nine months of 2024 was $161.3 million, an increase of $57.8 million compared to the same period in 2023.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $57.0 million or 53.1 percent compared to the prior-year period.

An increase in adjusted gross margin in the first nine months of 2024 was driven by contributions from the acquisition of FCG, incremental margin from regulatory initiatives, natural gas organic growth and continued pipeline expansion projects, higher customer consumption and increased margins from the Company's unregulated businesses. Higher operating expenses during the current period were driven largely by the operating expenses of FCG and increased insurance costs. These increases were partially offset by lower payroll, benefits and other employee-related expenses compared to the prior-year period.

Increases in depreciation, amortization and property taxes attributable to growth projects and FCG were partially offset by an $8.9 million RSAM adjustment from FCG and lower depreciation from our electric operations and Maryland natural gas division due to revised rates from approved depreciation studies. Regulated Energy Segment Nine Months Ended September 30, (in thousands) 2024 2023 Change Percent Change Adjusted gross margin** $ 324,022 $ 240,130 $ 83,892 34.

9 % Depreciation, amortization and property taxes 63,671 56,415 7,256 12.9 % FCG transaction and transition-related expenses 3,114 3,899 (785) (20.1) % Other operating expenses 114,688 87,988 26,700 30.

3 % Operating income $ 142,549 $ 91,828 $ 50,721 55.2 % The key components of the increase in adjusted gross margin** are shown below: (in thousands) Contribution from FCG $ 71,725 Margin from regulated infrastructure programs 4,424 Natural gas growth including conversions (excluding service expansions) 4,182 Natural gas transmission service expansions, including interim services 3,702 Rate changes associated with the Florida natural gas base rate proceeding (1) 1,630 Eastern Shore contracted rate adjustments (238) Other variances (1,533) Period-over-period increase in adjusted gross margin** $ 83,892 (1) Includes adjusted gross margin contributions from permanent base rates that became effective in March 2023. The major components of the increase in other operating expenses are as follows: (in thousands) FCG operating expenses $ 25,363 Facilities, maintenance costs and outside services 677 Insurance related costs 651 Other variances 9 Period-over-period increase in other operating expenses $ 26,700 Unregulated Energy Segment Nine Months Ended September 30, (in thousands) 2024 2023 Change Percent Change Adjusted gross margin** $ 89,161 $ 83,818 $ 5,343 6.

4 % Depreciation, amortization and property taxes 14,142 14,500 (358) (2.5) % Other operating expenses 56,413 57,789 (1,376) (2.4) % Operating income $ 18,606 $ 11,529 $ 7,077 61.

4 % The major components of the change in adjusted gross margin** are shown below: (in thousands) Propane Operations Increased propane customer consumption $ 1,261 Contributions from acquisition 733 Increased propane margins and service fees 521 CNG/RNG/LNG Transportation and Infrastructure Increased level of virtual pipeline services 1,585 Aspire Energy Increased margins - rate changes and gathering fees 1,267 Other variances (24) Period-over-period increase in adjusted gross margin** $ 5,343 The major components of the decrease in other operating expenses are as follows: (in thousands) Vehicle expenses $ 575 Insurance related costs 456 Payroll, benefits and other employee-related expenses (1,598) Facilities, maintenance costs, and outside services (631) Other variances (178) Period-over-period decrease in other operating expenses $ (1,376) Forward-Looking Statements Matters included 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 2023 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the third quarter of 2024 for further information on the risks and uncertainties related to the Company's forward-looking statements.

Conference Call Chesapeake Utilities (NYSE: CPK ) will host a conference call on Friday, November 8, 2024 at 8:30 a.m. Eastern Time to discuss the Company's financial results for the three and nine months ended September 30, 2024.

To listen to the Company's conference call via live webcast , please visit the Events & Presentations section of the Investors page on . For investors and analysts that wish to participate by phone for the question and answer portion of the call, please use the following dial-in information: Toll-free: 800.245.

3074 International: 203.518.9765 Conference ID: CPKQ324 A replay of the presentation will be made available on the previously noted website following the conclusion of the call.

About Chesapeake Utilities Corporation Chesapeake Utilities Corporation is a diversified energy delivery company, listed on the New York Stock Exchange. Chesapeake Utilities Corporation offers sustainable energy solutions through its natural gas transmission and distribution, electricity generation and distribution, propane gas distribution, mobile compressed natural gas utility services and solutions, and other businesses. 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 Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary 302.734.

6022 Michael D. Galtman Senior Vice President and Chief Accounting Officer 302.217.

7036 Lucia M. Dempsey Head of Investor Relations 347.804.

9067 Financial Summary (in thousands, except per-share data) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Adjusted Gross Margin Regulated Energy segment $ 102,267 $ 75,893 $ 324,022 $ 240,130 Unregulated Energy segment 19,699 18,589 89,161 83,818 Other businesses and eliminations (29) (29) (87) (157) Total Adjusted Gross Margin** $ 121,937 $ 94,453 $ 413,096 $ 323,791 Operating Income (Loss) Regulated Energy segment $ 43,935 $ 24,912 $ 142,549 $ 91,828 Unregulated Energy segment (3,061) (4,723) 18,606 11,529 Other businesses and eliminations 44 39 138 131 Total Operating Income 40,918 20,228 161,293 103,488 Other income (expense), net 400 (72) 1,705 1,036 Interest charges 17,022 7,076 50,861 21,272 Income Before Income Taxes 24,296 13,080 112,137 83,252 Income taxes 6,789 3,673 30,191 21,368 Net Income $ 17,507 $ 9,407 $ 81,946 $ 61,884 Weighted Average Common Shares Outstanding: (1) Basic 22,501 17,797 22,346 17,784 Diluted 22,564 17,858 22,402 17,847 Earnings Per Share of Common Stock Basic $ 0.78 $ 0.53 $ 3.

67 $ 3.48 Diluted $ 0.78 $ 0.

53 $ 3.66 $ 3.47 Adjusted Net Income and Adjusted Earnings Per Share Net Income (GAAP) $ 17,507 $ 9,407 $ 81,946 $ 61,884 FCG transaction and transition-related-expenses, net (2) 593 2,804 2,276 2,898 Adjusted Net Income (Non-GAAP)** $ 18,100 $ 12,211 $ 84,222 $ 64,782 Earnings Per Share - Diluted (GAAP) $ 0.

78 $ 0.53 $ 3.66 $ 3.

47 FCG transaction and transition-related-expenses, net (2) 0.02 0.16 0.

10 0.16 Adjusted Earnings Per Share - Diluted (Non-GAAP)** $ 0.80 $ 0.

69 $ 3.76 $ 3.63 (1) Weighted average shares for the three and nine months ended September 30, 2024 reflect the impact of 4.

4 million common shares issued in November 2023 in connection with the acquisition of FCG. (2) Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transaction costs, transition services, consulting, system integration, rebranding and legal fees. Financial Summary Highlights Key variances between the third quarter of 2023 and 2024 included: (in thousands, except per share data) Pre-tax Income Net Income Earnings Per Share Third Quarter of 2023 Adjusted Results** $ 16,979 $ 12,211 $ 0.

69 Increased Adjusted Gross Margins: Contributions from acquisitions 23,534 16,958 0.75 Margin from regulated infrastructure programs* 1,806 1,301 0.06 Natural gas transmission service expansions, including interim services* 1,548 1,115 0.

05 Increased level of virtual pipeline services 1,098 791 0.04 Natural gas growth including conversions (excluding service expansions) 1,013 730 0.03 Changes in customer consumption (651) (469) (0.

02) 28,348 20,426 0.91 Increased Operating Expenses (Excluding Natural Gas, Propane, and Electric Costs): FCG operating expenses (8,680) (6,255) (0.28) Payroll, benefits and other employee-related expenses (708) (510) (0.

02) (9,388) (6,765) (0.30) Interest charges (9,946) (7,167) (0.32) Increase in shares outstanding due to 2023 and 2024 equity offerings*** - - (0.

14) Net other changes (878) (605) (0.04) (10,824) (7,772) (0.50) Third Quarter of 2024 Adjusted Results** $ 25,115 $ 18,100 $ 0.

80 * Refer to Major Projects and Initiatives Table for additional information. ** Transaction and transition-related expenses attributable to the acquisition and integration of FCG have been excluded from the Company's non GAAP measures of adjusted net income and adjusted EPS. See reconciliations above for a detailed comparison to the related GAAP measures.

*** Reflects the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG and shares also issued in 2024. Key variances between the nine months ended September 30, 2023 and September 30, 2024 included: (in thousands, except per share data) Pre-tax Income Net Income Earnings Per Share Nine months ended September 30, 2023 Adjusted Results** $ 87,151 $ 64,782 $ 3.

63 Non-recurring Items: Absence of benefit associated with a reduction in the PA state tax rate - (1,284) (0.06) - (1,284) (0.06) Increased Adjusted Gross Margins: Contributions from acquisitions 72,458 52,952 2.

36 Margin from regulated infrastructure programs* 4,424 3,233 0.14 Natural gas growth including conversions (excluding service expansions) 4,182 3,056 0.14 Natural gas transmission service expansions, including interim services* 3,702 2,706 0.

12 Rate changes associated with the Florida natural gas base rate proceeding* 1,630 1,191 0.05 Increased level of virtual pipeline services 1,585 1,158 0.05 Improved Aspire Energy performance - rate changes and gathering fees 1,267 926 0.

04 Changes in customer consumption 1,191 870 0.04 Increased propane margins and fees 521 381 0.02 90,960 66,473 2.

96 (Increased) Decreased Operating Expenses (Excluding Natural Gas, Propane, and Electric Costs): FCG operating expenses (28,813) (21,057) (0.94) Depreciation, amortization and property tax costs (includes FCG) (3,441) (2,515) (0.11) Insurance related costs (1,107) (809) (0.

04) Payroll, benefits and other employee-related expenses 1,484 1,084 0.05 (31,877) (23,297) (1.04) Interest charges (29,589) (21,623) (0.

97) Increase in shares outstanding due to 2023 and 2024 equity offerings*** - - (0.74) Net other changes (1,394) (829) (0.02) (30,983) (22,452) (1.

73) Nine months ended September 30, 2024 Adjusted Results** $ 115,251 $ 84,222 $ 3.76 * Refer to Major Projects and Initiatives Table for additional information. ** Transaction and transition-related expenses attributable to the acquisition and integration of FCG have been excluded from the Company's non GAAP measures of adjusted net income and adjusted EPS.

See reconciliations above for a detailed comparison to the related GAAP measures. *** Reflects the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG and shares also issued in 2024.

Recently Completed and Ongoing Major Projects and Initiatives The Company continuously pursues and develops additional projects and initiatives to serve existing and new customers, further grow its businesses and earnings, and increase shareholder value. The following table includes all major projects and initiatives that are currently underway or recently completed. The Company's practice is to add incremental margin associated with new projects and initiatives to this table once negotiations or details are substantially final and/or the associated earnings can be estimated.

Major projects and initiatives that have generated consistent year-over-year adjusted gross margin contributions are removed from the table at the beginning of the next calendar year. The related descriptions of projects and initiatives that accompany the table include only new items and/or items where there have been significant developments, as compared to the Company's prior quarterly filings. A comprehensive discussion of all projects and initiatives reflected in the table below can be found in the Company's third quarter 2024 Quarterly Report on Form 10-Q.

Adjusted Gross Margin Three Months Ended Nine Months Ended Year Ended Estimate for September 30, September 30, December 31, Fiscal (in thousands) 2024 2023 2024 2023 2023 2024 2025 Pipeline Expansions: Southern Expansion $ 586 $ 100 $ 1,758 $ 586 $ 586 $ 2,344 $ 2,344 Beachside Pipeline Expansion 603 603 1,809 1,206 1,810 2,451 2,414 St. Cloud / Twin Lakes Expansion 146 118 438 118 264 584 2,752 Wildlight 566 178 970 271 471 1,423 2,996 Lake Wales 114 114 342 152 265 454 454 Newberry 646 - 718 - - 1,364 2,585 Boynton Beach - - - - - - 3,342 New Smyrna Beach - - - - - - 1,710 Central Florida Reinforcement - - - - - 98 1,959 Warwick - - - - - 258 1,858 Renewable Natural Gas Supply Projects - - - - - - 5,460 Total Pipeline Expansions 2,661 1,113 6,035 2,333 3,396 8,976 27,874 CNG/RNG/LNG Transportation and Infrastructure 3,498 2,385 10,438 8,811 11,181 14,000 15,000 Regulatory Initiatives: Florida GUARD program 982 90 2,436 90 353 3,566 6,333 FCG SAFE Program 1,051 - 2,152 - - 3,337 6,534 Capital Cost Surcharge Programs 765 687 2,373 2,110 2,829 3,167 4,374 Florida Rate Case Proceeding (1) 3,991 3,991 13,591 11,961 15,835 17,153 17,153 Maryland Rate Case (2) - - - - - TBD TBD Delaware Rate Case (3) - - - - - TBD TBD Electric Rate Case (4) - - - - - TBD TBD Electric Storm Protection Plan 717 298 2,024 940 1,326 3,133 5,581 Total Regulatory Initiatives 7,506 5,066 22,576 15,101 20,343 30,356 39,975 Total $ 13,665 $ 8,564 $ 39,049 $ 26,245 $ 34,920 $ 53,332 $ 82,849 (1) Includes adjusted gross margin during 2023 comprised of both interim rates and permanent base rates which became effective in March 2023. (2) Rate case application and depreciation study filed with the Maryland PSC in January 2024.

See additional information provided below. (3) Rate case application and depreciation study filed with the Delaware PSC in August 2024. See additional information provided below.

(4) Rate case application filed with the Florida PSC in August 2024. See additional information provided below. Detailed Discussion of Major Projects and Initiatives Pipeline Expansions St.

Cloud / Twin Lakes Expansion In February 2024, Peninsula Pipeline filed a petition with the Florida Public Service Commission ("PSC") for approval of an amendment to its Transportation Service Agreement with FPU for an additional 10,000 Dts/day of firm service in the St. Cloud, Florida area. Peninsula Pipeline will construct pipeline expansions that will allow FPU to serve the future communities that are expected in that area.

The Florida PSC approved the project in May 2024, and it is expected to be complete in the fourth quarter of 2025. Newberry Expansion In April 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreement with FPU for an additional 8,000 Dts/day of firm service in the Newberry, Florida area. The petition was approved by the Florida PSC in the third quarter of 2023.

Peninsula Pipeline will construct a pipeline extension, which will be used by FPU to support the development of a natural gas distribution system to provide gas service to the City of Newberry. A filing to address the acquisition and conversion of existing Company owned propane community gas systems in Newberry was made in November 2023. The Florida PSC approved it in April 2024, and conversions of the community gas systems began in the second quarter of 2024.

East Coast Reinforcement Projects In December 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities on the East Coast of Florida. The projects are driven by the need for increased supply to coastal portions of the state that are experiencing significant population growth. Peninsula Pipeline will construct several pipeline extensions which will support FPU's distribution system in the areas of Boynton Beach and New Smyrna Beach with an additional 15,000 Dts/day and 3,400 Dts/day, respectively.

The Florida PSC approved the projects in March 2024. Construction is projected to be complete in the first and second quarters of 2025 for Boynton Beach and New Smyrna Beach, respectively. Central Florida Reinforcement Projects In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities located in Central Florida.

The projects are driven by the need for increased supply to communities in central Florida that are experiencing significant population growth. Peninsula Pipeline will construct several pipeline extensions which will support FPU's distribution system around the Plant City and Lake Mattie areas of Florida with an additional 5,000 Dts/day and 8,700 Dts/day, respectively. The Florida PSC approved the projects in May 2024.

Completion of the projects is projected for the fourth quarter of 2024 for Plant City and the fourth quarter of 2025 for Lake Mattie. Warwick In July 2024, the Company announced plans to extend Eastern Shore's transmission deliverability by constructing an additional 4.4 miles of six inch steel pipeline.

The project will reinforce the supply and growth for our Delaware division distribution system and expand natural gas service further into Maryland for anticipated future growth. The project is estimated to be in service during the fourth quarter of 2024. Pioneer Supply Header Pipeline Project In March 2024, Peninsula Pipeline filed a petition with the Florida PSC for its approval of Firm Transportation Service Agreements with both FCG and FPU for a project that will support greater supply growth of natural gas service in southeast Florida.

The project consists of the transfer of a pipeline asset from FCG to Peninsula Pipeline. Peninsula Pipeline will proceed to provide transportation service to both FCG and FPU using the pipeline asset, which supports continued customer growth and system reinforcement of these distribution systems. The Florida PSC approved the petition in July 2024.

Renewable Natural Gas Supply Projects In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of Transportation Service Agreements with FCG for projects that will support the transportation of additional renewable energy supply to FCG. The projects, located in Florida's Brevard, Indian River and Miami-Dade counties, will bring renewable natural gas produced from local landfills into FCG's natural gas distribution system. Peninsula Pipeline will construct several pipeline extensions which will support FCG's distribution system in Brevard County, Indian River County, and Miami-Dade County.

Benefits of these projects include increased gas supply to serve expected FCG growth, strengthened system reliability and additional system flexibility. The Florida PSC approved the petition at its July 2024 meeting with the projects estimated to be completed in the first half of 2025. Regulatory Initiatives Maryland Natural Gas Rate Case In January 2024, the Company's natural gas distribution businesses in Maryland, CUC-Maryland Division, Sandpiper Energy, Inc.

, and Elkton Gas Company (collectively, "Maryland natural gas distribution businesses") filed a joint application for a natural gas rate case with the Maryland PSC. In connection with the application, the Company is seeking approval of the following: (i) permanent rate relief of approximately $6.9 million with a return on equity ("ROE") of 11.

5 percent; (ii) authorization to make certain changes to tariffs to include a unified rate structure and to consolidate the Maryland natural gas distribution businesses which is anticipated to be called Chesapeake Utilities of Maryland, Inc.; and (iii) authorization to establish a rider for recovery of the costs associated with the Company's new technology systems. In August 2024, the Maryland natural gas distribution businesses, the Maryland Office of Peoples' Counsel ("OPC") and PSC Staff reached a settlement agreement which provided for, among other things, an increase in annual base rates of $2.

6 million. In September 2024, the Maryland Public Utility Judge issued an order approving the settlement agreement in part. The $2.

6 million increase in annual base rates was approved and the Company will file a Phase II filing to determine rate design across the Maryland natural gas distribution businesses, consolidation of the applicable tariffs and recovery of technology costs. The outcome of the application is subject to review and approval by the Maryland PSC. Maryland Natural Gas Depreciation Study In January 2024, the Company's Maryland natural gas distribution businesses filed a joint petition for approval of its proposed unified depreciation rates with the Maryland PSC.

A settlement agreement between the Company, PSC staff and the Maryland OPC Counsel was reached and the final order approving the settlement agreement went into effect in July 2024, with new depreciation rates effective as of January 1, 2023. The approved depreciation rates will result in an annual reduction in depreciation expense of approximately $1.2 million.

FCG SAFE Program In April 2024, FCG filed a petition with the Florida PSC to more closely align the SAFE Program with FPU's GUARD program. Specifically, the requested modifications will enable FCG to accelerate remediation related to problematic pipe and facilities consisting of obsolete and exposed pipe. These modifications will require an estimated additional $50.

0 million in capital expenditures associated with the SAFE Program, which would increase the total projected capital expenditures to approximately $255.0 million over a 10-year period. The Florida PSC approved the modifications in September 2024.

Delaware Natural Gas Rate Case In August 2024, the Company's Delaware natural gas division filed an application for a natural gas rate case with the Delaware PSC. In connection with the application, the Company is seeking approval of the following: (i) permanent rate relief of approximately $12.1 million with a ROE of 11.

5 percent; (ii) proposed changes to depreciation rates which were part of a depreciation study also submitted with the filing; and (iii) authorization to make certain changes to the existing tariffs. In September 2024, interim rates were approved by the Delaware PSC in the amount of $2.5 million on an annualized basis effective in October 2024.

The discovery process has commenced and hearing for the proceeding has been scheduled for May 2025. The outcome of the application is subject to review and approval by the Delaware PSC. FPU Electric Rate Case In August 2024, the Company's Florida Electric division filed a petition with the Florida PSC seeking a general base rate increase of $12.

6 million with a ROE of 11.3 percent based on a 2025 projected test year. The outcome of the application will be subject to review and approval by the Florida PSC.

In October 2024, annualized interim rates of approximately $1.8 million were approved with an effective date of November 1, 2024. Other Major Factors Influencing Adjusted Gross Margin Weather and Consumption Weather was not a significant factor to adjusted gross margin in the third quarter of 2024 compared to the same period in 2023.

For the nine months ended September 30, 2024, higher consumption which includes the effects of colder weather conditions compared to the prior-year period resulted in a $1.2 million increase in adjusted gross margin. While temperatures through September 30, 2024 were colder than the prior-year period, they were approximately 13.

2 percent and 13.1 percent warmer, respectively, compared to normal temperatures in our Delmarva and Ohio service territories. The following table summarizes HDD and CDD variances from the 10-year average HDD/CDD ("Normal") for the three and nine months ended September 30, 2024 and 2023.

Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 Variance 2024 2023 Variance Delmarva Actual HDD 6 19 (13) 2,287 2,069 218 10-Year Average HDD ("Normal") 27 38 (11) 2,635 2,731 (96) Variance from Normal (21) (19) (348) (662) Florida Actual HDD - 1 (1) 511 371 140 10-Year Average HDD ("Normal") 1 1 - 512 550 (38) Variance from Normal (1) - (1) (179) Ohio Actual HDD 43 86 (43) 3,180 3,148 32 10-Year Average HDD ("Normal") 65 65 - 3,661 3,661 - Variance from Normal (22) 21 (481) (513) Florida Actual CDD 1,528 1,533 (5) 2,824 2,793 31 10-Year Average CDD ("Normal") 1,420 1,391 29 2,615 2,535 80 Variance from Normal 108 142 209 258 Natural Gas Distribution Growth The average number of residential customers served on the Delmarva Peninsula increased by approximately 3.9 percent for the three and nine months ended September 30, 2024 while our legacy Florida Natural Gas distribution business increased by approximately 3.9 percent and 3.

7 percent, respectively, during the same periods. The details of the adjusted gross margin increase are provided in the following table: Adjusted Gross Margin** Three Months Ended Nine Months Ended September 30, 2024 September 30, 2024 (in thousands) Delmarva Peninsula Florida Delmarva Peninsula Florida Customer growth: Residential $ 276 $ 470 $ 1,118 $ 1,997 Commercial and industrial 172 95 452 615 Total customer growth (1) $ 448 $ 565 $ 1,570 $ 2,612 (1) Customer growth amounts for the legacy Florida operations include the effects of revised rates associated with the Company's natural gas base rate proceeding, but exclude the effects of FCG. Capital Investment Growth and Capital Structure Updates The Company's capital expenditures were $256.

8 million for the nine months ended September 30, 2024. The following table shows a range of the forecasted 2024 capital expenditures by segment and by business line: 2024 (in thousands) Low High Regulated Energy: Natural gas distribution $ 160,000 $ 190,000 Natural gas transmission 75,000 90,000 Electric distribution 30,000 38,000 Total Regulated Energy 265,000 318,000 Unregulated Energy: Propane distribution 13,000 15,000 Energy transmission 5,000 6,000 Other unregulated energy 13,000 15,000 Total Unregulated Energy 31,000 36,000 Other: Corporate and other businesses 4,000 6,000 Total 2024 Forecasted Capital Expenditures $ 300,000 $ 360,000 The capital expenditure projection is subject to continuous review and modification. Actual capital requirements may vary from the above estimates due to a number of factors, including changing economic conditions, supply chain disruptions, capital delays that are greater than currently anticipated, customer growth in existing areas, regulation, new growth or acquisition opportunities and availability of capital.

The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. The Company's equity to total capitalization ratio, including short-term borrowings, was approximately 49 percent as of September 30, 2024. Chesapeake Utilities Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 (in thousands, except per share data) Operating Revenues Regulated Energy $ 130,633 $ 102,411 $ 429,684 $ 345,822 Unregulated Energy 35,567 34,970 160,089 158,886 Other businesses and eliminations (6,062) (5,834) (17,619) (19,439) Total Operating Revenues 160,138 131,547 572,154 485,269 Operating Expenses Natural gas and electricity costs 28,366 26,518 105,662 105,692 Propane and natural gas costs 9,835 10,576 53,396 55,786 Operations 49,519 41,217 153,418 128,147 FCG transaction and transition-related expenses 819 3,899 3,114 3,899 Maintenance 5,062 5,125 16,526 15,487 Depreciation and amortization 16,851 17,610 51,744 52,096 Other taxes 8,768 6,374 27,001 20,674 Total operating expenses 119,220 111,319 410,861 381,781 Operating Income 40,918 20,228 161,293 103,488 Other income (expense), net 400 (72) 1,705 1,036 Interest charges 17,022 7,076 50,861 21,272 Income Before Income Taxes 24,296 13,080 112,137 83,252 Income taxes 6,789 3,673 30,191 21,368 Net Income $ 17,507 $ 9,407 $ 81,946 $ 61,884 Weighted Average Common Shares Outstanding: Basic 22,501 17,797 22,346 17,784 Diluted 22,564 17,858 22,402 17,847 Earnings Per Share of Common Stock: Basic $ 0.

78 $ 0.53 $ 3.67 $ 3.

48 Diluted $ 0.78 $ 0.53 $ 3.

66 $ 3.47 Adjusted Net Income and Adjusted Earnings Per Share Net Income (GAAP) $ 17,507 $ 9,407 $ 81,946 $ 61,884 FCG transaction and transition-related expenses, net (1) 593 2,804 2,276 2,898 Adjusted Net Income (Non-GAAP)** $ 18,100 $ 12,211 $ 84,222 $ 64,782 Earnings Per Share - Diluted (GAAP) $ 0.78 $ 0.

53 $ 3.66 $ 3.47 FCG transaction and transition-related expenses, net (1) 0.

02 0.16 0.10 0.

16 Adjusted Earnings Per Share - Diluted (Non-GAAP)** $ 0.80 $ 0.69 $ 3.

76 $ 3.63 (1) Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transaction costs, transition services, consulting, system integration, rebranding and legal fees. Chesapeake Utilities Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) Assets September 30, 2024 December 31, 2023 (in thousands, except per share data) Property, Plant and Equipment Regulated Energy $ 2,600,087 $ 2,418,494 Unregulated Energy 426,127 410,807 Other businesses and eliminations 32,136 30,310 Total property, plant and equipment 3,058,350 2,859,611 Less: Accumulated depreciation and amortization (556,421) (516,429) Plus: Construction work in progress 156,180 113,192 Net property, plant and equipment 2,658,109 2,456,374 Current Assets Cash and cash equivalents 1,609 4,904 Trade and other receivables 57,113 74,485 Less: Allowance for credit losses (2,739) (2,699) Trade and other receivables, net 54,374 71,786 Accrued revenue 23,634 32,597 Propane inventory, at average cost 6,781 9,313 Other inventory, at average cost 21,139 19,912 Regulatory assets 20,446 19,506 Storage gas prepayments 4,339 4,695 Income taxes receivable 12,563 3,829 Prepaid expenses 18,965 15,407 Derivative assets, at fair value 405 1,027 Other current assets 2,232 2,723 Total current assets 166,487 185,699 Deferred Charges and Other Assets Goodwill 507,852 508,174 Other intangible assets, net 15,475 16,865 Investments, at fair value 14,156 12,282 Derivative assets, at fair value 122 40 Operating lease right-of-use assets 10,945 12,426 Regulatory assets 81,899 96,396 Receivables and other deferred charges 12,147 16,448 Total deferred charges and other assets 642,596 662,631 Total Assets $ 3,467,192 $ 3,304,704 Chesapeake Utilities Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) Capitalization and Liabilities September 30, 2024 December 31, 2023 (in thousands, except per share data) Capitalization Stockholders' equity Preferred stock, par value $0.

01 per share (authorized 2,000 shares), no shares issued and outstanding $ - $ - Common stock, par value $0.4867 per share (authorized 50,000 shares) 11,085 10,823 Additional paid-in capital 812,896 749,356 Retained earnings 528,426 488,663 Accumulated other comprehensive loss (4,135) (2,738) Deferred compensation obligation 9,775 9,050 Treasury stock (9,775) (9,050) Total stockholders' equity 1,348,272 1,246,104 Long-term debt, net of current maturities 1,172,956 1,187,075 Total capitalization 2,521,228 2,433,179 Current Liabilities Current portion of long-term debt 18,522 18,505 Short-term borrowing 214,753 179,853 Accounts payable 70,138 77,481 Customer deposits and refunds 47,408 46,427 Accrued interest 13,776 7,020 Dividends payable 14,492 13,119 Accrued compensation 14,495 16,544 Regulatory liabilities 14,762 13,719 Derivative liabilities, at fair value 633 354 Other accrued liabilities 25,832 13,362 Total current liabilities 434,811 386,384 Deferred Credits and Other Liabilities Deferred income taxes 289,208 259,082 Regulatory liabilities 190,512 195,279 Environmental liabilities 2,441 2,607 Other pension and benefit costs 16,327 15,330 Derivative liabilities, at fair value 2,030 927 Operating lease - liabilities 9,157 10,550 Deferred investment tax credits and other liabilities 1,478 1,366 Total deferred credits and other liabilities 511,153 485,141 Environmental and other commitments and contingencies (1) Total Capitalization and Liabilities $ 3,467,192 $ 3,304,704 (1) Refer to Note 6 and 7 in the Company's Quarterly Report on Form 10-Q for further information. Chesapeake Utilities Corporation and Subsidiaries Distribution Utility Statistical Data (Unaudited) For the Three Months Ended September 30, 2024 For the Three Months Ended September 30, 2023 Delmarva NG Distribution Florida Natural Gas Distribution Florida City Gas Distribution FPU Electric Distribution Delmarva NG Distribution Florida Natural Gas Distribution FPU Electric Distribution Operating Revenues (in thousands) Residential $ 8,277 $ 9,583 $ 12,026 $ 16,053 $ 8,663 $ 9,862 $ 16,967 Commercial and Industrial 7,119 22,873 15,713 14,368 9,119 26,020 15,920 Other (1) 2,375 4,485 5,710 (565) 217 2,441 (204) Total Operating Revenues $ 17,771 $ 36,941 $ 33,449 $ 29,856 $ 17,999 $ 38,323 $ 32,683 Volumes (in Dts for natural gas and MWHs for electric) Residential 237,744 347,995 341,010 100,207 245,612 325,445 102,699 Commercial and Industrial 1,913,091 9,070,258 2,686,804 118,214 1,915,125 10,684,539 96,716 Other 59,512 659,557 1,496,698 - 62,277 - - Total 2,210,347 10,077,810 4,524,512 218,421 2,223,014 11,009,984 199,415 Average Customers Residential 101,635 92,125 114,200 25,776 97,847 88,640 25,782 Commercial and Industrial 8,322 8,494 8,567 7,354 8,208 8,411 7,382 Other 27 - 118 - 24 6 - Total 109,984 100,619 122,885 33,130 106,079 97,057 33,164 For the Nine Months Ended September 30, 2024 For the Nine Months Ended September 30, 2023 Delmarva NG Distribution Florida Natural Gas Distribution Florida City Gas Distribution FPU Electric Distribution Delmarva NG Distribution Florida Natural Gas Distribution FPU Electric Distribution Operating Revenues (in thousands) Residential $ 60,003 $ 36,201 $ 39,975 $ 38,704 $ 67,562 $ 38,546 $ 39,347 Commercial and Industrial 35,009 80,647 52,115 37,285 41,637 80,499 39,913 Other (1) (2,262) 7,966 9,730 (3,623) (6,696) 6,401 (805) Total Operating Revenues $ 92,750 $ 124,814 $ 101,820 $ 72,366 $ 102,503 $ 125,446 $ 78,455 Volumes (in Dts for natural gas and MWHs for electric) Residential 3,499,276 1,714,914 1,367,409 243,454 3,302,125 1,551,348 238,051 Commercial and Industrial 7,588,547 29,318,803 8,455,727 301,687 7,523,061 31,047,013 239,505 Other 207,213 1,962,689 4,566,210 - 213,600 627,934 - Total 11,295,036 32,996,406 14,389,346 545,141 11,038,786 33,226,295 477,556 Average Customers Residential 101,045 91,345 113,633 25,747 97,230 88,051 25,718 Commercial and Industrial 8,361 8,484 8,545 7,361 8,242 8,408 7,373 Other 26 - 109 - 23 6 - Total 109,432 99,829 122,287 33,108 105,495 96,465 33,091 (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.

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