- First quarter net income totaled $19.1 million or $1.17 per share
- Earnings from the Eight Flags Combined Heat & Power plant, higher margin from the natural gas marketing operation and continued growth in the natural gas distribution and transmission businesses partially offset higher operating expenses and the impact of warmer weather
- Xeron began winding down its operations during the first quarter
Dover, Delaware — Chesapeake Utilities Corporation (NYSE: CPK) (“Chesapeake Utilities” or the “Company”) today reported first quarter financial results. The Company’s net income for the quarter ended March 31, 2017 was $19.1 million, compared to $20.4 million in the same quarter of 2016. Earnings per share for the quarter ended March 31, 2017 were $1.17 per share, compared to $1.33 for the same quarter of 2016.
Margin growth continued to be strong throughout the Company’s businesses, driven primarily by: income generated from the Eight Flags Energy, LLC (“Eight Flags”) Combined Heat & Power (“CHP”) plant, which initiated service in the second quarter of 2016; higher gross margin from the Company’s natural gas marketing operation, Peninsula Energy Services Company, Inc. (“PESCO”); customer growth and service expansions in the Company’s natural gas transmission and distribution businesses; and increased gross margin generated by the Florida Gas Reliability Infrastructure Program (“GRIP”).
The increased gross margin generated by the Company’s successful growth initiatives was offset by the effects of warmer than normal weather and higher operating expenses. The first quarter of 2017 was the third warmest first quarter on the Delmarva Peninsula during the last fifty years. The warmer weather during the quarter reduced EPS by $0.04 per share as compared to the first quarter of 2016. The increase in total quarter-over-quarter operating expenses was partly attributable to expenses incurred to pursue growth initiatives and wind down the operations of Xeron, Inc. (“Xeron”), the Company’s former propane and crude oil trading subsidiary, which is more fully discussed in the “Major Projects and Initiatives” section later in this press release, which further reduced EPS by $0.04 per share. Lastly, an increase in outstanding shares as a result of the equity issuance consummated in September of 2016 lowered EPS for the quarter, by approximately $0.07 per share.
“First quarter results reflect both the continuing benefits of our growth strategy and the importance of investing in our systems and expanding our staff to deliver excellent service and maximize our future growth opportunities. Margin growth from both our regulated and unregulated businesses largely offset the first quarter impacts of warmer weather and higher costs from expanding our capacity to serve recent and future growth,” stated Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. “The investment in our ability to provide our customers with excellent service and expand our capacity to identify and develop future growth opportunities is critical to ensure that we continue to generate the kind of margin growth we delivered in the first quarter, as we seek to extend our ten years of record reported earnings per share in 2017 and beyond. We will continue to execute our growth plan with financial discipline, which includes walking away from opportunities that do not meet our strict guidelines for risk and return, even after incurring due diligence costs to fully vet them, as we did this quarter, or winding down operations after carefully weighing alternatives, as we did in the case of Xeron,” added Mr. McMasters.« Return to Newsroom