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Welcome to Chesapeake Utilities Corporation's First Quarter 2025 Earnings Conference Call. [Operator 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 and 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 2024 annual report on Form 10-K and on our first quarter Form 10-Q provides 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 with a moment on bicycle safety, as highlighted on Slide 3. Increasingly warmer temperatures bring more cyclists on the road whether for commuting or for fun. Cycling is great for physical and mental health but we must increase our awareness to ensure safety for all on the road. Cyclists should always wear a helmet, remain highly visible during the day and at night and stay aware of traffic patterns. Drivers also need to remain alert and watch for cyclists, particularly at intersections and when turning or parking. Sharing the road will ensure we all get to our destination safely. I'll now introduce our presenters. Jeff Householder, Chair of the Board, President and Chief Executive Officer, will provide an update on our quarterly performance, our growing service areas and our capital investment plan. Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer will review our active regulatory agenda, business transformation initiatives and stakeholder engagement efforts. And Beth Cooper, Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary will discuss our financial results, strong balance sheet and dividend and earnings growth trajectory. With that it is my pleasure to turn the call over to Jeff.

Thank you, Lucia. Good morning, and thank you for joining our call today. I'll begin with Slide 5. Following our strong performance in 2024, we are pleased to announce continued growth in the first quarter of 2025 with adjusted earnings per share of $2.22, up 6% from the first quarter of 2024. This performance is in line with our expectations enabling us to reaffirm our full year 2025 adjusted earnings per share guidance of $6.15 to $6.35. And as I'll discuss in more detail shortly, our 2025 capital growth plan of $325 million to $375 million is off to an excellent start with $113 million already invested in the first three months of this year. As shown on Slide 6, for the first quarter of 2025, we continue to see strong growth and increasing demand for natural gas across our service areas. We operate in some of the fastest-growing regions of the country and recorded another quarter of above-average customer growth. Delmarva customer growth was up nearly 4% and Florida increased by 3% relative to the same period last year. This growth is driven by a number of factors including population in migration to our service areas, construction of new residential communities and system expansions to serve growing commercial and industrial demand. Customers continue to seek natural gas service to fuel their lives and businesses and we'll continue to provide them the safe, reliable and cost-effective service they expect. The opportunity to serve increasing customer demand is the basis for our overall growth strategy, which in turn drives sustainable earnings. To deliver consistent returns we remain focused on the three pillars of our growth strategy as shown on Slide 7. First, we work hard to identify and prudently deploy capital for projects that meet our increasing customer demand. Second, we proactively manage our regulatory agenda to support cost recovery of our capital projects and growing operations. And third, we continually transform our business operations, which includes technology and organizational improvements that enable us to maintain operational excellence as we become a larger organization. Slide 8 highlights our fortunate position of having multiple channels of capital investment to drive overall, long-term earnings growth. The first is reliability infrastructure, which includes upgrades and replacements to improve system resiliency and safety. These infrastructure growth investments are supported by regulatory programs such as the Florida GUARD and SAFE programs that provide effective and timely recovery of our capital investments. Reliability infrastructure investments generated $5.8 million of gross margin in the first quarter of 2025 and are expected to generate a total of $27 million of gross margin throughout the full year. The second category of significant growth is occurring in our gas transmission businesses in Delaware and Florida. Many of our major capital projects are designed to extend transmission service in support of distribution expansion that serves new customers. In the first quarter of this year, these projects generated $2.5 million of gross margin and are expected to contribute $22 million of gross margin for the full year, primarily in the third and fourth quarters of 2025. Slide 9 provides additional detail on these transmission projects. The Eastern Shore Natural Gas Wallrich Extension in Maryland and The Peninsula Pipeline Company Plant City Project in Florida were placed in service in the fourth quarter of 2024 and have driven over $3 million of gross margin in 2025. In addition, our Peninsula Pipeline and Boynton Beach Project, was placed in service in the first quarter of this year, driving an additional $3 million of 2025 gross margin. Construction continues for our remaining capital projects, many of which are expected to be in service in the second half of this year. The majority of our 2025 margins resulting from these projects will occur in the third and fourth quarters of 2025. I'll now provide an update on our Worcester Resiliency Upgrade or WRU project, as shown on Slide 10. In January of this year, we received FERC approval for WRU, a liquefied natural gas storage facility, critical to support seasonal peaking services for interconnected gas distribution systems. The LNG peaking service provides reliable and affordable system peaking capacity service that ensures that we can meet the growing demand for natural gas in our Delaware and Maryland distribution systems. Following FERC approval, we received final updated general contractor bids for site-related construction work. The bids were significantly higher than the indicative pricing, and the timing of construction was longer than the indicative project timing we had received from contractors at the end of last year. Two factors are principally contributing to the cost increases and the project timing. Reviews of the bids and discussions with the participating contractors indicated availability constraints for certain skilled and licensed labor, and the cost estimates were also being impacted by uncertainty around the current economic climate. These factors have led to a $20 million increase in capital investment, resulting in a total expected project cost of approximately $100 million. We will be making the necessary filings to ensure rate recovery of this additional capital. The expected in-service date of the project has shifted from October 2025, to the second quarter of 2026, which means that the WRU margin that was originally expected in the fourth quarter will begin in 2026. This project remains critical to support increasing demand in this area and is still the lowest-cost project to address peak winter loads and protect against weather-related disruption. We're executing contracts this week and anticipate starting full site construction upon receiving the notice to proceed from FERC. WRU is just one of many projects that support our five-year capital investment plan, as shown on Slide 11. We've made significant progress to-date, with $356 million invested in 2024 and $113 million already invested through the first quarter of 2025. Cumulatively, we've also already identified and initiated at least $1.4 billion of our five-year capital investment plan of $1.5 billion to $1.8 billion, of which approximately 70% requires no additional regulatory approval or support. With that, I'll turn to Jim, to discuss our regulatory strategy and business transformation initiatives.

Thank you, Jeff, and good morning, everyone. As Jeff discussed earlier, a proactive regulatory agenda is the second pillar of our growth strategy. So, to start, I'll share several updates on our active rate cases, as shown on Slide 12. For our Maryland jurisdiction, in March 2025, a base rate increase of $3.5 million was approved, which reflects a Phase 1 revenue increase of $2.6 million and a subsequent Phase 2 revenue increase of $0.9 million. We then received a final order last month, with rates effective April 19, 2025. We are pleased to have come to a final resolution on this case and are excited that we will now serve all of our Maryland communities under one consolidated entity, Chesapeake Utilities of Maryland, Incorporated. On to our Delaware rate case which was initially filed in August of 2024. In March of this year, we reached a settlement agreement in principle with an approved cumulative interim rate increase of $6.1 million, effective May 1, 2025. We expect to reach a final order on the settlement agreement in the second quarter of this year. Our Florida rate case was also filed in August 2024. Following, an initial revenue increase voted on by commissioners in March of this year, we worked with interested parties and yesterday reached a settlement agreement for $8.6 million of a revenue requirement increase. We anticipate this agreement to be on the Florida PSC hearing agenda in June. Slide 13, summarizes our other key active regulatory filing, an updated depreciation study for Florida City Gas. In February of this year, we requested a reduction in annual depreciation expense of approximately $1 million in the form of revised annual depreciation rates and a two-year amortization of an excess depreciation reserve of $27.3 million. This filing reflects a return to our standard way of recovering excess depreciation going forward. The procedural schedule set by the Florida PSC projects a staff recommendation in August 2025 and an order in September 2025, leading to updated annual depreciation rates being implemented no earlier than the third or fourth quarter of this year, effective back to January 1, 2025. I'll now turn to slide 14, which provides an update on our business transformation initiatives, which is the third pillar of our fundamental growth strategy. In April 2025, we fully completed the implementation of our 1CX project by transitioning our Florida City Gas operations to the SAP system that we rolled out to our Delmarva and FPU operations in August of last year. The team capitalized on their experience with the initial system launch and refined the processes around training and implementation, which led to a highly successful rollout and seamless transition thus far. We are also in initial stages of launching a company-wide multiyear enterprise resource plan or ERP to coordinate and improve functions across the organization, including human resources, supply chain, asset management, and finance among others. These technology transformations alongside additional operational and security upgrades, within our technology road map will create a strong foundation to support our overall growth trajectory. Turning to slide 15, I would like to highlight a couple of ways we've been highly engaged with our stakeholders, including our investors and our broader communities. In March, we published our 2024 annual report, which highlights many of our accomplishments throughout last year. This report alongside our 2025 Investor Day, held at Cape Canaveral in March, launched our theme for this year, delivering with purpose reaching new heights. We were excited to host over 35 financial community members at our Investor Day, where we highlighted our growth opportunities across the enterprise. The key accomplishments and objectives related to our regulatory and business transformation pillars and the depth and breadth of leaders from across the company. Yesterday, we were gratified that our investors supported all six proposals on the ballot this year at our annual meeting, including the declassification amendment and an increase in the authorized shares from $50 million to $75 million. We also continue to invest in our communities and support local organization based on our four focus areas of giving: safety and health, community development, education and environmental stewardship. We understand that active engagement with all of our stakeholders is a core responsibility as we grow, and we look forward to publishing the third installment of our sustainability micro reports, which will focus on engagement with our employees, communities, and customers. With that, I will turn the call to Beth for a more detailed discussion of our financial results.

Thanks, Jim, and good morning, everyone. Our financial results as shown on slide 16, demonstrate strong growth in the first quarter of 2025, with adjusted gross margin of approximately $182 million, up 11% from the first quarter of 2024 driven by higher consumption and margin growth from investments in transmission distribution and infrastructure. Our margin growth coupled with operational efficiencies drove significant improvements in adjusted net income up 9% to approximately $51 million for the quarter. We also reported strong growth in adjusted earnings per share this quarter, up $0.12 to $2.22, a 6% increase over the first quarter of 2024. We are proud of this continued growth, particularly as this quarter did not benefit from a $3.4 million depreciation expense that was recognized under the Florida City Gas RSAM mechanism in the first quarter of last year. I'll now turn to slide 17, and highlight some of the key drivers of our first quarter 2025 adjusted EPS. Colder weather across our service areas contributed an $0.18 increase in adjusted EPS, particularly driven by increased consumption in Delaware and across our propane operations. Continued demand for natural gas drove $0.14 of incremental adjusted EPS, including $0.07 related to transmission capital projects and $0.07 of distribution growth across our service areas. Our unregulated business generated an additional $0.12 of adjusted EPS this quarter driven by increased margins in our propane operations and incremental demand for our Marlin Virtual Pipeline services relative to the first quarter of last year. Regulatory initiatives also drove additional adjusted EPS growth this quarter. Infrastructure reliability investments through our approved regulatory programs contributed $0.11 this quarter and interim rates related to our in-process rate cases added $0.05 in the first quarter of 2025. These gains were partially offset by a few factors including $0.17 per share of increased depreciation and amortization expense as this quarter had no RSAM depreciation expense reduction compared with an $0.11 benefit in the first quarter of last year. We also incurred additional operations and maintenance expense of $0.20 per share this quarter as a combination of business growth and higher prices led to increases in expenses associated with employees, customers, facilities and insurance. Lastly, financing activity, including our debt issuance in November 2024 and additional equity issuances in the first quarter of 2025, reduced adjusted EPS by $0.11 per share. Moving to slide 18. Adjusted gross margin for our Regulated segment was approximately $128 million this quarter, up 8% from the first quarter of last year. As just discussed, this improvement was driven by increased consumption due to colder weather, organic transmission and distribution growth in our natural gas distribution operations and growth in regulatory-related initiatives. As shown on slide 19, our Unregulated Energy segment demonstrated substantial growth relative to the first quarter of last year with adjusted gross margin up 18% to approximately $54 million in the first quarter of 2025. Even amidst an elevated demand environment, which typically compresses margin due to higher cost propane purchases in the spot market, our propane operations and gas supply teams did a fantastic job managing supply, enabling us to avoid costly spot market purchases and sustain our margins during high demand periods in January and February of this year. Our Marlin Gas Services business continued to grow as incremental demand for virtual pipeline deliveries drove $3.6 million of additional gross margin in the first quarter of 2025. In addition to RNG, we have seen increased CNG demand, particularly from manufacturing businesses in North Carolina and Ohio. I'll now shift to slide 20 to review our capital structure and financing activities. Maintaining a strong balance sheet and implementing a strategic financing plan is becoming even more critical as we accelerate our growth strategy amidst a volatile market backdrop. In March, Fitch Ratings issued our inaugural investment-grade credit rating, including a long-term issuer default rating of BBB+, an A- instrument rating for our senior unsecured debt and a stable outlook. We are proud of this assessment as it reflects our long-standing commitment to prudent investment and disciplined balance sheet management. And we'll continue to implement a strategy consistent with maintaining an investment-grade credit profile. We ended the first quarter of 2025 with an equity to total capitalization ratio of 49%, up from 48% at the end of 2024 and on the cusp of our target equity to total capitalization ratio range of 50%. We were able to take advantage of market performance during the last few months issuing approximately $22 million within the first quarter of 2025 via our ATM program and the waiver component of our direct stock purchase and dividend reinvestment plan and issuing nearly an additional 238,000 shares subsequent to the quarter, bringing our total shares outstanding to $23.3 million as of May 2, 2025. This puts us ahead of our equity issuance plan for the full year. On the debt side, minimum maturities in 2025 reduce our interest rate exposure and provide optionality for any issuances this year. In addition, our liquidity remains strong with 68% of our revolving credit facility and private placement shelf facilities available at the end of March 2025. 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 investments to drive earnings growth and overall shareholder return. Yesterday, our Board of Directors approved an $0.18 increase in our annualized dividend, reflecting 7% growth. We're moving from $2.56 per share to $2.74 per share. As shown on Slide 21, we continue to maintain a 10-year dividend CAGR of 9%. Since the Florida City Gas acquisition, we have strived to align our dividend growth with our earnings growth. Both of these metrics are expected to generate a compounded annual growth rate just under 8% over the two-year period from 2023 to 2025. This dividend strategy is not an either/or but a both and proposition. We support continued dividend growth while reinvesting significant earnings back into the company, enabling our investors to benefit from both long-term top quartile earnings and dividend growth. Turning now to that earnings growth. Slide 22 demonstrates not only our consistent track record of earnings per share growth, but also our 2025 adjusted EPS guidance, which reflects an increase of 14% to 18% over full year 2024 or growth rates twice as high as the overall utility industry. Our first quarter 2025 performance is in line with our expectations, enabling us to reaffirm our full year 2025 adjusted EPS guidance of $6.15 to $6.35 per share even without WRU's margin this year. Given the continuously evolving macroeconomic environment, we will continue to monitor any potential impacts to our investment plan and operations as we proceed through the year. As shown on Slide 23, our first quarter EPS represents 35% to 36% of our 2025 EPS guidance. There are a couple of factors that will shift a higher-than-normal percentage of our 2025 incremental gross margin to the third and fourth quarters of the year, which alters the cadence we've typically seen over the last approximate five years. The first factor is the timing of our interim and final revenue rate increases that Jim just highlighted, which primarily begin in the second quarter of this year. Second, as Jeff mentioned earlier, most of our major capital projects are expected to come into service in the third and fourth quarters of 2025, leading to back-end weighted incremental margin. The third factor is depreciation expense as each quarter throughout 2024 benefited from an RSAM adjustment, while the full year results of the Florida City Gas depreciation study may not be recognized until the third and/or fourth quarters of 2025, based on the current procedural schedule for that filing. Before we shift to Q&A, I'd like to highlight a couple of differentiators on Slide 24 that will enable us to drive shareholder value in 2025 and for years to come. As Jim mentioned earlier, our theme for this year is delivering with purpose, reaching new heights. This starts with our mission to deliver energy that makes life better for the people and communities we serve and is reinforced by our track record of delivering consistent financial results and top quartile return over the last 20 years or more. We are uniquely positioned in two regions that benefit from above-average customer growth and infrastructure expansion opportunities, enabling us to implement a growth strategy supported by our three pillars: prudent capital deployment, proactive regulatory strategy and continuous business transformation. This growth plan is made possible through our relentless focus on financial discipline, balance sheet strength and our 3-pronged financing strategy. We remain intent on maintaining an investment-grade profile and returning to our target capital structure so that we are well positioned to fund our long-term capital growth plan. All of these elements drive our ability to reach new heights, both in 2025 and beyond. We're not only targeting significantly above-average adjusted earnings per share growth this year, but reaching new heights with capital investment projects, regulatory activity and large-scale technological transformation, enabling us to become a much larger organization over the next few years. Staying committed to our goals and excelling at these differentiators will enable us to continue to drive industry-leading growth, total shareholder return and long-term value for all our stakeholders. With that, we'll take your questions. Operator?

Thanks.

Thank you, Chris.

Thank you.

We'll take our next question from Paul Fremont with Ladenburg. Please go ahead.

Good morning.

Thanks. Congratulations on a good quarter.

Thanks, Paul.

I guess my first question is if you were to settle in the FGC gas depreciation case, what would be sort of the optimal time? Would it be after staff testimony? Or would it be after the staff issues its report?

It's likely to be the former. I mean I think this is probably going to run out into the late third quarter or early fourth quarter as kind of indicated by that schedule. One of the things that I think all of us are still looking toward it doesn't have a direct bearing per se on the depreciation study that we filed but everyone is still looking at that RSAM Supreme Court decision as at least an indicator of what the court's view might be of the original RSAM. This is not that, but I think it all plays in that general context. And so, I think it will probably be a summer where we work with staff and work with the Office of Public Counsel as we work through the data requests that have already started on the depreciation study likely heading toward the schedule that you referred to. And I would imagine we would get pretty close to that before we began significant settlement discussions.

Great. And then with Fitch initiating ratings, did they indicate a downgrade threshold for FFO to debt?

They have the FFO leverage calculation is the predominant calculation that they're looking at. And Paul from their perspective, they start to view a downgrade when you're thinking about a 4.8 is when there's consideration of a potential downgrade. And then similarly on the other side, an upgrade has been indicated around the 3.8.

And then do you have sort of your own target relative to their thresholds?

We do. Actually, great question. We have actually spent time with our Board and we have constructed a framework that actually looks at seven different metrics along the kind of the credit spectrum including that one and two others that they actually monitor as well, but to a lesser degree. But we have those -- we have the dashboard in place. We've established internal targets that our Board has reviewed and that we monitor and we'll be showing them on a quarterly basis. So that's pretty front and center and something that we're looking at on a regular basis.

Right. But are you -- do you plan on sort of sharing any of those metrics with investors? Or are those truly...

We are still looking at that. Mike, Noah, myself we're looking at that and evaluating whether or not we'll come out with that. So stay tuned. But right now, we haven't, but we feel comfortable with our forecast and what we've shown them. And certainly, we're looking to sustain the ratings that we have out there.

Great. Thank you so much.

Thank you.

[Operator Instructions] We'll go next to Nicholas Campanella with Barclays. Go ahead.

Do you think Chesapeake can hit the midpoint of guidance without the WRU project margin for 2025?

Well I think certainly, we intend to be in the guidance range. I mean I think that's what we've reaffirmed today. Where we fall within that range I think is yet to be seen. It's hard to predict the future in some ways in an economic climate like this. As I've indicated, we haven't seen other than WRU any substantive impacts to us or our business relative to what's going on in the economy at this point. And in fact we're pretty bullish on our capital program and you've seen that from I think a number of companies reporting here lately. There's a lot to do out there and there's a significant demand for gas. And the WRU margins are -- it's unfortunate to see them move and I hate to even say that it's only $3 million, $3 million is $3 million, but it's a number that we I think can manage pretty effectively. Now whether that takes us to the midpoint of the range or the end of the range or the beginning of the range, I think is something we'll continue to look at. Beth, have you got anything to add there?

Sure. [Technical Difficulty] and that we have a lot going on from a capital perspective. And I think we'll come back later in the year and revisit whether or not we need to consider any change in our capital guidance in the future. And then second off I would just add a lot of those dollars are being spent on projects as you can see in our major project table that will have more of a full year impact in 2026. That's number one. The second thing is, I would say you've seen us also commit to getting back to that target capital structure. And so, our decision to do that can weigh into where you actually land within that EPS guidance range. So I think that's really -- those couple of things would just be the additional comments that I would have. So, I think, we're pleased as Jeff said when he started off the call and I ended it with the first quarter. I think it was a strong quarter. I think you saw that in our results across our businesses. And so again we're reaffirming for the year despite WRU. And so maybe Jeff, I'm not sure we have any more questions. So maybe we can turn it to you for some closing remarks.

Operator, are there any other questions?

We have no further questions at this time.

All right. Well, thank you guys very much for connecting with us this morning. We appreciate your continued interest in the business. We're pretty happy with the first quarter results. And as Beth and I indicated, I think WRU is not ultimately going to be a significant impact to us this year. We can manage through that. And we look forward to reporting on how that's going next quarter. And with that, goodbye.