Chesapeake Utilities Corporation Stock

Welcome to Chesapeake Utilities Corporation's Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

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 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 2025 annual report on Form 10-K and in our second quarter Form 10-Q provide 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 G. A reconciliation of these non-GAAP measures to the related GAAP measures have been provided in the appendix of this presentation in our earnings release and our second 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 as highlighted on Slide 3. Given the impact that wildfires have caused across the country lately, today's safety moment focuses on wildfire smoke. 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. Jeffry Householder, Chair of the Board, President and Chief Executive Officer, will provide an update on this quarter's key accomplishments and our capital growth program. James 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 Jeffrey 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 5. 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 6. We continued 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 and 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 nearly 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. FEP is expected to be in service in 2030 and is anchored by multiple investment-grade shippers who've committed to nearly 250,000 dekatherms 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 FCG acquisition.

Now let's shift to Slide 8, 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 million 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 project 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 Accomack County Exploration project as we continue to assess opportunities to serve customers on Virginia's Eastern Shore.

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 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.

Thank you, Jeff, and good to be with all of you today.

I'll start with Slide 12. Earlier this year, we filed a rate case for our Florida City Gas business, requesting a base rate adjustment of approximately $47 million and an ROE of 11.25%. This request updates our returns and includes cost recovery for a number of key areas, including technology, insurance, depreciation and property taxes.

We were pleased to have our request for $16 million of annualized interim rate adjustment approved by the Florida Commission in late July. This will generate over $6 million of increased revenue in 2026.

We are thrilled that our FCG teammates and customers are part of the Chesapeake family and value the exciting opportunity to serve this growing region. We will continue to work closely with the Florida PSC staff and the Office of Public Counsel to achieve a constructive outcome. I'll now turn to Slide 13 to provide an update on our stakeholder engagement.

In April, we launched Spring Impact Days, a company-wide volunteer initiative that brought employees together to continue to support the communities we serve. With more than 30 volunteer events across our service areas, Impact Days brought out our purpose-led mission to life.

From environmental cleanups to serving at food banks and supporting animal shelters, walks, and bills, these days were all about connection, compassion and community. Impact Days are set to become a tradition and cornerstone of our company's commitment to stakeholder engagement.

Through the six months of the year, over 500 team members have participated in a volunteer event, and the company has contributed nearly $1 million in charitable donations, community partnerships and sponsorships. Stakeholder engagement remains central to who we are and to our success.

We are powered by people and guided by a commitment to inclusive progress so that no one is left behind.

With that, I am very pleased to turn the call to Jeff Sylvester, who will discuss our financial results in more detail.

Thanks, Jim, and good morning, everyone. Slide 14 provides an overview of our business transformation. We are building a stronger foundation for growth with our ERP implementation serving as a critical enabler of that strategy. We are making a substantial progress on our ERP project.

Last month, we successfully transitioned into the realized build phase, and we remain on track for our planned 2027 go-live. I'm proud of what the team has accomplished to reach this important milestone. This investment will strengthen enterprise capabilities, improve data analytics and provide a scalable platform to support future growth and create long-term value for our shareholders.

Now shifting to Slide 15 to discuss our financial results for the quarter. We continue to demonstrate strong performance and growth across all metrics. Adjusted gross margin was approximately $150 million, up 5% and adjusted net income was approximately $25 million, also up 5% from the second quarter of 2025.

Adjusted earnings per share were $1.05 this quarter, representing a 1% increase over the second quarter of 2025 and is reflective of the shares we've issued throughout the last year as we return to our target capital structure. Slide 16 provides additional detail on the key drivers of our second quarter performance.

Ongoing and recently completed natural gas transmission expansion projects contributed $0.15 of adjusted earnings per share this quarter. Margin from our infrastructure program investments accounted for an additional $0.10 per share. Continued demand for natural gas distribution drove $0.06 of incremental adjusted EPS, and we benefited from an additional $0.06 of improved propane and Aspire performance in the quarter as well.

These gains were partially offset by a few factors, including $0.04 related to consumption, quarterly timing differences and other items and $0.04 from decreased CNG, RNG and LNG services. We also had $0.11 of increased depreciation, amortization and property tax expenses driven by increasing levels of capital investment, $0.05 of increased facility, vehicle and insurance expenses, $0.04 of higher credit collections and customer service costs and $0.03 of increased payroll and benefit expenses.

Lastly, financing activity, including debt and equity issuances over the last 12 months reduced adjusted EPS by $0.05. Shifting to Slide 17. Adjusted gross margin for our regulated segment was approximately $125 million this quarter, up 6% from the second quarter of last year.

Regulated operating income saw similar growth, up 7% to approximately $55 million in the second quarter of 2026. Our unregulated Energy segment also demonstrated continued growth with adjusted gross margin up 2% to approximately $25 million in the second quarter of 2026.

Our overall growth is supported by our sustained focus on managing our expenses. For the first half of the year, our operational expenses represented only 45% of gross margin, which is our lowest point to date. This reinforces our long-term progress towards efficiency and value realization as we grow the business.

I'll now move to Slide 18 to review our capital structure and financing activities. At June 30, our equity capitalization remained at 50%. We also continue to maintain strong liquidity and sufficient capacity to support growth with 70% of our total debt capacity of $798 million available as of June 30, 2026.

In the last few days, we have just completed an amendment of our revolving credit agreement, bringing the total borrowing capacity under the revolver to $650 million, an increase of $200 million. This includes $250 million available under a 364-day tranche and $400 million available under a five-year tranche expiring August 2031.

Moving on to Slide 19. Alongside our equity and debt plans, our dividend policy continues to be a key component of our capital allocation strategy as we fund growth investments to drive overall total shareholder return. Our most recent annual dividend increase of 7.3% and our next dividend payment of $0.74 per share align with our Board-approved dividend payout target range of 45% to 50%.

This enables us to retain 50% to 55% of earnings to support our robust capital program and reduce external financing needs.

Slide 20 demonstrates our track record of strong and consistent earnings growth over the last 19 years. We remain committed to delivering industry-leading long-term earnings per share growth by reaffirming our 2028 earnings per share guidance of $7.75 to $8.

And as Jeff mentioned earlier, we expect to provide a five-year capital guidance and earnings growth rate on our full year earnings call in February of next year.

I'd like to end by summarizing our value proposition, which is shown on Slide 21. Our track record reflects a long-standing commitment to executing on our promises and creating value for stakeholders. Through decades of consistent growth, we have demonstrated both resilience and discipline, and I remain highly confident in our ability to continue delivering strong results.

Through our three growth pillars of disciplined capital investment, effective regulatory engagement and a relentless focus on continuous improvement, we will strengthen our business and position it for sustained long-term growth.

As Jim discussed, we remain powered by people. We are fueled by our teammates who are committed to delivering high-quality service to our customers. We are active participants within our communities and remain focused on delivering value for all shareholders.

With that, we'll take your questions. Operator?

[Operator Instructions] We'll take our first question from Constantine Lednev with Wells Fargo.

Maybe starting off on the Florida Energy Pathway. Just curious on the regulatory and permit path here and how the commercial interest is shaping up anchors for the project. Is there still an opportunity to upsize or would that more rely on future laterals? And just maybe a little bit of a sense on how this project could fit into the bigger update at year-end.

Constantine, this is Jeff Sylvester. I mean, as you know, we've probably disclosed the size of the project and the, I guess, the shippers we haven't disclosed, but certainly, the volumes in there are meaningful to us. We also disclosed that we're interested in looking at additional potential load, which we're obviously working on and expect to be an interesting part of that project. And again, we do expect there's growth in that potential project.

In terms of the update in February. I think it is a meaningful part of that update. And so we're, as you would expect, maybe thinking about how that plays out over the next five years. We expect to provide some of that in February. But still a lot of questions as we work towards the partnership, we expect to have that sort of aligned here in the quarter. And that will give us a little bit more clarity around all kinds of things relative to financing and partnership specifically. So obviously, it's an exciting project for us. It's quite meaningful, and we look forward to sharing more as we can.

Constantine, this is Jeff Householder. From a regulatory and permitting perspective, this is an intrastate pipeline project. operating under primarily our Peninsula Pipeline company. It is jurisdictional to the Florida Public Service Commission. And we will, at the appropriate times, be filing various documents with the PSC and disclosing contracts and those sorts of things.

To the extent that we are providing some service to ourselves to one of our affiliates, which is frankly a fairly small part of this project, but it's meaningful to us, then we'll file an affiliate transaction petition with the commission as we typically do with PPC projects.

The permitting process is about to begin in earnest. We've had many, many conversations, as you might imagine, with folks like the Florida Department of Environmental Protection and the Florida Department of Transportation and others. This is a project that goes through three southern counties.

We will be largely in the public right of way here. And so there's not a tremendous amount of land acquisition required, and we expect the permitting process to go relatively smoothly for a project of this size.

Excellent. I appreciate that. And maybe a quick follow-up there, noting the partnership structure kind of what's driving the rationale there? And we've obviously seen a lot of different project equity, pref equity type structures, kind of maybe kind of how is that contemplated within the funding plan?

Well, I think part of that for us is trying to maintain a reasonable balance on the risk associated with any investment of this size. Good to share some of those risks with a partner. It's also reflective, I think, of the impact of a project of this magnitude on our earnings profile over the next several years as we build capital up to about $600 million on our side of the project, and look to initiate revenue from that project in 2030.

So we've got some things to manage in the ensuing years as we construct the project. And there are several ways to do that. We've obviously contemplated that as part of our ongoing guidance for earnings and the thoughts of what we will provide to you in February of '27 looking forward. So I think we're in pretty good shape there, but it was a manageable amount of capital over an extended period of time that we felt comfortable with. And frankly, that's kind of how we got to the point of being interested in taking on a partner for the project.

Yes. And I'll add that there. We've talked about other potential projects out there for us. And this thinking about timing related to those, obviously, we want to continue to do projects that are meaningful to us in our service areas. And so we're thinking about all of those things, making sure we've got the capacity to do more.

Excellent. And maybe just one housekeeping item on the '28 CapEx kind of step-up, given the difference versus the prior plan, does that kind of push you to the top end of the range? And if we look at kind of that implied $400 million run rate for '27, '28, is that something that's sustainable into the five-year update?

Yes. I think that what we're signaling with the update through '28 is obviously, we're pushing up against the bottom of what we have provided. Obviously, FEP has an impact there, but we're also seeing other opportunities that are going to push us beyond it. And so again, we believe we've got lots of opportunities in our service territories and certainly looking beyond the '28 plan, you'll expect to see an update in February that will likely signal the right things relative to growth.

Our next question comes from Nicholas Campanella with Barclays.

This is Michael on for Nicolas Capital. My first question is there a common ground for a settlement in the FCG rate case?

Well, I mean, we always like to think that, that might occur. We'll see where all of this goes. The Office of Public Counsel, as you probably have seen, has staked out a position completely opposite to what we've filed. That's not been that unusual. And certainly, people will take positions in these filings as they feel are necessary.

I don't know that we will get to a settlement on this particular filing, and we're certainly prepared to fully litigate it if we need to. And so we'll see where it goes.

The next question is, do you plan on, I know you plan on giving a growth rate in the February update. What about EPS guidance for 2027 and also beyond 2028? I know given EPS guidance for 2028.

Yes. I mean we've been chatting about that. I know there is some desire for us to do that. We're not signaling it here, but we certainly are signaling that we're going to provide more clarity around the five-year growth rate and the capital associated with it, and we'll see where that goes.

Our next question comes from Tate Sullivan with Maxim Group.

Just one follow-up on FEP. Jeff, how long, if you can share, have you been evaluating this project and at the scale, I mean, was it when you saw Energy Transfer go forward with the Phase IX project? Or how is the timing, if you can give some background on the project evaluation timing, please?

Back in the mid-'90s, I actually worked for NUI that owned Florida City Gas. And we recognized at that time, and I'm not kidding, recognized at that time that we had significant capacity shortfalls into the South Florida area. One of the things that we thought was attractive, frankly, about the Florida City Gas acquisition was an opportunity to play a more direct role in trying to resolve some of those capacity issues. And I think, obviously, you've seen others in that market area having the same issues.

The Phase IX expansion on FGT was certainly a significant opportunity to think about moving additional upstream interstate pipeline capacity down towards South Florida. And then the issue is how does it get further down into the market area. And so we were fortunate to be able to cobble together an arrangement with Florida Gas Transmission and with Florida Power & Light. And we're pretty excited about the project.

I mean it helps service reliability in that area. I think there's a lot to be said about service resilience. It allows us to continue to grow and expand and meet customer demand in that area. And I think it does the same thing on the electric service side.

So it's a great project. A lot of people holding hands to get it done. And I think we'll see finally after all these years, the opportunity to bring additional gas capacity into South Florida.

Being an intrastate project, will this be your first partnership intrastate pipeline project? I believe it will be in terms of financing with them.

Yes, that's exactly right. It is.

And then just separately on the WRU project, you note in the presentation, still exploring potential expansions once it's in service. Is that a given that it gets regulatory approval for expansion due to required peaking needs and redundancy needs, please?

Well, I'd like to think that it's a given. I never assume that. But I mean the need is certainly there. The demand from the customers and the growth in service connections on the Delmarva Peninsula is substantial, and it hasn't slowed down in years and years, and we don't see a whole lot of backing off in our look at developments and house construction there and all the other things that go with it.

We're seeing a significant uptake in things like health services, hospital expansions and those sorts of things that are substantial gas users. So I think the demand for service certainly indicates that we'd be prepared to meet those service obligations. And at this point, the LNG facility sitting in Maryland that feeds into our Eastern Shore transmission system and ultimately provides services into our distribution systems and potentially others is the least expensive way and most efficient way to actually provide that service.

So I think there is a good argument, a very solid case to be made that meeting the service demand issues that we have on that peninsula over the long term, at least at this point, are best met by these LNG facilities. So I think there is a good opportunity to expand it.

We will move next with Chris Ellinghaus with Siebert Williams Shank.

Jeff, can you give us any color on sort of progress on the Virginia feasibility study or anything going on with Canaveral?

Well, yes, there's several things going on there. As you know, we were successful in getting the state grant that went to Accomack County that subsequently was awarded to us to do the feasibility study and some of the preliminary engineering work on trying to expand into that area down toward the Wallops Island facility and also to the various other potential customers in that part of the state. We're pretty excited about that.

We're in the middle of that process now beginning the feasibility analysis. It's not an easy project. There's a lot involved in building a pipeline down to that part of Virginia. But we're halfway down that way at this point, and we're trying to see if we can figure out a rational way to continue to expand into that territory. There's a lot of interest on the part of the potential customers down there, a lot of support, obviously, from the governmental entities that have enabled this grant to go forward.

And so we'll see where that leads. But I'm pretty happy about where we are in our role in potentially bringing natural gas service to that part of Virginia for the first time. On the Canaveral front, we continue to do what we have been trying to do, which is to find an appropriate piece of property to locate an LNG facility that would allow us to fuel both the space program as well as the cruise ships that are coming in and out of Port Canaveral.

I think we have, without going too far down this path, I think we have identified out of the 14 or 15 pieces of property that we've looked at, including the one at the port that the Port Commission decided they did not want us to build on. We have an opportunity to look at another piece of property that's water side that I think might have some real opportunities for us.

So again, we continue to work with the governmental agencies in Washington, and NASA, the state Space Florida folks and others that are interested in getting natural gas to the Space Coast plus the Port of Canaveral. And so there continue to be, as you well know, LNG facilities or LNG ships that continue to come in and out of that port. They're either barging LNG down from places like Jacksonville or they're fueling offshore in the Bahamas. And so we think there's a real opportunity to do something there, and we're going to continue to be pretty aggressive in trying to secure the property and get the project under construction.

Okay. Great. Jeff, there's also a fairly palpable slowdown in customer growth across a pretty varied geography across the U.S. Can you just talk about what you're seeing in any headwinds? Customers usually relate to housing. So anything that you're seeing in particular in your regions?

Yes. I mean we are seeing some slowdown, I think. It's reflected in the numbers that I just mentioned a moment ago. But we're also continuing to see things like on the Delmarva Peninsula growth rate that's still double what you would typically see around the country. And in Florida, when you add the FPU and City Gas numbers together, you're still at a pretty healthy growth rate. So, we're looking pretty carefully at our lot inventories, the developments that we have under contract, talking to homebuilders in the areas that we serve.

And I think your comment is accurate. I think there is a general slowdown, but it's still going pretty quickly for us in the service territories that we're in. And we see good healthy construction activity going on and customers still having a substantial interest in connecting to our gas systems. So yes, I would agree with you. I think there is a little bit of a slowdown from kind of peak levels from a few years ago, but nothing alarming to us at this point.

[Operator Instructions] We will move next with Paul Fremont with Ladenburg.

Great. First of all, congratulations on the FEP announcement. That's very impressive. When you guys do provide an EPS growth rate on a longer-term basis, I would think the FEP project is a pretty lumpy project that would affect that growth rate. So would you be looking to potentially indicate what the growth rate would be through the completion of the project and then sort of a more normalized growth rate beyond? Or how would you sort of approach that?

Yes. Thanks, Paul. I think you're right about the five-year cycle. It's obviously going to go out through 30 or 31 at this point in time, which would capture the impact of FEP at least in the first year. I'm not sure we've settled on exactly how to tell that story yet, but you can expect at least some visibility across the five years. And then we're thinking about how to sort of bridge the early years in that five-year plan. So more to come on that.

Great. And when I look at sort of the numbers through '28, it looks like at the midpoint, the capital spending would be up about $350 million. How much of that is FEP?

We haven't disclosed FEP numbers yet in that total. Again, you can expect that there's a ramp-up and ramp down in this project. And so in the early part of that project, sort of limited capital and the meat of that really comes in the center of that period between now and 2030.

Great. And then you basically have indicated or quantified the negative impact of the LNG storage delay at about $0.10. Would there be a significant offset to that based on sort of the $100 million of CapEx that you announced today?

Most of that CapEx, I mean, is probably, the way I would think about that, Paul, is most of that CapEx is really pointed at 2028 and beyond. '26 is pretty much a big year. In terms of earnings.

And then just going back to sort of the storage facility in the Delmarva, do you plan on having an open season? And if so, at what time frame would that occur?

In terms of the expansion potential that was.

Yes. Yes.

I would expect that you will see an open season and certainly similar to what we did before, just gaining interest and then ultimately kind of thinking about long-term needs, both for our distribution units and any other customer that might show up there or has needs. Timing isn't clear at this point in time, but we'll obviously be in front of you with some information in terms of the open season process, which obviously takes some time to kind of work through.

At this time, there are no further questions in queue. I will now turn the meeting back to Jeff Householder for closing comments.

Well, thank you all for joining the call today, and we will talk to you very soon, I'm sure, with more updates on some of the exciting things we're doing here. Goodbye. Thank you.

This concludes Chesapeake Utilities Corporation's Second Quarter 2026 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.

Welcome to Chesapeake Utilities Corporation's First Quarter 2026 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 & 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 2025 Annual Report on Form 10-K and in our first quarter Form 10-Q provide 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 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 as highlighted on Slide 3. May is Electrical Safety Month and a great time to ensure we are safely using the power of electricity.

Be mindful of overloaded outlets, damaged cords and using electrical appliances near water. Also be sure to use lithium-ion batteries safely, only use the correct charger, avoid charging on beds or couches and never use damaged or overheating batteries. Small daily choices can prevent fires, injuries and protect ourselves, our homes and our loved ones.

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 key 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.

Jeff Sylvester, current Senior Vice President and Chief Operating Officer and incoming Chief Financial Officer, joins us today for his first earnings call. Jeff will summarize our first quarter performance and financing updates.

And Beth Cooper, Executive Vice President and Chief Financial Officer, who has announced her retirement at the end of June, joins us for her 71st and final earnings call. Beth will discuss dividend and earnings growth and then close with our value proposition.

With that, it's my distinct pleasure to turn the call over to Jeff Householder.

Thank you, Lucia, and good morning, all. Let me start today by recognizing Beth Cooper, who announced her retirement in March following 36 years of service to the company. In the last 18 years as our Chief Financial Officer, Beth's strategic and financial leadership has led to incomparable growth, including a $3 billion increase in our market capitalization, 10x growth in total assets and net income as well as a 366% increase in earnings per share.

Most importantly, Beth embodies the best of Chesapeake Utilities. She has an authentic passion for delivering results and an impressive ability to build connections and relationships internally and externally. So thank you, Beth. It's been an honor to work alongside you.

We are eternally grateful for your significant contributions to this company. I'd also like to welcome Jeff Sylvester to our call, who will transition from COO to formally assume the CFO role on July 1 of this year. Jeff brings deep financial and operational knowledge of our business, along with valuable expertise in data analytics and process and technology transformation, all of which are fundamental to our next stage of growth and development.

I look forward to continuing to work closely with Jeff as we remain focused on the 3 pillars of our growth strategy, prudent deployment of capital, a proactive regulatory agenda and business transformation actions that meet the energy delivery and service expectations of our customers and communities.

I'll now move on to Slide 5. We had a strong start to the year, reporting a 16% increase in adjusted net income and an 11% increase in adjusted earnings per share compared with the first quarter of last year.

We generated an incremental $12 million of margin from transmission and infrastructure projects and $11 million of margin from distribution system growth, updated rates and increased customer usage given the much colder winter we experienced in the first quarter.

Slide 6 highlights the connection between growth in our service areas and our long-term growth strategy. I can continue to report a quarter of solid commercial customer growth and above-average residential customer growth, 3.3% in Delmarva, 2.2% for Florida Public Utilities and 2% for Florida City Gas. Increasing demand for natural gas and propane remains core to our long-term growth strategy.

Population growth, homebuilding and the needs of our customers continue to provide investment opportunities to upgrade and expand our energy delivery systems and invest in technology that provides safe, reliable and affordable service to our customers. Investing in our delivery systems and continuously improving our business operations to realize meaningful service and value improvements will drive long-term earnings growth and enable us to appropriately scale the enterprise.

Now let's shift to Slide 7, which summarizes our 2026 projected capital program and our progress to-date. Through the end of the first quarter, we've invested $122 million of capital across the business. This is in line with our full year 2026 capital expenditure guidance of $450 million to $500 million.

Slide 8 shows additional detail on our major capital projects. We forecast these projects to contribute approximately $31 million of gross margin in 2026 and an additional $20 million in 2027. We've made some recent updates to one of the projects on the table on Slide 9, WRU, our LNG storage facility in Bishopville, Maryland.

As you can see in the latest photos on Slide 9, there has been significant construction progress at the Delmarva site. You may recall that last fall, the FERC Notice to Proceed process took a couple of months longer than we expected. We had hoped to make up much of this time, but the severe winter weather in the first quarter and a few design modifications that will simplify future expansion kept us from accelerating construction.

The snow, ice and freezing temperatures we experienced in January and February significantly limited the pace of construction. The site was actually totally inaccessible for several days due to roadway travel restrictions. While the winter weather boosted usage and margins in our existing businesses, it was not helpful to the WRU construction schedule.

WRU is a substantial complex project that will deliver significant peak day service capabilities to Delmarva customers. The tanks and primary structural and control room facilities are in place. We're working to complete the control electronics, on-site piping and interconnections to our Eastern Shore Natural Gas Transmission System. Coming out of this winter, I spent quite a bit of time assessing our progress and the overall project schedule.

I'm happy with the effort we're making to push the project to completion. I'm also realistic about where we stand today and the need to build an additional time for a FERC commissioning process that is not governed by a specific time requirement. We're engaged in a third-party pre-commissioning process, so I don't foresee any substantive FERC issues, but we're building in additional time in the schedule. So the schedule changes mean that we expect significantly reduced margin contributions from WRU in 2026.

This impact is partially offset by the margin benefits from weather this quarter and incremental Eastern Shore Natural Gas peaking capacity, which will be online prior to the full in-service date of WRU. However, full year EPS will be reduced by approximately $0.10. The project is still on track to come online early next year and generate $17 million of 2027 margin.

I will say that the extreme temperatures this winter only solidified the need for this project and will likely lead to a potential LNG facility expansion at the site in the near future. Increased storage at the southern end of our system will further improve reliability, reduce supply costs during peak usage times and enable continued system expansion to serve customer growth in the future.

I'll now shift to Slide 10 to highlight several projects that are in progress or on the horizon. There are a number of potential expansion opportunities ahead of us that provide significant growth potential as we serve growing demand across our service areas. The first is the Delmarva Regional Enhancement, which we discussed on our last earnings call.

This $75 million 20-mile project expands transmission infrastructure in our Delmarva region. Permitting has begun and construction is expected to start next year. We are also evaluating opportunities for potential expansions of this project as demand remains high. We've also discussed a project to explore the potential for extending our Eastern Shore natural gas system into Accomack County, Virginia.

Supported by a $6.5 million grant, we're beginning feasibility and design studies to assess the opportunity to serve customers on Virginia's Eastern Shore, including the NASA Wallops Island facility. We also remain engaged with partners in the community at the Cape and Port of Canaveral to explore potential opportunities for LNG transportation and storage. We're continuing to identify and evaluate potential sites for storage as demand remains high for the space and cruise industries there.

And lastly, we continue to evaluate multiple opportunities to expand transmission capacity into South Florida to serve the substantial population growth and energy demand in the Greater Miami area. We ultimately believe that a future expansion into this area is necessary and are evaluating numerous options to meet the growing demand in South Florida.

With that, I'll turn to Jim to provide regulatory and stakeholder engagement updates.

Thank you, Jeff, and good to be with all of you today. I'll start with Slide 11. On April 20, we filed a rate case for our Florida City Gas business, requesting a base rate increase of approximately $47 million and an ROE of 11.25%.

This request comes more than 3 years following FCG's last rate increase request prior to our acquisition and updates cost recovery for a number of key areas, including capital investment, operational expense, insurance, depreciation and property taxes. Included in our filing was a request for interim rates of $16 million, which we expect to be effective in the third quarter of this year.

While a full procedural schedule has not yet been set, we expect the hearing to occur in the fourth quarter of 2026 or in early 2027, with full rates expected to be effective shortly thereafter. We remain conscious of the impact to our customers, so we have incorporated cost savings and efficiencies across the business into our overall assumptions wherever possible.

We value the opportunity to serve our FCG customers and we'll continue to work together with the Florida PSC staff and Office of Public Counsel to achieve a constructive outcome. Speaking of customers, I'll now turn to Slide 12 to provide an update on stakeholder engagement.

In March of this year, we published our 2025 Annual Report, which includes highlights of our 2025 stakeholder engagement work, including investments in our teammates, customers and communities. We believe that serving all stakeholders creates a virtuous and sustainable cycle of long-term performance and growth. So we remain focused on driving collaboration and value with all those we serve so that no one is left behind.

With that, I am very pleased to turn the call to Jeff Sylvester, who will discuss our financial results in more detail.

Thanks, Jim, and good morning, everyone. I'm excited to be here today, and I'm honored to be stepping into the Chief Financial Officer role on July 1 of this year. I started my career in finance, so I'm looking forward to reengaging in our financial operations and expanding the collaboration between our finance and operational teams, the latter of which I've led for the last 7 years.

A top priority of mine over that period has been the implementation of our One Company approach and related operational and technological transformations. Slide 13 provides an overview of our business transformation themes, all of which form a stronger platform for efficient and effective operations as we become a much larger organization.

Mike Galtman, who has served as our Chief Accounting Officer for the last 7 years, has recently transitioned into a newly established Chief Transformation Officer role. His new responsibilities embed him deeply into our transformation efforts, including the [ One Core ] project and ongoing improvements across our finance, technology and operational areas. Melissa Barnes has recently joined the team as our new Chief Accounting Officer.

Melissa brings a wealth of experience in technical accounting, external reporting, large-scale finance transformations and internal controls. She is already adding tremendous value, and we are excited to have her on board. Now shifting to the results for the quarter. As shown on Slide 14, our financial results continue to demonstrate strong performance and growth across all metrics.

Adjusted gross margin was approximately $206 million, up 13% and adjusted net income was approximately $59 million, up 16% from the first quarter of 2025. Adjusted earnings per share were $2.47 this quarter, representing an 11% increase over the first quarter of 2025. Slide 15 provides additional detail on the key drivers of our first quarter performance. Continued demand for natural gas drove $0.27 of incremental adjusted EPS, including $0.21 related to transmission capital projects and a $0.06 of distribution growth across our service areas.

Margin from our infrastructure program investments contributed an additional $0.17 per share this quarter and permanent rates from our 3 rate cases added $0.13 in the first quarter 2026 adjusted EPS. Cold weather across our system, particularly in Delmarva region and in our Propane and Aspire businesses drove increased consumption that added $0.14 of earnings for the quarter.

We also benefited from improved Aspire system performance driven by rate changes and higher gathering fees. We also had gains from off-system natural gas sales within the quarter, driving a combined $0.07 of incremental earnings per share. These gains were partially offset by a few factors, including $0.20 of higher payroll and benefit expenses, $0.29 increased operational expenses, $0.04 of higher credit collections and customer service costs.

As I mentioned earlier, we were able to achieve a higher percentage increase in operating income and net income as compared to gross margin, demonstrating that we are effectively managing our cost structure despite the significant growth in margin. We also incurred $0.05 per share of increased depreciation and amortization expense, driven by increasing levels of capital investment as we actively deploy capital.

Lastly, financing activities included in our debt and equity issuances over the last 12 months as we return to our target capital structure, reduced adjusted EPS by $0.05. Shifting to Slide 16; adjusted gross margin for our regulated segment was approximately $148 million this quarter, up 15% from the first quarter of last year.

As mentioned earlier, our focus on cost management enabled similar growth in our regulated operating income, up 18% to approximately $71 million in the first quarter of 2026. Our Unregulated Energy segment also demonstrated strong margin growth relative to the first quarter of last year, with adjusted gross margin of 8% to approximately $59 million in the first quarter of 2026.

This incremental margin was primarily driven by higher propane consumption and strong performance in our Ohio Aspire operations. Much of this fell to the bottom line, enabling unregulated operating income growth of 8% to $28 million for the first quarter of this year. I'll now move to Slide 17 to review our capital structure and financing activities.

At March 31, our equity capitalization was 50% with 107,000 shares issued during the first 3 months of the year. We also continue to maintain strong liquidity and sufficient capacity to support growth with ability of 74% of our total debt capital of $793 million between our revolving credit facility and private placement shelf facilities as of March 31, 2026.

To support our robust capital investment program, we expect to issue $60 million of equity throughout full year 2026 using our ATM and waiver programs. We also look forward to refinancing the first tranche of debt issued during the Florida City Gas acquisition, which should generate overall interest expense savings.

With that, it's my distinct pleasure to turn the call over to Beth.

Thanks, Jeff, and good morning, everyone. As shown on Slide 18, yesterday, our Board of Directors approved a $0.20 or 7.3% increase in our annualized dividend payment from $2.74 per share to $2.94 per share. This reflects our 66th consecutive year of dividend payments and our 23rd consecutive year of dividend increases.

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 investment to drive earnings growth and overall total shareholder return. Previously, our Board approved a dividend payout target range of 45% to 50% enabling us to deliver a long-term dividend CAGR of 9%, which aligns with our long-term earnings growth rate over that same 10-year time period.

This payout ratio also enables us to retain 50% to 55% of earnings, which has been a meaningful part of our financing plan as we fund increasing levels of capital to drive sustainable business growth to meet increasing customer demand. Slide 19 demonstrates our track record of strong and consistent earnings growth over the last approximate 19 years, most of which made up my tenure as CFO.

We remain committed to a long-term earnings per share compounded annual growth rate of 8% through 2028 and are reaffirming our 2028 earnings per share guidance of $7.75 to $8 per share. As we mentioned on previous calls, we expect to revisit our capital guidance range by February 2027, given the progress we have made in the last 2 years, coupled with our expectations for capital investment in 2026.

Moving to Slide 20; there is no better way to close our call than to summarize what an amazing and wonderful place to work Chesapeake has been for me over the last 36 years. I am extremely grateful to have served as CFO for the last 18 years during such pivotal growth. Much of what has made my experience so special are the key drivers that often make Chesapeake a differentiated investment.

Delivering on our promises and taking our commitment seriously has never wavered. We have driven significant growth over the last several decades, and I have complete confidence in the team's ability to continue this track record for years to come. Our talented team focused on our growth strategy is capable of great things.

While these 3 pillars have been formalized in the last few years, they have always been core to our operations. We invest wisely, manage our regulatory agenda and continue to find new and better ways of working each and every year. Especially near and dear to me is our financial discipline.

I participated in more than 20 acquisitions and over $2.5 billion of equity and debt raises across the last 3 decades and can assure you that each transaction is carefully planned and executed. We recognize the value of long-term relationships with our financial partners and prioritize our financial health, diligent financial planning and analysis as well as strategic alignment in all we do.

And lastly, we are powered by our stakeholders, each and every one of you, our investors, our bankers, our partners, our teammates and our customers. We are nothing without our dedicated teammates, growing customers, close-knit communities and trusted partners. The bottom line is that the relationships we've built, both internally and externally are what matter the most.

I will forever treasure the valuable connections I've made and will carry them with me as I embark on my next adventures. Thank you for your personal support and encouragement of me over the years. I have been humbled by the outreach of so many wonderful colleagues and friends. I remain committed to Chesapeake's mission and sincerely appreciate your continued interest, support and investment in the company as well.

Thank you all. With that, we'll take your questions. Operator?

[Operator Instructions] Our first question today comes from Tate Sullivan with Maxim Group.

Congratulations, Beth, on all your achievements over the years at CPK and pleasure working with you. And moving to some of the comments from the call. Jeff, did you mention a new LNG storage exploration project in Florida in the Cape or is that -- have you mentioned that before? And is it for LNG delivery and not regasification of that natural gas?

Yes. We've been looking, Tate, at the opportunity, certainly subsequent to our acquisition of Florida City Gas and the inclusion of that service territory around Cape Canaveral and the Port of Canaveral. Lots of cruise ships coming and going. They're already fueling with liquefied natural gas, many of them.

Most of that gas is being barged in from Jacksonville. And there are certainly -- there's a limit to the capacity that the LNG facility in Jacksonville can provide and folks keep launching rockets from the Spaceport there, utilizing LNG and they'd like to expand that. And so we've had the possibility of working potentially with someone else to develop an LNG facility at the Cape that would provide service to both of those industries, and we continue to do that.

We have been looking at property up and down the intercoastal and even some inland sites, thought we had a -- probably the best location is a facility that's on the canal that runs down to the Port of Canaveral, pursued that for some period of time. The port has other designs on that property, which is certainly fine. That would have been the easiest, simplest, cheapest facility location, but there are many others that we're looking at, and we're pretty confident that we'll find something and develop that project.

Just one follow-up on that. Is Marlin currently delivering LNG in Florida or is that not the case?

No, certainly not any quantity. We have some capability to move LNG with Marlin tankers but we have -- serving either the port or the Spaceport. Those are coming, like I said, principally on the cruise ship side, down the intercoastal being barged in from Jacksonville and then truck deliveries from a variety of places into the Spaceport.

And one more, if I may. The customer growth rate, still an impressive growth rate, but the annual growth compared to the fourth quarter was down a little bit. Is that -- I mean, should I read into that in terms of where the range may fall in the EPS guide -- EPS for 2028 or was that just a quarter of weakness?

No. I think that's probably as much weather as it is anything else, especially in Delmarva. And we see those kinds of fluctuations seasonally in Florida. So we have a lot of homebuilding activity on the books and certainly a lot of builder and developer agreements that we've executed for many thousands of residences, both on the Peninsula of Florida and the Peninsula of Delmarva. So we're not signaling anything other than just the usual sort of seasonal fluctuations in building activity.

Congratulations Beth.

I appreciate it. It's been great working with you.

Our next question comes from J.C. Vidales with Ladenburg.

Beth, congratulations. It's been great to work with you.

Thank you, JC. It's been great with you as well.

So just a couple of questions. So I think this is the first time we kind of see some equity guidance for the year. In terms of the total CapEx plan that you all have, are you all able to give us some color in terms of your equity assumptions for that plan?

So I mean, in terms of the total capital budget of $450 million to $500 million for the year, you'll recall that we have a substantial portion of our earnings that are getting reinvested because of our dividend payout policy.

And so above and beyond that right now, just given the level of CapEx range that's out there, we've indicated that we expect to issue about $60 million plus. It could be a little bit more than that. But generally, that's a good area right now to assume. And it's a small amount that we'll be able to manage through our ATM and our traditional waiver program.

Okay. And then just a follow-up. In terms of a go forward for -- I think you gave guidance to '28 in CapEx. Is that a good assumption to use in terms of sizing of equity needs for the following years?

Well, as we've indicated, we're going to be readdressing the entire guidance range in February of 2027, given our progress and where we come -- where we've actually been from an actual standpoint through 2025 and our guidance right now for 2026.

If you were to look at what the run rate is in the base CapEx guidance range that is out there, it would be slightly less than this amount because the CapEx -- the average CapEx that's assumed on an annual basis is lower than the $450 million to $500 million.

Okay, great. And then just one last question for me. Should we expect or do you all expect to potentially issue '26 EPS guidance following the decision on your interim rates here in Florida?

I know maybe the depreciation ruling kind of potentially made you all not issue guidance for this year, but should we expect to change once you get an order on interim rates?

What we have typically done, we've given annual guidance only really one time in our history to-date. We've been a long-term guidance company putting out long-term CAGRs because as you have seen, as you've looked at our past, we have some fairly large transmission projects that don't necessarily make our earnings per share CAGRs a straight line as you look at it from year-to-year, but over the long-term, have generated that 8% plus from an EPS growth standpoint.

What you will see us put out this year would be additional margin information if there were to be a final rate case settlement this year. And we've already provided some indication about our expectations with information that we know, but it's certainly subject to being fine-tuned on the interim rate side. So we build a lot of our earnings estimates in through the margin table, just given, again, those large projects, those large initiatives that we have underway.

That's it from me. Beth, once again, congrats and looking forward catching up at AGA.

Our next question comes from Alex Kania with BTIG.

Again, congrats, Beth, and good luck to Jeff and Jeff in the aftermath of that departing. So just maybe 2 questions just on some projects. First might just be on thinking about the example of the kind of the small projects in Ohio with respect to kind of the large load data center. Do you kind of see any other opportunities like that evolving across the system?

I mean we hope to see that. Certainly, we're actively pursuing those opportunities in the areas that we currently serve. Ohio is certainly a place of interest to us. We have, as you know, facilities there and the [ AEE ] agreement that we've announced here recently.

And it's an area that seems to be of great interest from a data center perspective. And so as you might imagine, we are actively interested in doing what we do to extend gas service to those data centers. So I have nothing to report today, but we have great interest in that service area.

And there are other things going on in other places. I mean it's interesting to see some of the potential activity in Florida, and we've certainly had some interest in data center locations on the Delmarva Peninsula. So we'll see where all that goes. We're as interested in that as everybody else in the country is at this point. So we're, I think, positioned well in the service areas that we're currently in.

Okay, great. That's helpful. And then just on the South Florida capacity expansion, are there any -- I'm thinking maybe kind of further downstream in terms of what events or catalysts you might be willing to keep in mind to see -- to assess kind of the potential progress of that project? And maybe just to confirm to the extent that there -- do you see an opportunity, would that be kind of be treated as an intrastate project rather than having to go through a FERC process?

Yes, I'll take that in reverse order. I do think that that for us would be of interest as an intrastate pipeline. We have invested significantly in intrastate pipes in Florida. One of the things that was interesting to us about Florida City Gas and that acquisition was the full knowledge that there were capacity constraints in South Florida.

And certainly, Florida City Gas is not the only entity that serves in South Florida that's experiencing that. So I think the growth in population, the growth in customers and the growth in demand requires that at some point, we find a way to increase capacity capabilities in the South Florida area.

Again, we're in a very nice position, I think, to be able to do that. We serve facilities in the West Palm Beach area, close to interstate transmission interconnections, and we believe that there are possibilities to again expand the capacity all the way down to South Florida. So I look forward to someday, hopefully, being able to talk about a project that gets more gas down to that growing load center.

At this time, there are no further questions in queue. I will now turn the meeting back to Jeff Householder.

Thank you. We appreciate your continued interest in Chesapeake Utilities. So thank you for joining the call today. We look forward to seeing many of you here in a week or 2 in Scottsdale at the AGA Financial Forum.

I'll end just by continuing to congratulate Beth on her very long years of service with Chesapeake Utilities. It's been a remarkable run. She's been a great colleague and a great friend. And I'll leave you with one last statistic. She served as CFO in our company for 18 years. In every one of those years, we had record earnings. I'll see you all in Arizona. Goodbye.

Thank you. This concludes Chesapeake Utilities Corporation's first quarter 2026 earnings conference call. Please disconnect your line at this time, and have a wonderful day.

Welcome to Chesapeake Utilities Corporation's Fourth Quarter and Full Year 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 the call up 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 2025 annual report on Form 10-K 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 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 2025 annual report on Form 10-K.

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 Women's Heart Health as highlighted on Slide 3. As February is American Heart Month, it's a good time to take care of ourselves and our loved ones by making small changes that can have a big impact on our heart health.

Cardiovascular disease is the #1 killer for women in particular. So it's important to understand the unique risk factors women face across various stages of life, including pregnancy and menopause. We are proud to be a long-standing supporter of the American Heart Association, which has in-depth resources for managing heart health risks and implementing changes that support long-term cardiovascular health.

It's now my pleasure to introduce our presenters today. Jeff Householder, Chair of the Board, President and Chief Executive Officer, will summarize the highlights and accomplishments of 2025 and introduce our theme for 2026. Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer, will provide updates on our regulatory strategy, business transformation efforts and stakeholder engagement. And Beth Cooper, Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary, will discuss our full year financial results, financing updates and investment highlights.

I'll now turn the call over to Jeff.

Thank you, Lucia. Good morning. It's great to speak with you today. As shown on Slide 5, 2025 was a year of outstanding performance and growth. I'm proud of everything our team has done in the last year to deliver with purpose. We have once again reached significant new heights across our entire enterprise.

2025 was our 19th consecutive year of earnings growth. We generated adjusted earnings of $6.01 per share, reflecting industry-leading growth of 12% relative to full year 2024. Above-average residential growth of 3% across our service areas continues to serve as the primary driver for our capital program. We invested $470 million through 2025, a 32% increase over our 2024 capital spend and $20 million above our 2025 guidance range, a record of non-acquisition capital.

2025 was also a record year for incremental adjusted gross margin growth up $71 million. Included in that was transmission project margin of $19 million and incremental infrastructure margin of $14 million. Our proactive regulatory approach also contributed to our full year results with completed rate cases in our Maryland, Delaware and Florida electric jurisdictions, driving an additional $13 million of gross margin in 2025.

And lastly, we are pleased to end the year back at our target equity capitalization of 50%, exactly in line with the goal we laid out at the start of 2025 and ahead of the schedule we established at the time of the FCG acquisition.

Slide 6 provides additional detail on our record levels of earnings growth. For the fourth quarter and full year 2025, we generated double-digit growth in adjusted gross margin, adjusted net income and adjusted earnings per share. These results demonstrate our commitment to providing high-quality, safe and reliable service for all customers and driving value for all stakeholders.

I'll now shift to Slide 7, which highlights our above-average customer growth. We operate in some of the fastest-growing regions of the country. In 2025, we added nearly 11,000 residential, commercial and industrial customers across our natural gas and electric distribution service areas. In Delmarva, residential customer growth was 4.1%. Florida Public Utilities was up 3.6%, and Florida City Gas recorded a 2.2% increase. Residential community expansion drives corresponding commercial infrastructure growth. Our customer additions led to an incremental $7.4 million of adjusted gross margin in 2025.

We also see additional growth opportunities in Ohio, which has quickly become a top spot for data center build-outs. In addition to starting construction this year on the Duncan Plains pipeline to support AEP's data center fuel cell, we've been providing temporary virtual pipeline service through Marlin for a data center construction project north of Columbus, Ohio. We continue to explore a number of gas transportation projects and look forward to further expansion in the Ohio market.

Before I discuss our strategy and goals for the next year, I'd like to reflect on the significant progress we've made in just the first 2 years following our acquisition of Florida City Gas in late 2023, as detailed on Slide 8. FCG has proved to be a strong strategic and cultural fit and immediately provided a wide range of investment, expansion and improvement opportunities. We quickly got to work and have already invested approximately $250 million of CapEx, which is 50% of our 5-year FCG-related investment goal. These projects are expanding and reinforcing FCG's ability to provide reliable and affordable energy to meet customer demand.

We've also fully integrated the FCG team into the Chesapeake family and aligned a number of functions and processes with our legacy operations under our One Company approach. FCG is now active on our 1CX SAP customer billing platform, and we've consolidated all regulated customer service operations into one coordinated team. These integration and investment accomplishments are important for several reasons. One, we've done what we said we would do. We've also strengthened our track record of above-average growth, and we're demonstrating our ability to finance, integrate and capitalize on transformational opportunities that support consistent long-term growth.

I'd now like to talk about our outlook, strategy and goals for 2026 and beyond. Core to that discussion and to our record-breaking performance and growth over the last year are the 3 pillars of our growth strategy shown on Slide 9. We remain committed to prudently deploying capital, proactively managing our regulatory agenda and continually transforming our business operations as we believe consistent and successful execution will continue to drive top quartile growth and total shareholder return.

I'll now move to Slide 10 to introduce our theme for this year, Transforming for Growth, Powered by People, which particularly resonates with where we are today. We're building on a well-established blueprint for top quartile performance. We're transforming the business to prepare for a new level of scale and growth, and we're powered by strong relationships across all stakeholders, teammates, customers, regulators, investors and our communities.

In this year of transformation, there are a few specific deliverables that we're focused on for 2026. We're focused on investing $450 million to $500 million of CapEx, including successful completion of a number of projects and initiating construction on a new set of opportunities that are presently under development. We're focused on reaching a successful outcome on our general rate case for Florida City Gas, which Jim will discuss shortly in more detail. As part of a whole host of business transformation initiatives across our organization, we're undertaking the largest technology system implementation in our history with our multiyear enterprise resource plan or ERP.

I know I've said it before when we were embarking on the 1CX project, but this ERP implementation, which we're calling 1CORE is going to be bigger and even more transformational than anything we've done thus far, and Jim will discuss more on that shortly. And finally, we're focused on maintaining a strong balance sheet and investment-grade credit ratings as we fund our significant capital investment program and continue to drive strong earnings and dividend growth in support of top quartile shareholder return.

I'll now turn to Slide 11, which provides a detailed look into our 2026 capital plan. Following a record-breaking $470 million of capital invested in 2025, we're initiating full year 2026 capital expenditure guidance of $450 million to $500 million. This plan assumes levels of transmission, distribution and infrastructure investment similar to last year alongside an increase in technology CapEx for the ERP. I will note that approximately 20% to 30% of this capital will drive margin growth in 2027 or later, given regulatory recovery time lines and expected project completion dates.

Slide 12 provides an update on our major capital projects. Nearly all are generating margin through interim or full service, driving $22.8 million of adjusted gross margin in full year 2025. We forecast these projects to contribute approximately $47 million of gross margin in 2026 and an additional $9 million in 2027.

Turning to Slide 13. I'd like to highlight 2 projects for Eastern Shore natural gas that could further support the significant demand growth in our northern service areas.

The first is the Delmarva Regional Enhancement project, which I am pleased to be announcing today. This investment includes over 20 miles of 16- and 24-inch pipeline and looping to add firm capacity and improve reliability, driven by increased shipper demand identified during our latest open season. We currently estimate capital investment of approximately $75 million and an in-service date around the end of 2028.

Second project was announced a few weeks ago when we were awarded a $6.5 million grant by the Accomack County Board of Supervisors to begin to assess feasibility, design and engineering of new infrastructure that would bring natural gas to Virginia's Eastern Shore. We're working with local stakeholders and potential customers to ascertain the size, route and cost for this potential system, which could extend natural gas from Princess Anne, Maryland to Temperanceville, Virginia, serving homes and major employees, including the NASA Wallops Flight facility, Wallops Island operations and other regional commercial and industrial customers. While still in very early stages, we are excited about the opportunity to extend our system into Virginia to deliver safe, reliable natural gas to the Accomack County community.

I'll now shift to Slide 14 to discuss our 5-year capital investment guidance of $1.5 billion to $1.8 billion through 2028. Given our 2024 and 2025 capital spend, combined with our identified and ongoing capital investments, we've invested and identified a total of $1.6 billion toward our 5-year range. As we've discussed, we intend to provide a more significant update to this range a year from now in order to incorporate outcomes of our strategic planning session this summer and make additional headway on multiple potential investment projects under evaluation and development.

With that, I'll turn to Jim to discuss our second and third pillars, regulatory strategy and business transformation initiatives.

Thank you, Jeff. It is great to be with you all again today. I'll start with Slide 15, which includes updates on our regulatory agenda. As Jeff mentioned at the start of the call, successful rate cases in our Delaware, Maryland and Florida electric jurisdictions drove over $12 million of incremental gross margin in 2025 and are expected to generate over $18 million in 2026, the first full year of revised rates.

Our Florida City Gas depreciation study also concluded last week. The Florida Public Service Commission denied our request for a 2-year amortization of the $19 million excess depreciation reserve and adopted its staff recommendation of only $6.8 million of excess depreciation recovered over the life of the assets. This results in annual depreciation savings of approximately $500,000.

Given the timing of the order, we opted to not reopen the books for 2025 and instead will apply 2 years' worth of reduced depreciation expense or close to $1 million in 2026. And as you'll recall, achieving our 2025 earnings guidance included appropriate cost recovery and return on equity at FCG, which did not happen. We had hoped to avoid filing a general rate case and utilize depreciation expense savings from the excess reserve to delay a customer rate adjustment for as long as possible.

Given the outcome of the depreciation study, however, we immediately submitted notice of intent, indicating our plan to file a general rate case for FCG in mid-April of 2026. This rate request will ensure appropriate cost recovery and an improved allowed ROE. We expect interim rates to be effective by early July 2026 and look forward to FCG returning to its earnings contribution levels in 2027 and beyond.

I'd now like to turn to the 2 core elements of our theme for 2026, which Jeff introduced earlier. Starting with transformation for growth. Slide 16 provides an update on our business transformation efforts, which is a particular focus this year as we implement significant transformations within technology, systems and processes to drive continued operational excellence as a much larger organization. We've identified 5 key transformation themes: customer experience, operational excellence, digital agility, employee experience and financial modernization, each of which will be addressed through one or more projects in 2026.

In January of this year, we held an official kickoff event for our ERP project, which we're calling 1CORE. We brought together 130 teammates and external partners to align around our objectives and goals as we implement SAP solutions for our finance, supply chain, asset management and human resource functions. We expect to invest approximately $75 million in 2026 and are targeting a system go-live date in Q2 of 2027.

We are also implementing employee training and wellness programs, new software tools and organizational structure updates across the company to strengthen our people, simplify processes and leverage new technologies. These initiatives will deliver better service for our customers and facilitate continued long-term growth of the organization.

The second element of our 2026 theme is powered by people, which recognizes the important role all our stakeholder groups play to drive our long-term success. Slide 17 provides highlights on the work underway to actively engage with our key stakeholder groups, teammates, customers, regulators, legislators, partners, investors and our communities overall. We're focused on attracting and retaining change-focused teammates and have rolled out multiple programs on training, development, organizational change management and wellness.

We are committed to placing our more than 440,000 customers at the center of everything we do as we continue to prioritize safe, reliable and affordable service. We're grateful to maintain strong constructive relationships with regulators, legislators, business partners and investors. Whether seeking project approval or capital financing, we rely on these trusted partners to enable sustainable positive growth for all stakeholders.

And finally, we are thankful for the communities in which we work and live. We support local organizations. We communicate with our neighbors. We improve our environments, all of which is core to our mission and reflected in the work we do each and every day.

With that, I'll turn the call over to Beth for a more detailed discussion of our financial results.

Thanks, Jim, and good morning, everyone. Slide 18 shows our record-breaking financial results for full year 2025. We generated approximately $639 million of adjusted gross margin, $141 million of adjusted net income and $6.01 of adjusted earnings per share in 2025, all representing double-digit increases over full year 2024.

Adjusted net income was up 16%, which translated into a 12% increase in adjusted EPS after we purposely advanced our equity to total capitalization ratio back to 50% to support our CapEx program at a faster pace than our forecasted financial models post FCG. This reflects Chesapeake's highest level of annual earnings and our 19th year of consecutive earnings growth, as I will discuss in more detail shortly.

Our results were driven by consistent growth across our entire business as detailed on Slide 19. For full year 2025, our key margin drivers added $2.41 per share, only partially offset by increased expenses and financing costs of $1.79 per share. Record levels of capital investment drove $0.58 of incremental adjusted EPS from transmission expansion projects and $0.43 from infrastructure projects to improve reliability and resiliency across our regulated businesses.

Growth in our service areas and increasing demand for natural gas drove $0.51 of incremental adjusted EPS, including $0.28 of higher customer consumption and $0.23 of distribution system customer growth. Permanent rates from the 3 rate cases we completed in 2025 added $0.39 of adjusted EPS and our unregulated businesses generated $0.29 of net incremental earnings per share, largely driven by substantial growth in our Marlin Virtual Pipeline transportation business and supported by strong performance in our Propane and Aspire Energy operations.

As I just mentioned, these positive margin gains were partially offset by a few factors, most notably $0.51 from the absence of the RSAM benefit we recorded in 2024 and we were unable to repeat given the outcome of the Florida City Gas depreciation study. We also incurred $0.31 per share of increased depreciation and amortization expense related to our significant levels of capital investment and $0.41 per share of additional operating expenses directly attributable to our sustained growth.

However, we continue to drive operational efficiencies, leading to operational expenses at only approximately 45% of adjusted gross margin for full year 2025. Lastly, financing activity, including our debt and equity issuances over the last 12 months to fund our capital expenditures and return to our target capital structure, reduced adjusted EPS by $0.35 per share, particularly as we accelerated our equity capitalization back to 50%.

Shifting to Slide 20. Adjusted gross margin for our Regulated segment was $494 million in 2025, a 12% increase over full year 2024. This growth continues to be driven by strength in our core business operations with high levels of capital investment to support rapidly growing service areas and improved regulatory recovery following our 3 rate cases. Our focus on cost management enabled similar growth in our regulated operating income, up 13% to approximately $222 million for full year 2025 despite again, the absence of the $15.5 million RSAM benefit recorded in 2024.

Moving to Slide 21. We continue to see outstanding performance from our unregulated segment with full year 2025 adjusted gross margin of $145 million, up 13% relative to the prior year. Our Marlin Gas Services business continues to meet the rapid growth in demand for virtual pipeline transportation, driving $11 million of additional gross margin with our Propane and Aspire Energy businesses contributing an additional $5.7 million of gross margin in 2025.

I'll now move to Slide 22 to highlight our financing and capital accomplishments this past year. I'm proud to report that we ended 2025 at an equity capitalization of 50%, meeting the goal we set at the start of the year, 3 years ahead of the target we actually established for ourselves following the acquisition of Florida City Gas. We issued $123 million of equity or 961,000 shares, ending the year with nearly 24 million shares outstanding. Our equity capitalization was also boosted by $76 million of retained earnings.

We also made meaningful moves to further strengthen our balance sheet and access to capital. At the start of the year, we secured our inaugural credit rating with Fitch earning investment-grade issuer and instrument ratings. Then in June, we amended and extended one of our long-term shelf agreements, followed by a $200 million debt issuance in August and September. And just last week, we extended and amended our second private placement shelf facility, providing us additional debt capacity.

We ended the year maintaining strong liquidity with 78% of our total capacity of $755 million available between our revolving credit facility and our private placement shelf facilities. As we look to 2026, we are excited to refinance the first tranche of debt that we issued in conjunction with the Florida City Gas acquisition and plan to finance our robust capital program with a mix of earnings retained in the business, equity and debt, generally maintaining our 50/50 capital structure overall.

Slide 23 demonstrates how our dividend policy remains a key component of our capital allocation strategy. We also remain committed to consistent dividend growth. Our annualized dividend per share of $2.74 reflects a 7% annual increase from 2024 and is reflected in the long-term dividend CAGR of 9%. Our policy also facilitates significant earnings reinvestment as our Board-approved dividend payout target range of 45% to 50% allowed us to retain 54% of earnings in 2025 to support our capital investment plan, a higher percentage than most of our peers.

We will continue to support long-term dividend growth while reinvesting significant earnings back into the company, enabling our investors to benefit from both long-term top quartile earnings and strong dividend growth.

As shown on Slide 24, our 2025 adjusted EPS result was remarkable for a number of reasons.

First, we generated 12% growth relative to 2024, which is significantly above the industry average. It is particularly meaningful that we achieved this growth rate despite receiving no recovery and amortization of the excess depreciation reserve and also while successfully driving our equity capitalization back to 50%.

Second, 2025 marks our 19th year of consecutive earnings growth. Since 2007, we've grown year-over-year earnings, demonstrating our unwavering track record of higher earnings performance and commitment to increasing shareholder value.

Third, our 2025 EPS represents a 9.1% CAGR over this 19-year time period, which highlights our ability to drive consistent above-average returns now and into the future. And speaking of the future, we are reaffirming our 2028 adjusted EPS range of $7.75 to $8 per share as we remain on track to meet our long-term adjusted EPS growth target of 8%.

Before we open the call for Q&A, I'd like to highlight some of the reasons that Chesapeake Utilities remains a uniquely valuable investment for years to come, as shown on Slide 25. As I just discussed, we take financial discipline and execution very seriously and are highly focused on building on our track record of performance and growth with many financial records being set in 2025.

We will continue to execute on our 3 pillars of growth, enabled by continued growing demand for natural gas throughout our service areas and the need for continued reliability, capacity and expansion. Our disciplined approach to financing, including ensuring balance sheet strength and upholding investment-grade credit metrics keep us well positioned to address market volatility and achieve successful regulatory outcomes as we fund our growth plan. All of these elements set the stage for growth in 2026 and beyond.

As we transform the company for growth, we are continually reminded that we are powered by people and that strengthening relationships and creating value for all stakeholders will continue to differentiate us now and into the future. We sincerely appreciate your continued interest, support and investment in our company, and thank you for joining us today.

With that, we'll take your questions. Operator?

[Operator Instructions] Our first question is coming from Nicholas Campanella with Barclays.

This is Michael Brown on for Nicholas Campanella. My first question is, you reaffirmed your full year '28 EPS target. Can you walk us through the growth rate for full year '25 through full year '27 to reach a full year '28?

Michael, I'm sorry. This is Beth. Can you restate your question? Would you mind?

You reaffirmed your full year '28 EPS target. Can you walk us through the growth rate from full year '25 through full year '27 to get to full year '28?

We have -- at the present time, as we -- as I talked about on the call, we have reaffirmed our 2028 EPS guidance. And Michael, you may recall this, but I will just remind you, as a company, we've historically provided long-term EPS guidance given some of the capital expenditures that we incur and how the timing of getting some of those capital expenditures underway and completed.

And so what we've done is actually put out there our long-term EPS CAGR of 8% and again, reaffirmed our 2028 EPS guidance. Also in conjunction with that, we have put out our annual capital guidance this year and some of the projects that are underway that will hopefully, both with that information and also the information that we include in our major projects table, enable you to provide a forecast as we move through that period to 2028.

We'll take our next question from Chris Ellinghaus with Siebert.

Can you talk about the first quarter thus far? It seems like we've had some pretty cold snaps. And I'm just kind of curious what you're thinking about tailwind from weather in the first quarter.

Sure. Great question. Certainly, weather has been top of mind for us like many across the country with the weather that we've experienced. As you may recall, in our northern service territories on the Maryland side, we have weather normalization, right? So that's going to somewhat stabilize the impact of the weather for our Maryland operations.

In Delaware, there will certainly be an impact, and we've begun to quantify the first part of that for January, but the numbers certainly are preliminary, and we're not in a position to really talk about that just yet. Similarly, on the propane side, there will be some benefit that comes from the weather in Florida. You also may recall with cooler -- the colder weather there -- also in weather, we have a greater portion of our bill that is more of a fixed than a variable component. So again, more weather normalized when you get to Florida.

So yes, coming out of the gate, there will be some impact in January and as we're seeing into February. What we're also, Chris, being very mindful of is the impact on our customers and wanting to work with them, certainly from a payment standpoint, working with them to hopefully put those that may need it in touch with some of the social service agencies.

And then finally, from an operations standpoint, I can't say enough about from our standpoint, how our team operated during this challenging time, how our facilities were maintained, a no disruption of service across our systems. And again, we look forward to providing more information when we jump on our first quarter call.

Okay. I'm not quite sure if you have insights into this, but I'm guessing over your wide-ranging Florida service areas that the temperatures were fairly unusually cool. Is that fair?

In certain parts of our areas in Florida, absolutely. I can tell you, I've just been down in Florida. And when I landed, it wasn't the normal temperatures. I'm traditionally accustomed to. So yes, there would be.

But again, with our rate design over the last several years, we have limited that a little bit more than as we've moved over the last couple of years. But certainly, there will be some, and there will also be some, to your point, that may come from certainly the propane side as well down there.

Okay. The growth in the FCG customers for the year, you do have this wide-ranging FCG service area. Does that suggest versus maybe the more Miami proper area that there are some portions of the service area that are growing in the 3% to 4% range?

There are portions of Florida that certainly have higher growth than others. I think it's -- and I would say it's probably closer to the 3-ish-percent in some of those areas. What I would also say, though, is despite what individuals may think about growth, let's say, in more of a metropolitan area like Miami, what you are seeing, we saw this last year on one of the trips down there when we took a ride in the service area and with our team looked at some of what's going on, there is a lot of redevelopment that's going on there.

So opportunities to particularly have increased margin that comes from commercial infrastructure that's being constructed when particular buildings are being torn down and multi-unit dwellings are being constructed, again, there may be more opportunities as well. So yes, higher in certain markets, but there are opportunities from a commercial side and a residential side, even in some of those lower growing markets.

The other thing, Chris, that I would point out, and I think your point to some degree, I would just highlight, we try to make it very clear in our earnings release. In Florida, in particular, the amount of commercial infrastructure that is supporting the residential growth that is going on down there is pretty phenomenal. It's also happening on the Peninsula, but to a much lesser degree, more driven there by residential. So we're continuing to see the levels of growth that we had thought we would experience over the last several years since Florida City Gas. So that's been exciting that it's been on track.

Chris, I'll just add -- this is Jeff. I'll just add a little detail to that specific to your question. If you look at the city gas service territories, where we're seeing significant residential growth followed by, as Beth indicated, a substantial amount of commercial service growth is in the Port St. Lucie area around Vero Beach and then up in the Brevard County area, especially to the West of the county out in the Viera communities. And so those are significantly higher growth areas than what we're experiencing currently in the Miami portion of that service territory.

That's kind of what I was thinking. Can you talk about the ERP and what you see as the benefits where you might see cost savings or sort of synergistic value creation? Can you quantify any of that?

Sure. I can talk a -- go ahead, Jeff. Go ahead, please.

No, no, go ahead, please.

I was just going to start off, one of the ways that we've been talking about it internally, Chris, and we've been working on establishing some metrics would be as we think about and talk about from time to time, our O&M expenses as a percentage of gross margin. So as this project starts to be underway on the back end, certainly of this project and many other technology improvements that we're making, you'll see us referring to that, in particular, as we talk about that benchmark O&M as a percentage of gross margin. And you may recall, Chris, we've been talking about that pretty much since Jeff became our CEO coming out of the gate and talking about that each year. And if you look at our history, we've been on a declining path as we've continued to grow.

So I would say that out of the gate -- Jeff, maybe I'll turn it to you, and you can touch on just some of the things that we're thinking about from the technology standpoint.

Sure. I think this is a drive to accumulate data in a more proactive way that allows us to actually utilize that data and making better decisions about the company. I mean that's fundamentally what this is. To specifically talk about a handful of areas that we believe we'll see efficiencies and ultimately some cost savings.

I think there are opportunities on the customer service side, certainly, with respect to electronic billing, moving customers into a portal relationship with the company, reducing the number of calls to our call centers, automatic meter reading. All of those things, I think, are on the horizon for us that will provide significant efficiencies. There are a variety of supply chain issues here that we believe that kind of march down this One Company approach that we've been looking at to standardize things across all of our operating areas over the last few years.

We've just sort of scratched the surface, I think, on the way we buy materials and supplies and services in the company. And so I think there are significant opportunities there. A number of field services operations activities, especially in the way we schedule work and control kind of the flow of orders back and forth from a computer system out into the field and back without having to physically touch those. There are a variety of accounting and finance improvements that I think we'll see just how we process accounts payable. I mean and on and on and on. I mean, it's the sort of classic ERP opportunity here.

And so, linking that into our recently installed what we call 1CX, the SAP Customer Service Billing and Field Services Management Systems that we have in place across the company now, I think will continue to drive some of the cost savings that Beth was trying to support and to quantify.

We haven't gotten to a number. I mean, I walk around with one in my head, but I'm certainly not ready to begin to publicly describe that. But I think it is significant. And I think we will see that we will realize those cost savings, and they will flow through ultimately to keep customers' bills down to allow us to redeploy some of those dollars in support of some of the capital operations that we're pursuing and to make the company more efficient and less costly.

Okay. Maybe one last question for Jim. Jim, how surprised were you by the Florida decision? And was that somewhat of a tacit invitation to file a rate case?

Well, thank you, Chris. I mean that's a very good question. Our purpose all along was to kind of simplify what was the RSAM to a more traditional approach to depreciation. I think in some ways, we got caught up in the continuing tendency of the Supreme Court review and action. And while that was still pending, I think the OPC took a certain stand against what we were trying to do. And then that just fed into taking a lot longer than we or really anyone anticipated to land with a decision.

We were -- our approach was to avoid as long as possible a general rate increase filing. But with this decision now, we made the decision to go forward, and that's what we're doing. So I guess we were surprised in some way that a relatively simple straightforward application of traditional approaches got caught up in this vortex for the past year. But we're accepting it, and we're moving on, and we'll be filing here very shortly.

So there seem to be some sympathy at the Supreme Court when they did the oral argument. What happens from now if some constructive order comes out of the Supreme Court?

Well, I think ultimately, that's helpful for us. It really will address an issue that we're no longer going to deal with, and that is the validity of the RSAM. But I think in supporting that approach, I think it helps all of us in Florida that are filing rate cases.

Did I lose you, Chris?

We'll take our next question from Mike Brown with Barclays.

Are you planning on giving guidance this year for full year '26?

We -- again, what we are doing is basically reaffirming our 2028 guidance at this time. We don't -- historically, other than the year post Florida City Gas, we gave guidance on an annual basis in 2024 coming out of the acquisition because we knew that year with the transaction just occurring at the end of the year, we knew we could be accretive, but it was much less than what our historical run rate had been. So we provided annual guidance.

But we have a long term -- our long-term track record going back to 2018 when we initiated guidance is we follow a long-term view of the CAGR that we can achieve over a period of time. And so the short answer after I gave you the long-winded answer, Mike, is that we will not be, at this time, giving annual guidance for 2026.

Can you provide an update on the Florida pipeline project that starts in the Indiantown gas hub and kind of where that stands at this point and when it will make it into the plan?

So we are -- Jeff, do you want to start this one off?

No. No, no. Go, Beth. Go sorry.

No. I'm going to defer to you, Jeff, and let you kick this one off.

Okay. All right. Fairly simple explanation. We are continuing the engineering design on that project and are working through -- in fact, I'm looking across the hall at the group of engineering folks that are working on that project as we speak. I think we're in pretty good shape to get an engineering design cost estimate here over the next 30 to 60 days on at least the first significant segments of that to get down toward our distribution system in Miami.

I believe that we will be on time with our estimated project start date, which I will probably hold back a little bit on describing when that is, but certainly sometime this year. It looks like we will be able to find the pipe and get the right of ways that we need to identify completed. So I'm pretty comfortable that we're on the right track with that project at this point.

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

And hopefully, you have less snow down there than we have up here, Beth. I guess, for my first question, I'd like to maybe draw your attention to Page 43 PDF of your 10-K. I think you're basically saying that the adjusted gross margin from Full Circle Dairy and Noble was $10.9 million in 2025, and you're projecting '26 to be $28.5 million and '27 to be $29.7 million, I guess. Can you walk us through the delta between '25 and '26?

So Paul, the line that you're looking at is actually a compilation of Marlin, Full Circle Dairy and our Noble RNG project that is in Ohio. It is not just Full Circle Dairy. And so some of the growth -- a big part of the growth that year-over-year, we've been experiencing, particularly if you look in the major project table, is actually coming more from Marlin because as you can imagine, with the facilities being in place for both Full Circle Dairy and our Ohio operations, there's not a steady -- they've both been in operation now for a year.

And so the opportunities for Full Circle Dairy for us, and certainly, we're going to have a follow-up with you and our other analysts would be around the production tax credit side. I know you've been talking to me about that. I think we've talked previously on the phone before around the investment tax credit that, that's really something for us that gets amortized over the life of the project. It is not a won and done. So the big part of the growth that you're seeing in any margin there is really going to be related to what Marlin is doing and less about those 2 facilities that are operating as planned.

And if I look at that uplift, I mean, wouldn't that essentially offset the absence of RSAM for 2026, based on the?

Well, that would be great. Well, that would be great if we stopped there at the margin line. But as you know, there's operating expenses that are associated with that growth. And so with Marlin and it continuing to serve increasing amounts of -- an increasing projects, there's certainly costs associated with the labor side and other incremental expenses that are variable. And so you can't just unfortunately look at that line.

I like to look at that line too, but then I have to remind myself that there's variable costs. So a significant chunk of that would be offset in payroll-related costs. If we have to buy additional equipment to support that demand that's associated with depreciation and certainly property taxes associated with that, that all gets factored into it. So we can certainly walk through some of that as we get together, but that would need to be factored into your calculations.

And then can you just quantify specifically the amount of PTC benefit that you're expecting to book in '26?

We have some preliminary estimates on that. We are continuing to refine those, and I would certainly love for us to set up some time and walk through that. We're not quite there. We're still noodling with that a little bit, but we can certainly walk through where we are in our assumptions behind that.

Great. And then can you also maybe -- I guess this would be more, Jim. Can you walk us through what -- how interim rates are set in Florida and what we should expect in terms of when interim rates come into play in July?

Do you want me to start that, Jim? Or do you -- Jeff? I don't know, Jim, do you?

Well, I can take a pass at that. Yes, Jim is having some trouble.

Yes, please go ahead. Yes.

Okay. The interim rate filing in Florida typically comes about 60 days after the actual filing date. So we're looking for those, as you well know, sometime in probably July, early-July. The traditional methodology for determining interim rates is to look at kind of existing rate base, could be some adjustments in there, look at the bottom end of the ROE range and to do a relatively straightforward calculation of any deficiency that exists there and to apply it to calculating the interim rates. So we're assuming that we would see interim rates in effect for the last half of this year or until certainly the permanent rates actually go into effect. And so we'll see what the timing looks like on that.

I don't think at this point, we're quite ready to describe what we believe that interim rate calculation will result in. There are some things that we are and will, I'm sure, debate with the Public Service Commission as we file for interim rate. One of those, as you may recall, is that the current return on equity for City Gas is about 100 basis points lower than what we would traditionally see at other gas utilities in Florida. That was set because of the RSAM.

And so the rate-making deal that was established by NextEra before we acquired the company reduced ROEs from the more traditional levels down about 100 basis points. And so we'll argue that, that's no longer applicable. And there are a couple of other things that will roll around in there. What I will tell you, though, Paul, is that you were -- I think the path you were down a second ago is one that I continue to go down between the weather impacts between the other associated opportunities that we have within the company and the interim rates, I believe that we will not see significant impacts resulting from missing out on the depreciation study result that we had anticipated for this year.

And in fact, as you may know, what would be traditionally done by the Florida Public Service Commission is if that depreciation study result had occurred the way we filed it in '26, that would have been a reduction most likely to the interim rates. And so I think there is a -- it's disappointing that we didn't get that depreciation result. But in the great scheme of things, I think we'll be able to overcome that with the several things that are going right for us this year.

Great. And then last question for me. It looks as if there are 3 sort of additional RNG projects that maybe came online in '25. Are those -- can you describe -- are those dairy or otherwise in terms of their nature?

Those are basically -- go ahead, Beth. Sorry.

No, go ahead, Jeff.

Those are essentially RNG transport projects from landfills.

That's just the pipeline.

Yes, that's the pipeline or the Marlin service that begins before the pipeline shows up. And so that's what you're seeing there. We don't have the production facility investment.

We'll take our next question from Alex Kania with BTIG.

Just thoughts on just the overall customer growth. I mean, again, just Delmarva continues to be really strong. I'm just kind of wondering if you see that as kind of sustainable or kind of any reason why that number can't continue in the near future?

Sure. So being based here on the Delmarva Peninsula, I can tell you in talking with our team, we continue to actually see strong growth in Delaware. It is not slowing down. In fact, you've heard -- in fact, Alex, on a couple of calls ago, Jeff actually, we talked about a small town by the name of Ellendale, which for someone who's from Delaware. Again, it would not have been an area that I would have thought would be close to the resort areas, but it's about a half hour to 45 minutes in. That is one of the new areas that we have begun to provide natural gas distribution service to, and it continues.

There is a lot of planned also infrastructure growth, particularly in the Southern County of Delaware that is being anticipated given it's a growing population. There's a lot of retirement activity that's happening in terms of new developments. So the infrastructure that's coming along like medical facilities, other types of things to support that growth are also continuing to stay at pretty high levels. So we continue to be excited.

And what I would add to that, which is, again, even more exciting when you layer this on top, right, is as that growth continues, it also supports the need for additional pipeline capacity to bring more gas into the southern part of the Delmarva Peninsula. And so we've got projects. Jeff just talked about it -- the newest one today. I think you're going to see, Alex, continued upstream pipeline demands that necessitate increased expansion there. So all continues. Nothing has changed from -- in terms of our view at this time.

Great. And then just maybe a follow-up on your comments a little bit earlier just on a little opportunity on the financing of the FCG acquisition debt. Could you just talk a little bit about kind of what that opportunity might be in terms of kind of a help on interest expense and if you see some additional ongoing opportunities down that path in the next couple of years?

Absolutely. Great question, an area that I absolutely love. So you're spot on this morning. Yes, I mean, when we did the Florida City Gas financing, we unfortunately had to place debt that had a sixth handle to it -- a 6-plus handle to it. And so we have steady retirements that are going to happen over the next several years. So there's going to be a robust refinancing plan that has to take place.

You're going to see us, Alex, take a similar approach to what we did last year, which means we'll be looking at blending a portfolio of different tenors to accomplish a rate that's much more in line with what we would be expecting and based upon our history in terms of our long-term debt portfolio. So I don't think it's unreasonable to think that the opportunity exists for us to shave anywhere from 50 bps to 100 bps off of the coupon rate as long as things stay where they are. And so that's what you should expect to see from us this year.

And that does conclude the Q&A portion of today's call. I would now like to hand it back to Jeff Householder for any closing remarks.

Thank you, and thank all of you for joining us this morning. We'll continue to provide significant information on our capital deployment, our project status and our margin production throughout the year.

We look forward to continuing our long track record of strong growth and top quartile financial success. And we look forward to seeing many of you at the AGA Financial Forum out in Scottsdale here in the next couple of months. So thanks again. We'll talk to you soon. Goodbye.

Thank you. This concludes Chesapeake Utilities Corporation's Fourth Quarter and Full Year Quarter 2025 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.

Welcome to Chesapeake Utilities Corporation's Third 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 in our third quarter Form 10-Q provide 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 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 third 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 kitchen and fire safety as highlighted on Slide 3. The holidays are coming up, which often means more time gathering together and cooking with friends and family.

This makes it a great time to remember safe kitchen practices, particularly as Thanksgiving is the leading day for home cooking fires. Be extra vigilant and aware to keep kids, pets and flammable materials away from heat and open flames, ensure any burned food or materials are completely saturated with water before throwing away and remember to use a metal lid, sheet pan, baking soda, salt or a fire blanket to extinguish grease fires.

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 key accomplishments and highlights, our full year guidance metrics and our capital growth program. Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer, will provide updates on our regulatory activity, our ongoing business transformation efforts and our stakeholder engagement.

And Beth Cooper, Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary, will discuss our financial results, financing updates and investment highlights.

With that, it's my pleasure to turn the call over to Jeff.

Thank you, Lucia, and good morning. We appreciate you joining our discussion today. The highlights on Slide 5 demonstrate how we've continued to deliver with purpose over the last few months. Our growth trajectory continues, and we've expanded our capital investment program.

A number of our 2025 projects are already in service and producing significant margin. We've finalized multiple positive regulatory filings and strengthened our balance sheet in support of future growth. As shown on Slide 6, we reported adjusted earnings per share of $0.82 for the third quarter of 2025 and $4.06 year-to-date, an 8% increase over the same period last year.

As you know, the third quarter always contributes the smallest percentage of our full year earnings, so my remarks will focus on our performance in the first 9 months of 2025. Year-to-date, we've achieved double-digit growth in adjusted gross margin, operating income and adjusted net income relative to the same period in 2024. That performance is a testament to our focus on driving growth, effectively working with our regulators and operating efficiently to meet our customers' needs.

Our results continue to align with our expectations. So we are reaffirming our full year 2025 EPS guidance of $6.15 to $6.35 per share, as shown on Slide 7. As we've previously indicated, this EPS range does assume we reach a successful outcome for 2025 in the FCG depreciation study proceeding, which Jim will discuss further on today's call. On the capital investment side, we continue to invest capital at a run rate of over $1 million a day with $336 million already invested in the first 9 months of this year, including $123 million invested in the third quarter.

Given this pace, we are again increasing our 2025 full year capital expenditure guidance to $425 million to $450 million, a $25 million increase over the top end of our prior range. I'll now shift to Slide 8 to discuss the increase in customer demand for natural gas that's driving our strategic investment in some of the fastest-growing regions of the country.

Both of our core service areas generated another quarter of above-average residential customer growth, 4.3% in Delmarva, 3.9% for Florida Public Utilities and 2.1% for Florida City Gas. I'll mention just a couple of examples to illustrate the demand for natural gas across our service areas. We're in the early stages of building out natural gas distribution for an underserved area in Southern Delaware that includes 2,000 new homes in Ellendale, Delaware.

We also recently became the natural gas provider for a new community development in Port St. Lucie, Florida, which has begun to construct the first of 6 phases of what will ultimately be a community with hundreds of new homes. Last month, we also expanded propane distribution to a fleet of Greensboro school district buses, which confirms our broader propane growth strategy in North Carolina.

We also see additional growth opportunities in Ohio, which has become fifth in the nation for data center potential as ranked by Ohio's Economic Development Corporation. The Ohio opportunity is supported by significant natural gas production in the state and constructive governmental and regulatory frameworks. The opportunities we have to serve increasing customer demand, improve system reliability and operate efficiently are the basis for our overall growth strategy, which in turn drives sustainable earnings.

We remain committed to increasing shareholder value by focusing on the 3 pillars of our growth strategy, as shown on Slide 9, prudently deploying capital, proactively managing our regulatory agenda and continually transforming our business operations to enhance safety and customer service and support future growth.

Successful execution of these 3 pillars will enable us to maintain top quartile growth and total shareholder return. Slide 10 provides some highlights of our 2025 capital program. Construction projects overall remain on track and on budget and more than 400 gas distribution projects have been placed in service through the first 9 months of this year.

Most importantly, this capital investment is generating significant gross margin, $14 million in the third quarter, nearly $34 million in the first 9 months of this year and $50 million expected for full year 2025. Given our pace of investment thus far and our additional opportunities ahead, we are again increasing our full year 2025 capital expenditure guidance, adding $25 million to the top end of our prior range for an updated range of $425 million to $450 million.

Approximately $15 million of the increase is related to initial spending on our multiyear enterprise resource planning process and about $10 million is related to recently approved Eastern Shore natural gas system improvements. This updated range reflects capital investment of approximately $800 million between last year and this year, a significant increase that reflects the many growth opportunities across all our businesses.

I'll now provide an update on WRU, our LNG storage facility in Bishopville, Maryland, as shown on Slide 11. Construction is well underway. Tanks are in place. We've been pouring a lot of concrete. The system control building has been erected and the majority of the equipment needed to complete the facility is now on site. Last month, we also successfully completed our first PHMSA inspection.

This project remains the lowest cost infrastructure option to deliver affordable energy and protect against weather-related disruptions in the southernmost portion of our Delmarva service area. We continue to target bringing the project online in mid-2026, dependent on construction completion and final FERC approval. As shown in detail on Slide 12, all of our major transmission capital projects are advancing as expected with more than half now in service.

We forecast these projects to contribute approximately $23 million of gross margin in 2025 and double that amount or $46 million in 2026. Shifting to Slide 13. The capital projects included on this slide support our 5-year capital investment plan of $1.5 billion to $1.8 billion through 2028. At this point, we've identified at least $1.4 billion of the capital plan with a number of projects already in service or under construction.

Most importantly, approximately 70% of that investment requires no additional regulatory approval or support. Not yet included in this forecast is the investment in our full ERP project as well as a number of projects that are still under exploration and development, as shown on Slide 14.

We continue to explore a number of additional potential expansion opportunities, including serving the space industries in Virginia and Florida, expanding our systems in the southern part of Delmarva and Florida and meeting incremental demand for our Marlin virtual pipeline services to transport RNG, CNG and LNG.

In just the last 2 weeks, I met with Florida Governor DeSantis and members of our leadership and external affairs teams have met with the Maryland and Delaware governors and their teams. We continue to partner with local state and federal electric representatives to advance the design and construction of much needed energy infrastructure in those states.

Maintaining strong relationships with all stakeholders and actively participating in energy coalitions advocating for a resilient and affordable energy future is key to driving these expansion projects forward to meet growing energy demand for years to come.

With that, I'll turn to Jim to discuss our regulatory strategy and business transformation initiatives.

Thank you, Jeff, and good to be with you all this morning. I'll start with Slide 15 as I provide some updates on our regulatory activity. After a great deal of effort, we now have permanent rates in effect for our Delaware, Maryland and Florida electric jurisdictions following successful conclusion of the 3 rate cases that we filed last year.

Last month, we also reached settlement on the rate design and tariff-related elements of the Delaware rate case. And on October 15, the Delaware Commission approved that settlement. Altogether, updated rates are driving $13.1 million of margin this year and $18.2 million of margin in 2026, a testament to our proactive strategy, constructive relationships with regulators and our highly diligent and dedicated internal regulatory team.

Slide 16 provides an update on the one remaining regulatory filing still outstanding, our traditional depreciation study filing for Florida City Gas. Following unexpected regulatory delays, we agreed to amend the filing from a proposed agency action or PAA proceeding to a standard hearing process. This transition provides for a more structured and traditional process for consideration of the filing and an updated schedule.

Under the new schedule, the company submitted testimony in early October, restating our request for a 2-year amortization of the excess depreciation reserve retroactive to January 1, 2025. Per the filing we made earlier this week alongside updated testimony, the excess reserve is now $19 million, primarily reflecting updates to expected useful lives for certain asset classes.

On Wednesday, the State of Florida Office of Public Counsel filed testimony objecting to the company's proposal and recommending that the existing depreciation rates remain in effect until the company files a new depreciation study as part of a rate case at a future date. The company will be filing rebuttal testimony later this month to address these arguments. Staff testimony will follow next week, and the hearing is scheduled for December 11.

The process is expected to conclude no later than February 2026, but could be completed earlier if all parties are able to reach a settlement. We are focused on securing successful recovery of the excess depreciation to support our 2025 full year results and will provide future updates as available. I'll now turn to Slide 17 to provide an update on our business transformation efforts, which is the third pillar in our growth strategy for a reason.

Transformation is the engine that enables technology, systems and processes to evolve in order to maintain our track record of growth as we become a much larger organization. In the last few months, we've continued to make strides with upskilling our team, including attracting additional talent in finance, strategic planning, information technology, change management and human resources.

We are completing the final preparation stages of our enterprise resource critical project that will have significant transformational impacts across the organization as we implement improvements in asset management, supply chain, human resources, accounting and finance. We expect to invest approximately $15 million in this project this year, and we'll provide total capital spend for this multiyear project on our next call.

Slide 18 provides a couple of updates on our engagement with stakeholders. In September, we were pleased to welcome Lisa Eden as our newest member of the Board of Directors. Lisa brings extensive experience in finance, strategic planning, talent management and information technology, having recently retired as Senior Vice President and Chief Financial Officer at TXNM Energy, Inc.

We look forward to Lisa's valuable insights and contributions in the years to come. We were also honored to receive several recognitions in the last few months. First, our Delmarva natural gas distribution business and our Sharp Energy propane distribution business were recognized as Stars of Delaware as voted by the Delaware Daily State News readers.

Second, Chesapeake Utilities was also named a 2025 Champion of Board Diversity for the third consecutive year by the Forum of Executive Women. And finally, we were named Employer Champion of the Year for Kent County by the Delaware Department of Labor State Rehabilitation Council. These awards reflect our unbroken commitment to excellence and inclusion of all members of our communities as we provide reliable and affordable energy solutions that enable families, businesses and the communities we serve the opportunity to flourish.

Our colleagues also continue to support the communities in which they live and work through the contribution of their time and resources. Through September, our teammates have volunteered over 1,500 hours and have contributed over $488,000 in charitable donations and corporate sponsorships, supporting organizations that align with our 4 focus areas of giving: safety and health, community development, education and environmental stewardship.

With that, I will turn the call to Beth for a more detailed discussion of our financial results.

Thanks, Jim, and good morning, everyone. As shown on Slide 19, our financial results for the third quarter of 2025 continue to demonstrate steady growth that supports our full year growth targets. Adjusted gross margin was approximately $137 million, up 12% and adjusted net income was approximately $20 million, up 8% from the third quarter of 2024.

We also sustained growth in adjusted earnings per share of $0.82, a 3% increase over the third quarter of last year, which includes an increase of 1 million more shares outstanding compared with a year ago. I'll now provide some additional detail on the key drivers of our third quarter performance as shown on the adjusted EPS bridge on Slide 20. Continued demand for natural gas drove $0.22 of incremental adjusted EPS, including $0.17 related to transmission capital projects and $0.05 of distribution growth across our service areas.

Margin from our infrastructure program investments contributed an additional $0.12 per share this quarter and permanent rates from our 3 rate cases added $0.11 in third quarter 2025 adjusted EPS. Our unregulated businesses generated net incremental earnings of $0.09 per share, largely driven by continued growth in our Marlin Virtual Pipeline transportation business.

These gains were partially offset by a few factors, including $0.14 per share of increased depreciation and amortization expense, driven by growth in total assets as we actively deploy capital and $0.10 again from the absence of an RSAM benefit recorded in the third quarter of 2024. We also incurred additional operating expenses of $0.12 per share this quarter, driven by incremental facilities, maintenance, insurance and employee-related expenses.

However, we continue to drive operational efficiencies, leading to operational expenses at only 34% of adjusted gross margin in the third quarter of 2025 relative to 37% in the same period last year. Our results were also impacted by 15% fewer cooling degree days this quarter relative to the third quarter a year ago, which drove slightly lower consumption in our Florida electric business.

Financing activity, including our debt and equity issuances over the last 12 months, reduced adjusted EPS by $0.07 per share. And finally, some changes in our billing accruals also impacted the third quarter of this year from a timing perspective, but will not impact full year results. Shifting to Slide 21. Adjusted gross margin for our Regulated segment was approximately $115 million this quarter, up 12% from the third quarter of last year.

This growth continues to be driven by strength in our core business operations, organic natural gas transmission expansions, which are a direct result of distribution growth as well as increased rates following the conclusion of our 3 rate cases. Our focus on cost management enabled similar growth in our regulated operating income, up 11% to approximately $49 million in the third quarter of 2025.

Our unregulated Energy segment also demonstrated strong growth relative to the third quarter of last year, as shown on Slide 22, with adjusted gross margin up 13% to approximately $22.5 million. Our Marlin Gas Services business continues to meet the rapid growth in demand for virtual pipeline transportation, driving $3.1 million of additional gross margin when combined with the incremental contribution from Full Circle Dairy in the third quarter of this year.

This growth was supported by increased performance from Aspire Energy, but tempered by changes in margins and service fees within our propane operations for the third quarter, leading to an overall gross margin increase of $2.6 million. While higher than the same period a year ago, margins did not fully cover the normal operating costs in the quarter as is typical during the least weather-sensitive quarter of the year.

I'll now move to Slide 23 to review our capital structure and financing activities. At September 30, our equity capitalization was 49% with $83.1 million of equity issued through the first 9 months of the year. In the third quarter alone, we issued approximately 126,000 shares with an additional 105,000 shares issued in October 2025.

We also completed the previously announced $200 million issuance of new long-term unsecured senior notes in the private placement debt market with $150 million funded in August and $50 million funded in September of this year at a blended 5.04% coupon. These capital raises support our overall financing strategy, which ensures we are committed to superior balance sheet strength.

We also continue to maintain strong liquidity and sufficient capacity to support growth with availability of 87% of our total capacity of $755 million between our revolving credit facility and private placement shelf facilities at the end of September 2025. Moving to Slide 24. 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 investment to drive earnings growth and overall total shareholder return.

Our Board has approved a dividend payout target range of 45% to 50%, allowing us to retain 50% to 55% of earnings, which has been a meaningful part of our financing plan. We also remain committed to consistent dividend growth. Our annualized dividend per share of $2.74 reflects a 7% annual increase from 2024 and supports a long-term dividend CAGR of 9% while still facilitating significant earnings reinvestment.

We will continue to support long-term dividend growth while reinvesting significant earnings back into the company, enabling our investors to benefit from both long-term top quartile earnings and strong dividend growth. As we've discussed many times, we are committed to a long-term earnings per share compounded annual growth rate of 8% through 2028 to drive top quartile shareholder returns, as shown on Slide 25.

Our third quarter results align with our full year 2025 adjusted EPS guidance range of $6.15 to $6.35 per share, inclusive of a successful outcome on the Florida City Gas depreciation study as both Jeff and Jim have previously discussed. This range represents an EPS growth rate of 14% to 16% over 2024 or on average, approximately 8% to 10% annually over the last 2 years.

Before we shift to Q&A, let's review the unique differentiators as shown on Slide 26, that enable us to drive significant shareholder value in 2025 and for years to come. We remain committed to delivering on our promises. We recognize that our consistent track record has driven expectations for continued strong growth, both in terms of performance and valuation.

We will continue to execute on our 3 pillars of growth, enabled by continued infrastructure reliability improvements and growing demand for natural gas throughout our service areas and supported by our increased 2025 capital guidance range of $425 million to $450 million. Our disciplined approach to financing, including ensuring balance sheet strength, upholding investment-grade credit metrics and sustaining our target capital structure keep us well positioned to address market volatility as we fund our growth plan.

All of these elements drive our ability to reach new heights, both in 2025 and beyond. We look forward to delivering with purpose and driving long-term value for all stakeholders. We sincerely appreciate your continued interest, support and investment in the company. Thank you for joining our call today.

With that, we'll take your questions. Operator?

[Operator Instructions] We'll take our first question from Barclays.

This is Nick Campanella. So I wanted to ask on the depreciation study. Just you kind of show in slides that the decision could be anywhere from December to February. I think you're very clear that this is included in guidance.

Just ability to kind of overcome that if you do get a decision, let's say, in January or February? Are you still able to kind of hit the range? Or is it fully predicated on that outcome? And then how would you kind of quantify what's in fiscal '25?

So we have -- Nick, as we've talked about previously, achieving the guidance range would assume that we do get a successful outcome from that rate -- from that proceeding. And where we actually fall within the range will ultimately be based on where that outcome is, meaning when you look at -- we have filed for a 2-year amortization period.

The standard is 5 years. So that will come into play. But as long as there is an outcome from the proceeding from the hearing in December, and we get a final order in time to be able to record it for 2025, that will determine ultimately the timing of the period as well as the amount that would enable us to achieve the guidance range.

And if it doesn't, is it just that you're at the lower end? Or I was just trying to parse through what you were saying there. And just to be completely clear, it's the $19 million that's kind of shown in slides, and I would just take half of that.

Yes, that is correct. And so achievement of that would enable us to be within the range and enable -- so there's some other factors certainly that we have to -- the reason why we're not saying exactly where it will depend on, again, the period of time, the ultimate conclusion of what gets approved in terms of amount.

And then certainly, there's other factors that could impact our results, but that is the clear differentiator to us being within the range or not being within the range. And I would add if for some reason, right, it's much lower than expected, we would anticipate that we're going to be filing a rate case next year anyway.

So we see dollars there that need to be part of the final outcome. We're very confident in the numbers that we've filed as being the excess reserve. And so we believe we're well positioned, whether it's through a depreciation study or ultimately, if we have to come back in some form of rate proceeding as well next year.

That's great. Really appreciate that clarity. And then I know Jim just kind of talked about the process overall in the prepared remarks and just brought up the prospects of settlement.

But just as you've seen kind of testimonies roll in, just how would you kind of frame the prospects to -- for parties to kind of come to a settlement before December? And are you really trying to achieve an all-party settlement? Or could this be more partial?

Yes, Jim, please go ahead.

Nick, this is Jim. As you know, it's very difficult to predict the process trying to land a case like this or if the parties will even entertain a potential settlement. We're working very hard if there were to be one. Our preference, of course, would be that it'd be unanimous. So I really can't say more than that, Nick, other than our historical approach would be try and resolve something, if at all possible.

Our next question comes from Tate Sullivan with Maxim Group.

First to follow up on a comment from earlier in the call. Jeff, did you say that you had 400 new distribution projects in service in the last 9 months? Or did I mishear that? And if I did not, what does that -- what qualifies as an individual project, please?

Yes, that's sure. Those are of a variety of different sizes. It is 400, just to give you some idea of the significant number of projects that we are moving forward on. Those range from distribution level subdivision projects up into some of the transmission work that we do.

So it really is just a compilation of the construction activity that's going on throughout the company. And it's a substantial increase over what we would typically see. And so some of that's reflective of the fact that we now have Florida City Gas in the fold and are doing construction activity on that system. And some of it continues to reflect the very substantial growth, especially in residential projects that we see both in Delmarva and in Florida. So yes, I didn't mean to -- that's not all $1 billion transmission projects, but it's a lot of things that add up to a significant amount of work and a substantial amount of customer growth.

Yes. I mean the scale of organizing all that. I mean, the previous year's period of 9 months, I mean, I imagine what, roughly 200 to 300 projects. Would that be fair? I mean just...

Yes, maybe even less. Yes, it's a significant amount of work, and our guys have done a really great job. We've spent a fair amount of time over the last couple of years in that particular area, trying to consolidate our construction teams, trying to make sure that we had different tools and systems that would allow us to track those projects in a better way, improving some of the supply chain issues.

I mean all of that has kind of come together intentionally to allow us to be able to actually move through that level of project.

And separately, you called out the Ohio data center growth in one of the slides. And just to refresh on the business, your Ohio business is an unregulated business -- energy segment, I believe.

And -- can you talk about the type of infrastructure? Is it pipelines to backup generators, pipelines to isolated power plants? Or can you talk about that opportunity?

On the data center side?

Yes.

Yes. What we actually have one announced project with AEP in Ohio right now to build a pipeline to serve a data center that AEP is building the project itself. We have a number of other possibilities out there that we're looking at. And I mean, we're in the same boat, I think, with a lot of people across the country.

As you well know, there are a lot of data center possibilities out there. Everybody is trying to understand where these things might actually land. We've seen, as we mentioned in the remarks, significant activity in Ohio. It seems to be one of those places where folks like the political regulatory climate.

They like the fact that there are in-state gas supplies that are possible and there are transmission opportunities there that can bring that gas to the projects as well as some large electric utilities that seem to be eager to pursue them. So we hope to continue to do business in Ohio with the possibility of adding additional transmission assets there.

And that's all of Ohio has been unregulated. Is that correct?

That's correct. I guess we have -- I should probably clarify that -- we have a small transmission pipeline that's sort of quasi-regulated in Ohio. But we don't have regulated distribution assets there in the sense that we do on Delmarva, Florida.

Okay. I asked this question because I saw an acquisition in Ohio territory as well recently in the industry and thank you for all the comments.

Our next question comes from Paul Fremont with Ladenburg.

I guess my first question, Beth, just to clarify, is the cutoff date for a Retroactive treatment of the amortization of the depreciation reserve, is that December 31? Or is that -- is it a different date?

So basically, Paul, as long as we would have an order that would be in the first week or 2 in February, we would be able -- because it would be a subsequent event and the magnitude of that subsequent event, it could be factored into our 2025 earnings.

Great. So it could be as late as the second week of February?

It could be as late as that. When it gets beyond that, it would be very challenging for us at that point. So yes, as long as an order is received, we can go back and we have worked through and evaluated that on the accounting side.

Mike Galtman and his team have researched that. We've talked to experts around that. And so yes, it could go back and be included because of the magnitude of that event.

Great. And then my second question is, can you help us split between the 22 that you had initially filed for and the 19 amended request?

Yes. So the process, Paul, as we started, and it actually -- it happens for all the parties. When you file that -- when you're filing that initial filing, you are certainly filing that with the thought that it is comprehensive. But as you continue to go through and look at the data, and we're scrubbing the data as we're moving through the process, ultimately, there are positive adjustments or things that you may find and sometimes there are updates that can be downward.

And in this particular case, the net effect of the adjustments that we found among the various different asset categories or classes ultimately resulted in a decline. We have had our work papers reviewed by some of the experts that we utilize -- but it happens. And so as we continue to scrub the data within our systems, we feel very good about that $19 million. But it is us just constantly going through and validating the data.

[Operator Instructions] We'll go next to Alex Kania with BTIG.

Maybe just a question just thinking about the -- maybe the year-end earnings call. Has there been just any kind of change in thinking about what the roll forward, what updates you may end up giving on the CapEx plan?

I know there's some discussion just about rolling in some of the projects that were talked a little bit about earlier on the call as well as the, I guess, the ERP or business transformation investments. But do you still consider planning on just keeping kind of the '28 long-term target? Or is there a sense maybe you want to do a more kind of full roll forward?

Thank you. Great question, Alex. So number one, I think right now, we happen to be in the process where we're working on and finalizing our 2026 budget. And that certainly, that is inclusive of our capital projects. And as we start the year, we have a really good sense and even years prior to that as we're moving through looking at the 5 years, it's a constant updating of CapEx guidance as we're looking at it.

So as I think about February, what you will definitely see is you will see us come out with our projection of our capital spend for the year that will be reflective of an updated estimate for our ERP process and plan. And so I think that will be something new that we will include. Our expectation right now is that we will continue to hold to the $1.5 billion to $1.8 billion through 2028.

And there is some likelihood in February of 2027 that we will revisit that and decide whether there's just an update or whether there's an extension of guidance from there. But most likely, we don't think it will be next year, but it will likely be the following year.

Great. And then just a follow-up on kind of the underlying growth of the businesses. It's just very notable that the Delmarva growth is even trending ahead of Florida. year-to-date. Do you -- what's kind of the view about how long that maybe could persist? I mean it's obviously a good thing to see. I'm just kind of curious about what the kind of current views are just in terms of trajectory of, let's say, in the Mid-Atlantic versus the Florida franchises.

Well, thank you. Great question. I happen to be -- and I'm certainly not saying this statistic is in true. I can't confirm it or deny it, but I happened to be in an event not long ago where the speaker at this particular setting was talking about Sussex County, which is really the county in Delaware where we're seeing the most growth because it's at our resort and beach areas.

And they were talking about some of the statistics they had seen, right, show that, that county is one of the fastest-growing counties in the entire country. And I think we're continuing to see that. That's reflected in our numbers. There's a substantial build-out that's occurring that for right now, we continue to see occurring into the foreseeable future.

You had Jeff talk about on the call today, actually what I would call more of a bedroom community to the beach areas. We're seeing growth actually start up in some of these small communities that I, as a lifetime resident of the state would not have expected some of these areas to be kind of natural extensions necessarily of the beach area, but the quality of life in the area that's around here, I think, is continuing to bring more people in.

So I think for right now, Alex, we're continuing to expect strong growth in that area. I don't think that takes away at all from the strong growth, though that we're also seeing in Florida. And one of the things that you saw us do in this particular release, and we're trying to make sure it stands out is that the areas that our Florida legacy business actually serves have tremendous growth that's also significantly above the industry average.

And we're seeing growth with even in Florida City Gas also pick up as well. So we're excited about the growth prospects and continue to be. And hopefully, those, as always, will continue to also result in some additional pipeline -- upstream pipeline capacity needs as well.

This does conclude today's question-and-answer session. I would now like to turn the program back over to Jeff Householder for any additional or closing remarks.

Well, thank you for joining our call this morning. We, as always, appreciate your continued interest in Chesapeake Utilities. I have to say that I like where we are this year, less than 2 years from the transformational FCG acquisition, double-digit growth in earnings.

We've more than doubled our pre-FCG capital investment, positive results in 3 rate cases, significant progress in our modernization business transformation efforts and really excellent outlooks for 2026. So we look forward to seeing many of you at the EEI Financial Forum in Florida in a couple of days and safe travels if you're headed to Florida. Goodbye.

Thank you. This concludes Chesapeake Utilities Corporation's Third Quarter 2025 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.