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Chesapeake Utilities experiencing 'strong growth' despite YOY decrease, CFO says

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Chesapeake Utilities experiencing 'strong growth' despite YOY decrease, CFO says

is experiencingstrong growth despite a decrease in year-over-year earnings. During the company'sfirst-quarter 2016 earnings call May 6, CFO, senior VP and assistant secretary BethCooper said the decrease, primarily driven by milder weather, was offset by thegrowth of the company's natural gas business, service expansions, customer growthand the contribution of Aspire Energyof Ohio LLC, acquired in 2015.

The growth the company experienced "helped offset the weatherimpact and ultimately resulted in net income only being down by about 3.5% for thequarter; pretty remarkable," Cooper said.

ChesapeakeUtilities on May 4 reportedfirst-quarter 2016 net income of $20.4 million, or $1.33 per share, compared with$21.1 million, or $1.44 per share, a year ago. The company said the impact of warmerweather on energy usage reduced net income by $4.0 million and EPS by 27 cents duringthe most recent quarter.

The companyrecorded operating revenues for the quarter of $146.3 million, a decrease from the$170.1 million generated in comparable period of 2015. Operating expenses dropped$22.7 million year over year to $109.9 million during the most recent quarter. Itsregulated energy segment contributed $24.3 million in first-quarter 2016 operatingincome, an increase from $22.2 million in the same period of 2015. The unregulatedenergy segment posted a $3.3 million year-over-year drop in operating income to$11.9 million.

"Our projects this year are comprised of about 82% regulatedinvestments in our natural gas and electric businesses," Cooper said on theearnings call. He added that one of the key projects underway, its combined heatand power plant, has an expected completion date of midyear 2016.

The company announcedin September 2014 that its subsidiary, EightFlags Energy LLC, would build and operate an approximately 20-MW combinedheat and power plant in Fernandina Beach on Amelia Island in Nassau County, Fla.The power will be sold to Chesapeake's subsidiary, Florida Public Utilities Co., for distribution to its retailelectric customers.

In March 2015, the Florida Public Service Commission grantedregulatory approval ofa 20-year power purchase agreement between Chesapeake Utilities subsidiaries FloridaPublic Utilities and Eight Flags Energy.

Cooper said the company is also expanding its facilities to serveCalpine Corp.'s GarrisonEnergy Center in Dover, Del., which has added "considerable margins."

"They're operating right now under our short-term serviceagreement," she said. "Ultimately, when we put additional services intoplace next year, at the beginning of the year, they'll be on our long-term contractfor approximately 20 years."

Another large component of the company's capital expenditurebudget is a reliability project currently underway, Cooper said. The company's FloridaGas Reliability Infrastructure Program, or GRIP, generated an additional $1.1 millionof margin and natural gas customer growth, according to Cooper.