Chesapeake Utilities Corporation

Welcome to Chesapeake Utilities Corporation's second quarter 2026 earnings conference call. At this time, all participants have been placed on a listen-only mode and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Lucia Dempsey, Head of Investor Relations. Please go ahead.

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 two, 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 2025 Annual Report on Form 10-K and in our second quarter Form 10-Q provides further 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 sheet. The reconciliation of these non-GAP measures to the related GAP measures have been provided in the appendix of this presentation in our earnings release and our second quarter form 10Q. Here's Chesapeake Utilities' safety as our first priority. We start all meetings with a safety moment, and we'll do so here, as highlighted on slide 3. Given the impact that wildfires have caused across the country lately, today's safety moment focuses on wildfire smokes. Wildfire smoke contains fine particles and harmful gases that can irritate the eyes and lungs, worsen asthma or heart conditions, and reduce air quality even far from the fire itself. When smoke levels are elevated, limit time outdoors, keep windows and doors closed, and use air conditioning or air purifiers as available. I'll now introduce our presenters today. Jeff Householder, Chair of the Board, President, and Chief Executive Officer will provide an update on this quarter's K accomplishments and our Capital Growth Program. Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer, will discuss the Florida City Gas Rate Case and stakeholder engagement. And then Jeff Sylvester, Senior Vice President and Chief Financial Officer, will discuss our financial results in more detail. With that, it's my pleasure to turn the call over to Jeff Householder.

Thank you, Lucia, and good morning, everybody. I'll start with slide five. Our growth trajectory has continued through the second quarter as we reported a 5% increase in adjusted net income, driving an 8% increase in adjusted earnings per share through the first six months of this year. In the second quarter, we generated an incremental $10 million of margin related to growth in our transmission, infrastructure, and distribution systems. We also invested $140 million of capital in the second quarter, bringing our total year-to-date investment to $262 million while continuing to advance our regulatory filings. Moving to slide six, I can continue to report another quarter of solid commercial customer growth and above average residential customer growth, 3% in Delmarva, 2.1% for Florida Public Utilities, and 1.8% for Florida City Gas. Increasing demand for natural gas remains core to our long-term growth strategy. We are fortunate to continue seeing above-average growth in our attractive service areas. In our Delmarva region, Spotlight Delaware states that Delaware has consistently ranked top 10 in percentage population growth during recent U.S. Census Bureau studies. We continue to see strong demand for natural gas in new apartment complexes and housing developments as well as for large commercial and industrial customers. Complementing this, the latest study from the Florida Office of Economic and Demographic Research projects annual state population growth to average every 300,000 net new residents. That's like adding a city nearly the size of Orlando every year. This growth will continue to drive increased natural gas demand for years to come. Slide 7 highlights the Florida Energy Pathway Project, or FEP, which we just announced last month. This project is designed to address significant transmission capacity constraints and substantial natural gas demand increases in South Florida. FEP is a 97-mile intrastate natural gas transmission infrastructure project that will run from Palm Beach County to Miami-Dade County in Florida. This is the largest single project in our company's history, representing total investment of approximately $1.2 billion. Our subsidiary, Peninsula Pipeline Company, or PPC will construct and operate the line and will fund and own at least 51%. We've been working with potential partners that may fund and own up to 49% of the project and we expect to share more details soon. FPP is expected to be in service in 2030 and is anchored by multiple investment grade shippers who've committed to nearly 250,000 becatherms per day of capacity. We are also accepting binding commitments with additional shippers. This project is a valuable long-term regulated growth opportunity for the company. It also aligns strategically with our natural gas transportation construction expertise, above average growth expectations, and increased presence in South Florida following the SCG acquisition. I will shift to slide eight, which summarizes our 2026 capital program. Given our strong start to the year and increased expectations for additional capital expenditures in the second half of the year, we're increasing our full year 2026 capital guidance by $100 million, resulting in an updated range of $550 to $600 million. This is driven primarily by initial spending for FEP, as well as increases in regulated distribution and infrastructure investments. Slide 9 shows additional detail on our transmission projects that are supporting natural gas demand in our service areas. We forecast these projects to contribute approximately $33 million of gross margin in 2026 and an additional $51 million in 2027. The largest project on this table yet to come online is the Worcester Resiliency Upgrade, or WRU, our LNG storage facility. Slide 10 summarizes the latest updates on this project. Site and facility construction remain on schedule, and I'm pleased with our progress overall. WRU is a substantial, complex project that will deliver significant peak-day service capabilities and serve natural gas expansion at the southern end of our system. We look forward to bringing full projects online early next year. I'll now shift to slide 11 to address our longer-term capital program. As we've discussed before, there are a number of expansion opportunities under development that may provide significant growth potential as we serve increasing demand across our service areas. Our Delmarva Regional Enhancement Project continues to move forward, with permitting underway and construction expected to start next year. We're also making progress with the Acomac County Exploration Project as we continue to assess opportunities to serve customers on Virginia's eastern shores. We continue to engage with partners in the community at the Cape and Port of Canaveral to explore potential opportunities for LNG transportation and storage. Given the growth in our capital program since 2024, we now expect to exceed capital investment of $1.4 billion through the end of this year, which is nearly at the bottom end of our initial five-year capital range. As a result, We are updating that range to share that we now expect to exceed $2.2 billion of capital investment from 2024 through 2028. In addition, we recognize that the progress we're making on our investment opportunities, particularly with the announcement of FEP, will necessitate a more fulsome update of our long-term performance expectations. Therefore, we now expect to provide the following guidance on our full year of 2026 earnings call this coming February. 2027 through 2031 capital expenditure guidance and 2027 through 2031 earnings growth rate. We believe these disclosures will reflect and support our industry leading long-term growth opportunities that will drive stakeholder value for years to come. With that, I'll turn it to Jim.