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FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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|
C
HESAPEAKE
U
TILITIES
C
ORPORATION
(Exact name of registrant as specified in its charter)
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||
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Delaware
|
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51-0064146
|
(State or other jurisdiction
of incorporation or organization)
|
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(I.R.S. Employer
Identification No.)
|
Large accelerated filer
|
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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I
TEM
1.
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||
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I
TEM
2.
|
||
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I
TEM
3.
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||
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I
TEM
4.
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||
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I
TEM
1.
|
||
|
|
|
I
TEM
1
A
.
|
||
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I
TEM
2.
|
||
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|
I
TEM
3.
|
||
|
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|
I
TEM
5.
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||
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|
I
TEM
6.
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||
|
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|
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Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
(in thousands, except shares and per share data)
|
|
|
|
|
||||
Operating Revenues
|
|
|
|
|
||||
Regulated Energy
|
|
$
|
109,393
|
|
|
$
|
97,654
|
|
Unregulated Energy and other
|
|
129,963
|
|
|
87,506
|
|
||
Total Operating Revenues
|
|
239,356
|
|
|
185,160
|
|
||
Operating Expenses
|
|
|
|
|
||||
Regulated Energy cost of sales
|
|
48,231
|
|
|
40,244
|
|
||
Unregulated Energy and other cost of sales
|
|
99,826
|
|
|
60,754
|
|
||
Operations
|
|
32,702
|
|
|
32,490
|
|
||
Maintenance
|
|
3,593
|
|
|
3,231
|
|
||
Depreciation and amortization
|
|
9,704
|
|
|
8,812
|
|
||
Other taxes
|
|
4,894
|
|
|
4,530
|
|
||
Total Operating Expenses
|
|
198,950
|
|
|
150,061
|
|
||
Operating Income
|
|
40,406
|
|
|
35,099
|
|
||
Other income (expense), net
|
|
68
|
|
|
(700
|
)
|
||
Interest charges
|
|
3,664
|
|
|
2,739
|
|
||
Income Before Income Taxes
|
|
36,810
|
|
|
31,660
|
|
||
Income taxes
|
|
9,955
|
|
|
12,516
|
|
||
Net Income
|
|
$
|
26,855
|
|
|
$
|
19,144
|
|
Weighted Average Common Shares Outstanding:
|
|
|
|
|
||||
Basic
|
|
16,351,338
|
|
|
16,317,224
|
|
||
Diluted
|
|
16,402,985
|
|
|
16,363,796
|
|
||
Earnings Per Share of Common Stock:
|
|
|
|
|
||||
Basic
|
|
$
|
1.64
|
|
|
$
|
1.17
|
|
Diluted
|
|
$
|
1.64
|
|
|
$
|
1.17
|
|
Cash Dividends Declared Per Share of Common Stock
|
|
$
|
0.3250
|
|
|
$
|
0.3050
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
(in thousands)
|
|
|
|
|
||||
Net Income
|
|
$
|
26,855
|
|
|
$
|
19,144
|
|
Other Comprehensive (Loss) Income, net of tax:
|
|
|
|
|
||||
Employee Benefits, net of tax:
|
|
|
|
|
||||
Amortization of prior service cost, net of tax of $(5) and $(8), respectively
|
|
(14
|
)
|
|
(11
|
)
|
||
Net gain, net of tax of $41 and $77, respectively
|
|
108
|
|
|
93
|
|
||
Cash Flow Hedges, net of tax:
|
|
|
|
|
||||
Unrealized (loss)/gain on commodity contract cash flow hedges, net of tax of ($756) and $192, respectively
|
|
(1,788
|
)
|
|
338
|
|
||
Total Other Comprehensive (Loss) Income, net of tax
|
|
(1,694
|
)
|
|
420
|
|
||
Comprehensive Income
|
|
$
|
25,161
|
|
|
$
|
19,564
|
|
Assets
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
(in thousands, except shares and per share data)
|
|
|
|
|
||||
Property, Plant and Equipment
|
|
|
|
|
||||
Regulated Energy
|
|
$
|
1,083,004
|
|
|
$
|
1,073,736
|
|
Unregulated Energy
|
|
213,803
|
|
|
210,682
|
|
||
Other businesses and eliminations
|
|
27,892
|
|
|
27,699
|
|
||
Total property, plant and equipment
|
|
1,324,699
|
|
|
1,312,117
|
|
||
Less: Accumulated depreciation and amortization
|
|
(279,802
|
)
|
|
(270,599
|
)
|
||
Plus: Construction work in progress
|
|
131,640
|
|
|
84,509
|
|
||
Net property, plant and equipment
|
|
1,176,537
|
|
|
1,126,027
|
|
||
Current Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
5,996
|
|
|
5,614
|
|
||
Trade and other receivables (less allowance for uncollectible accounts of $901 and $936, respectively)
|
|
69,447
|
|
|
77,223
|
|
||
Accrued revenue
|
|
18,907
|
|
|
22,279
|
|
||
Propane inventory, at average cost
|
|
7,345
|
|
|
8,324
|
|
||
Other inventory, at average cost
|
|
4,607
|
|
|
12,022
|
|
||
Regulatory assets
|
|
10,833
|
|
|
10,930
|
|
||
Storage gas prepayments
|
|
1,197
|
|
|
5,250
|
|
||
Income taxes receivable
|
|
4,378
|
|
|
14,778
|
|
||
Prepaid expenses
|
|
8,199
|
|
|
13,621
|
|
||
Derivative assets, at fair value
|
|
208
|
|
|
1,286
|
|
||
Other current assets
|
|
6,717
|
|
|
7,260
|
|
||
Total current assets
|
|
137,834
|
|
|
178,587
|
|
||
Deferred Charges and Other Assets
|
|
|
|
|
||||
Goodwill
|
|
22,104
|
|
|
22,104
|
|
||
Other intangible assets, net
|
|
4,482
|
|
|
4,686
|
|
||
Investments, at fair value
|
|
6,641
|
|
|
6,756
|
|
||
Regulatory assets
|
|
75,536
|
|
|
75,575
|
|
||
Other assets
|
|
4,316
|
|
|
3,699
|
|
||
Total deferred charges and other assets
|
|
113,079
|
|
|
112,820
|
|
||
Total Assets
|
|
$
|
1,427,450
|
|
|
$
|
1,417,434
|
|
Capitalization and Liabilities
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
(in thousands, except shares and per share data)
|
|
|
|
|
||||
Capitalization
|
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
|
||||
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding
|
|
$
|
—
|
|
|
$
|
—
|
|
Common stock, par value $0.4867 per share (authorized 50,000,000 shares)
|
|
7,964
|
|
|
7,955
|
|
||
Additional paid-in capital
|
|
254,126
|
|
|
253,470
|
|
||
Retained earnings
|
|
250,024
|
|
|
229,141
|
|
||
Accumulated other comprehensive loss
|
|
(6,873
|
)
|
|
(4,272
|
)
|
||
Deferred compensation obligation
|
|
3,573
|
|
|
3,395
|
|
||
Treasury stock
|
|
(3,573
|
)
|
|
(3,395
|
)
|
||
Total stockholders’ equity
|
|
505,241
|
|
|
486,294
|
|
||
Long-term debt, net of current maturities
|
|
222,014
|
|
|
197,395
|
|
||
Total capitalization
|
|
727,255
|
|
|
683,689
|
|
||
Current Liabilities
|
|
|
|
|
||||
Current portion of long-term debt
|
|
9,389
|
|
|
9,421
|
|
||
Short-term borrowing
|
|
229,108
|
|
|
250,969
|
|
||
Accounts payable
|
|
57,457
|
|
|
74,688
|
|
||
Customer deposits and refunds
|
|
34,795
|
|
|
34,751
|
|
||
Accrued interest
|
|
3,256
|
|
|
1,742
|
|
||
Dividends payable
|
|
5,318
|
|
|
5,312
|
|
||
Accrued compensation
|
|
5,444
|
|
|
13,112
|
|
||
Regulatory liabilities
|
|
18,503
|
|
|
6,485
|
|
||
Derivative liabilities, at fair value
|
|
2,359
|
|
|
6,247
|
|
||
Other accrued liabilities
|
|
8,694
|
|
|
10,273
|
|
||
Total current liabilities
|
|
374,323
|
|
|
413,000
|
|
||
Deferred Credits and Other Liabilities
|
|
|
|
|
||||
Deferred income taxes
|
|
141,484
|
|
|
135,850
|
|
||
Regulatory liabilities
|
|
141,346
|
|
|
140,978
|
|
||
Environmental liabilities
|
|
8,215
|
|
|
8,263
|
|
||
Other pension and benefit costs
|
|
28,981
|
|
|
29,699
|
|
||
Deferred investment tax credits and other liabilities
|
|
5,846
|
|
|
5,955
|
|
||
Total deferred credits and other liabilities
|
|
325,872
|
|
|
320,745
|
|
||
Environmental and other commitments and contingencies (Note 5 and 6)
|
|
|
|
|
||||
Total Capitalization and Liabilities
|
|
$
|
1,427,450
|
|
|
$
|
1,417,434
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
(in thousands)
|
|
|
|
|
||||
Operating Activities
|
|
|
|
|
||||
Net income
|
|
$
|
26,855
|
|
|
$
|
19,144
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
9,704
|
|
|
8,812
|
|
||
Depreciation and accretion included in other costs
|
|
2,276
|
|
|
1,939
|
|
||
Deferred income taxes
|
|
6,469
|
|
|
7,849
|
|
||
Realized gain on commodity contracts/sale of assets/investments
|
|
3,416
|
|
|
1,330
|
|
||
Unrealized loss on investments/commodity contracts
|
|
44
|
|
|
132
|
|
||
Employee benefits and compensation
|
|
228
|
|
|
423
|
|
||
Share-based compensation
|
|
1,520
|
|
|
639
|
|
||
Other, net
|
|
(12
|
)
|
|
(4
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable and accrued revenue
|
|
9,649
|
|
|
5,095
|
|
||
Propane inventory, storage gas and other inventory
|
|
12,448
|
|
|
6,688
|
|
||
Regulatory assets/liabilities, net
|
|
11,511
|
|
|
6,103
|
|
||
Prepaid expenses and other current assets
|
|
8,095
|
|
|
1,136
|
|
||
Accounts payable and other accrued liabilities
|
|
(26,932
|
)
|
|
(5,897
|
)
|
||
Income taxes receivable
|
|
8,741
|
|
|
9,500
|
|
||
Customer deposits and refunds
|
|
44
|
|
|
400
|
|
||
Accrued compensation
|
|
(7,731
|
)
|
|
(4,966
|
)
|
||
Other assets and liabilities, net
|
|
347
|
|
|
1,631
|
|
||
Net cash provided by operating activities
|
|
66,672
|
|
|
59,954
|
|
||
Investing Activities
|
|
|
|
|
||||
Property, plant and equipment expenditures
|
|
(63,116
|
)
|
|
(42,172
|
)
|
||
Proceeds from sales of assets
|
|
193
|
|
|
36
|
|
||
Environmental expenditures
|
|
(48
|
)
|
|
(57
|
)
|
||
Net cash used in investing activities
|
|
(62,971
|
)
|
|
(42,193
|
)
|
||
Financing Activities
|
|
|
|
|
||||
Common stock dividends
|
|
(5,147
|
)
|
|
(4,815
|
)
|
||
(Purchase) issuance of stock under the Dividend Reinvestment Plan
|
|
(164
|
)
|
|
222
|
|
||
Tax withholding payments related to net settled stock compensation
|
|
(719
|
)
|
|
(692
|
)
|
||
Change in cash overdrafts due to outstanding checks
|
|
2,352
|
|
|
587
|
|
||
Net repayment under line of credit agreements and short-term borrowing under the Revolver
|
|
(24,213
|
)
|
|
(11,125
|
)
|
||
Proceeds from long-term debt under the Revolver
|
|
25,000
|
|
|
—
|
|
||
Repayment of long term debt and capital lease obligation
|
|
(428
|
)
|
|
(416
|
)
|
||
Net cash used in financing activities
|
|
(3,319
|
)
|
|
(16,239
|
)
|
||
Net Increase in Cash and Cash Equivalents
|
|
382
|
|
|
1,522
|
|
||
Cash and Cash Equivalents—Beginning of Period
|
|
5,614
|
|
|
4,178
|
|
||
Cash and Cash Equivalents—End of Period
|
|
$
|
5,996
|
|
|
$
|
5,700
|
|
|
Common Stock
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
(in thousands, except shares and per
share data)
|
Number of
Shares
(2)
|
|
Par
Value
|
|
Additional Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive
Loss
|
|
Deferred
Compensation
|
|
Treasury
Stock
|
|
Total
|
|||||||||||||||
Balance at December 31, 2016
|
16,303,499
|
|
|
$
|
7,935
|
|
|
$
|
250,967
|
|
|
$
|
192,062
|
|
|
$
|
(4,878
|
)
|
|
$
|
2,416
|
|
|
$
|
(2,416
|
)
|
|
$
|
446,086
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
58,124
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58,124
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
606
|
|
|
—
|
|
|
—
|
|
|
606
|
|
|||||||
Dividend declared ($1.28 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,045
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,045
|
)
|
|||||||
Dividend reinvestment plan
|
10,771
|
|
|
5
|
|
|
730
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
735
|
|
|||||||
Stock issuance
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||||
Share-based compensation and tax benefit
(3)(4)
|
30,172
|
|
|
15
|
|
|
1,783
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,798
|
|
|||||||
Treasury stock activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
979
|
|
|
(979
|
)
|
|
—
|
|
|||||||
Balance at December 31, 2017
|
16,344,442
|
|
|
7,955
|
|
|
253,470
|
|
|
229,141
|
|
|
(4,272
|
)
|
|
3,395
|
|
|
(3,395
|
)
|
|
486,294
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
26,855
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,855
|
|
|||||||
Cumulative effect of the adoption of ASU 2014-09
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,498
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,498
|
)
|
|||||||
Reclassification upon the adoption of ASU 2018-02
|
—
|
|
|
—
|
|
|
—
|
|
|
907
|
|
|
(907
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,694
|
)
|
|
—
|
|
|
—
|
|
|
(1,694
|
)
|
|||||||
Dividend declared ($0.3250 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,381
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,381
|
)
|
|||||||
Dividend reinvestment plan
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||||
Share-based compensation and tax benefit
(3)
(4)
|
19,350
|
|
|
9
|
|
|
657
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
666
|
|
|||||||
Treasury stock activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
178
|
|
|
(178
|
)
|
|
—
|
|
|||||||
Balance at March 31, 2018
|
16,363,792
|
|
|
$
|
7,964
|
|
|
$
|
254,126
|
|
|
$
|
250,024
|
|
|
$
|
(6,873
|
)
|
|
$
|
3,573
|
|
|
$
|
(3,573
|
)
|
|
$
|
505,241
|
|
(1)
|
2,000,000
shares of preferred stock at
$0.01
par value have been authorized. None has been issued or is outstanding; accordingly, no information has been included in the statements of stockholders’ equity.
|
(2)
|
Includes
93,422
and
90,961
shares at
March 31, 2018
and
December 31, 2017
, respectively, held in a Rabbi Trust related to our Deferred Compensation Plan.
|
(3)
|
Includes amounts for shares issued for directors’ compensation.
|
(4)
|
The shares issued under the SICP are net of shares withheld for employee taxes.
For the three months ended March 31, 2018
, and for the year ended
December 31, 2017
, we withheld
10,436
and
10,269
shares, respectively, for taxes.
|
|
|
Three months ended March 31, 2018
|
||||||||||
Income statement
|
|
As Reported
|
|
Without Adoption of ASC 606
|
|
Effect of Change Higher (Lower)
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Regulated Energy operating revenues
|
|
$
|
109,393
|
|
|
$
|
110,357
|
|
|
$
|
(964
|
)
|
Regulated Energy cost of sales
|
|
$
|
48,231
|
|
|
$
|
48,803
|
|
|
$
|
(572
|
)
|
Depreciation and amortization
|
|
$
|
9,704
|
|
|
$
|
9,689
|
|
|
$
|
15
|
|
Income before income taxes
|
|
$
|
36,810
|
|
|
$
|
37,217
|
|
|
$
|
(407
|
)
|
Income taxes
|
|
$
|
9,955
|
|
|
$
|
10,077
|
|
|
$
|
(122
|
)
|
Net income
|
|
$
|
26,855
|
|
|
$
|
27,140
|
|
|
$
|
(285
|
)
|
|
|
As of March 31, 2018
|
||||||||||
Balance sheet
|
|
As Reported
|
|
Without Adoption of ASC 606
|
|
Effect of Change Higher (Lower)
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Accrued revenues
|
|
$
|
18,907
|
|
|
$
|
20,213
|
|
|
$
|
(1,306
|
)
|
Other assets
|
|
$
|
4,316
|
|
|
$
|
4,508
|
|
|
$
|
(192
|
)
|
|
|
|
|
|
|
|
||||||
Capitalization
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
$
|
250,024
|
|
|
$
|
251,522
|
|
|
$
|
(1,498
|
)
|
|
|
|
|
|
|
|
•
|
An entity need not reassess whether any expired or existing contracts are or contain leases.
|
•
|
An entity need not reassess the lease classification for any expired or existing leases (that is, all existing leases that were classified as operating leases in accordance with Topic 840 will continue to be classified as operating leases, and all existing leases that were classified as capital leases in accordance with Topic 840 will continue to be classified as capital leases).
|
•
|
An entity may elect to use hindsight in determining the lease term and in assessing impairment of the entity’s right-of-use assets.
|
•
|
An entity may elect to apply the provisions of the new lease guidance at the effective date, without adjusting the comparative periods presented.
|
2.
|
Calculation of Earnings Per Share
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
(in thousands, except shares and per share data)
|
|
|
|
|
||||
Calculation of Basic Earnings Per Share:
|
|
|
|
|
||||
|
|
|
|
|
||||
Net Income
|
|
$
|
26,855
|
|
|
$
|
19,144
|
|
Weighted average shares outstanding
|
|
16,351,338
|
|
|
16,317,224
|
|
||
Basic Earnings Per Share
|
|
$
|
1.64
|
|
|
$
|
1.17
|
|
|
|
|
|
|
||||
Calculation of Diluted Earnings Per Share:
|
|
|
|
|
||||
Reconciliation of Numerator:
|
|
|
|
|
||||
Net Income
|
|
$
|
26,855
|
|
|
$
|
19,144
|
|
Reconciliation of Denominator:
|
|
|
|
|
||||
Weighted shares outstanding—Basic
|
|
16,351,338
|
|
|
16,317,224
|
|
||
Effect of dilutive securities—Share-based compensation
|
|
51,647
|
|
|
46,572
|
|
||
Adjusted denominator—Diluted
|
|
16,402,985
|
|
|
16,363,796
|
|
||
Diluted Earnings Per Share
|
|
$
|
1.64
|
|
|
$
|
1.17
|
|
|
|
Regulated Energy
|
|
Unregulated Energy
|
|
Other and Eliminations
|
|
Total
|
||||||||
Energy distribution
|
|
|
|
|
|
|
|
|
||||||||
Florida natural gas division
|
|
$
|
5,864
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,864
|
|
Delaware natural gas division
|
|
32,072
|
|
|
—
|
|
|
—
|
|
|
32,072
|
|
||||
FPU electric distribution
|
|
18,741
|
|
|
—
|
|
|
—
|
|
|
18,741
|
|
||||
FPU natural gas distribution
|
|
23,213
|
|
|
—
|
|
|
—
|
|
|
23,213
|
|
||||
Maryland natural gas division
|
|
10,672
|
|
|
—
|
|
|
—
|
|
|
10,672
|
|
||||
Sandpiper
|
|
8,964
|
|
|
—
|
|
|
—
|
|
|
8,964
|
|
||||
Total energy distribution
|
|
99,526
|
|
|
—
|
|
|
—
|
|
|
99,526
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Energy transmission
|
|
|
|
|
|
|
|
|
||||||||
Aspire Energy
|
|
—
|
|
|
12,077
|
|
|
—
|
|
|
12,077
|
|
||||
Eastern Shore
|
|
15,597
|
|
|
—
|
|
|
—
|
|
|
15,597
|
|
||||
Peninsula Pipeline
|
|
2,098
|
|
|
—
|
|
|
—
|
|
|
2,098
|
|
||||
Total energy transmission
|
|
17,695
|
|
|
12,077
|
|
|
—
|
|
|
29,772
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Energy generation
|
|
|
|
|
|
|
|
|
||||||||
Eight Flags
|
|
—
|
|
|
4,378
|
|
|
—
|
|
|
4,378
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Propane delivery
|
|
|
|
|
|
|
|
|
||||||||
Delmarva Peninsula propane delivery
|
|
—
|
|
|
45,470
|
|
|
—
|
|
|
45,470
|
|
||||
Florida propane delivery
|
|
—
|
|
|
6,634
|
|
|
—
|
|
|
6,634
|
|
||||
Total propane delivery
|
|
—
|
|
|
52,104
|
|
|
—
|
|
|
52,104
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Energy services
|
|
|
|
|
|
|
|
|
||||||||
PESCO
|
|
—
|
|
|
81,559
|
|
|
—
|
|
|
81,559
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other and eliminations
|
|
|
|
|
|
|
|
|
||||||||
Eliminations
|
|
(7,828
|
)
|
|
(5,245
|
)
|
|
(15,598
|
)
|
|
(28,671
|
)
|
||||
Other
|
|
—
|
|
|
494
|
|
|
194
|
|
|
688
|
|
||||
Total other and eliminations
|
|
(7,828
|
)
|
|
(4,751
|
)
|
|
(15,404
|
)
|
|
(27,983
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total operating revenues
(1)
|
|
$
|
109,393
|
|
|
$
|
145,367
|
|
|
$
|
(15,404
|
)
|
|
$
|
239,356
|
|
|
|
|
|
|
|
|
||||||
|
|
Trade Receivables
|
|
Contract Assets (Non-current)
|
|
Contract Liability (Current)
|
||||||
in thousands
|
|
|
|
|
|
|
||||||
Balance at 12/31/2017
|
|
$
|
74,962
|
|
|
$
|
1,270
|
|
|
$
|
407
|
|
Balance at 3/31/2018
|
|
67,828
|
|
|
1,305
|
|
|
244
|
|
|||
Increase (decrease)
|
|
$
|
(7,134
|
)
|
|
$
|
35
|
|
|
$
|
(163
|
)
|
4.
|
Rates and Other Regulatory Activities
|
Jurisdiction
|
MGP Site
|
Status
|
Cost to Clean up
|
Recovery through Rates
|
Florida
|
West Palm Beach
|
Remedial actions approved by the FDEP have been implemented on the east parcel of the site. Similar remedial actions expected to be implemented on other remaining portions.
|
Between $4.5 million to $15.4 million, including costs associated with the relocation of FPU’s operations at this site, which is necessary to implement the remedial plan, and any potential costs associated with future redevelopment of the properties.
|
Yes
|
Florida
|
Sanford
|
In March 2018, the EPA approved a "site-wide ready for anticipated use" status, which is the final step before delisting a site. Construction has been completed and restrictive covenants are in place to ensure protection of human health. The only remaining activity is long-term groundwater monitoring. It is unlikely that FPU will incur any significant future costs associated with the site.
|
FPU's remaining remediation expenses, including attorneys' fees and costs, are anticipated to be less than $10,000.
|
Yes
|
Florida
|
Winter Haven
|
Remediation is ongoing.
|
Not expected to exceed $425,000, which includes costs of implementing institutional controls at the site.
|
Yes
|
Delaware
|
Seaford
|
Proposed plan for implementation approved by the DNREC in July 2017.
|
Between $273,000 and $465,000.
|
Yes
|
Maryland
|
Cambridge
|
Currently in discussions with the MDE.
|
Unable to estimate.
|
N/A
|
6.
|
Other Commitments and Contingencies
|
7.
|
Segment Information
|
•
|
Regulated Energy
. Includes energy distribution and transmission services (natural gas distribution, natural gas transmission and electric distribution operations). All operations in this segment are regulated, as to their rates and services, by the PSC having jurisdiction in each operating territory or by the FERC in the case of Eastern Shore.
|
•
|
Unregulated Energy.
Includes energy transmission, energy generation, propane delivery, and other energy services (propane distribution, the operations of our Eight Flags' CHP plant, as well as natural gas marketing, gathering, processing, transportation and supply). These operations are unregulated as to their rates and services. Through March 2017, this segment also included the operations of Xeron, our propane and crude oil trading subsidiary that wound down its operations shortly after the first quarter of 2017. Also included in this segment are other unregulated energy services, such as energy-related merchandise sales and heating, ventilation and air conditioning, plumbing and electrical services.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
(in thousands)
|
|
|
|
|
||||
Operating Revenues, Unaffiliated Customers
|
|
|
|
|
||||
Regulated Energy segment
|
|
$
|
105,954
|
|
|
$
|
96,446
|
|
Unregulated Energy segment and other businesses
|
|
133,402
|
|
|
88,714
|
|
||
Total operating revenues, unaffiliated customers
|
|
$
|
239,356
|
|
|
$
|
185,160
|
|
Intersegment Revenues
(1)
|
|
|
|
|
||||
Regulated Energy segment
|
|
$
|
3,439
|
|
|
$
|
1,208
|
|
Unregulated Energy segment
|
|
11,965
|
|
|
4,011
|
|
||
Other businesses
|
|
194
|
|
|
228
|
|
||
Total intersegment revenues
|
|
$
|
15,598
|
|
|
$
|
5,447
|
|
Operating Income
|
|
|
|
|
||||
Regulated Energy segment
|
|
$
|
26,711
|
|
|
$
|
23,395
|
|
Unregulated Energy segment
|
|
13,684
|
|
|
11,575
|
|
||
Other businesses and eliminations
|
|
11
|
|
|
129
|
|
||
Total operating income
|
|
40,406
|
|
|
35,099
|
|
||
Other income (expense), net
|
|
68
|
|
|
(700
|
)
|
||
Interest charges
|
|
3,664
|
|
|
2,739
|
|
||
Income before Income Taxes
|
|
36,810
|
|
|
31,660
|
|
||
Income taxes
|
|
9,955
|
|
|
12,516
|
|
||
Net Income
|
|
$
|
26,855
|
|
|
$
|
19,144
|
|
(1)
|
All significant intersegment revenues are billed at market rates and have been eliminated from consolidated operating revenues.
|
(in thousands)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Identifiable Assets
|
|
|
|
|
||||
Regulated Energy segment
|
|
$
|
1,148,635
|
|
|
$
|
1,121,673
|
|
Unregulated Energy segment
|
|
246,230
|
|
|
261,541
|
|
||
Other businesses and eliminations
|
|
32,585
|
|
|
34,220
|
|
||
Total identifiable assets
|
|
$
|
1,427,450
|
|
|
$
|
1,417,434
|
|
8.
|
Stockholder's Equity
|
|
|
Defined Benefit
|
|
Commodity
|
|
|
||||||
|
|
Pension and
|
|
Contracts
|
|
|
||||||
|
|
Postretirement
|
|
Cash Flows
|
|
|
||||||
|
|
Plan Items
|
|
Hedges
|
|
Total
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
As of December 31, 2017
|
|
$
|
(4,743
|
)
|
|
$
|
471
|
|
|
$
|
(4,272
|
)
|
Other comprehensive loss before reclassifications
|
|
—
|
|
|
(2,232
|
)
|
|
(2,232
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income
|
|
94
|
|
|
444
|
|
|
538
|
|
|||
Net current-period other comprehensive income/(loss)
|
|
94
|
|
|
(1,788
|
)
|
|
(1,694
|
)
|
|||
Stranded tax reclassification to retained earnings
|
|
(1,022
|
)
|
|
115
|
|
|
(907
|
)
|
|||
As of March 31, 2018
|
|
$
|
(5,671
|
)
|
|
$
|
(1,202
|
)
|
|
$
|
(6,873
|
)
|
|
|
Defined Benefit
|
|
Commodity
|
|
|
||||||
|
|
Pension and
|
|
Contracts
|
|
|
||||||
|
|
Postretirement
|
|
Cash Flows
|
|
|
||||||
|
|
Plan Items
|
|
Hedges
|
|
Total
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
As of December 31, 2016
|
|
$
|
(5,360
|
)
|
|
$
|
482
|
|
|
$
|
(4,878
|
)
|
Other comprehensive income/(loss) before reclassifications
|
|
(9
|
)
|
|
1,278
|
|
|
1,269
|
|
|||
Amounts reclassified from accumulated other comprehensive income/(loss)
|
|
91
|
|
|
(940
|
)
|
|
(849
|
)
|
|||
Net prior-period other comprehensive income
|
|
82
|
|
|
338
|
|
|
420
|
|
|||
As of March 31, 2017
|
|
$
|
(5,278
|
)
|
|
$
|
820
|
|
|
$
|
(4,458
|
)
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
(in thousands)
|
|
|
|
|
||||
Amortization of defined benefit pension and postretirement plan items:
|
|
|
|
|
||||
Prior service credit
(1)
|
|
$
|
19
|
|
|
$
|
19
|
|
Net loss
(1)
|
|
(149
|
)
|
|
(170
|
)
|
||
Total before income taxes
|
|
(130
|
)
|
|
(151
|
)
|
||
Income tax benefit
|
|
36
|
|
|
60
|
|
||
Net of tax
|
|
$
|
(94
|
)
|
|
$
|
(91
|
)
|
|
|
|
|
|
||||
Gains and losses on commodity contracts cash flow hedges:
|
|
|
|
|
||||
Propane swap agreements
(2)
|
|
$
|
(464
|
)
|
|
$
|
388
|
|
Natural gas swaps
(2)
|
|
(450
|
)
|
|
—
|
|
||
Natural gas futures
(2)
|
|
298
|
|
|
1,150
|
|
||
Total before income taxes
|
|
(616
|
)
|
|
1,538
|
|
||
Income tax benefit (expense)
|
|
172
|
|
|
(598
|
)
|
||
Net of tax
|
|
(444
|
)
|
|
940
|
|
||
Total reclassifications for the period
|
|
$
|
(538
|
)
|
|
$
|
849
|
|
9.
|
Employee Benefit Plans
|
|
|
Chesapeake
Pension Plan |
|
FPU
Pension Plan |
|
Chesapeake SERP
|
|
Chesapeake
Postretirement Plan |
|
FPU
Medical Plan |
||||||||||||||||||||||||||||||
For the Three Months Ended March 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Interest cost
|
|
$
|
97
|
|
|
$
|
103
|
|
|
$
|
592
|
|
|
$
|
623
|
|
|
$
|
21
|
|
|
$
|
22
|
|
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
12
|
|
|
$
|
13
|
|
Expected return on plan assets
|
|
(138
|
)
|
|
(127
|
)
|
|
(774
|
)
|
|
(699
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
||||||||||
Amortization of net loss
|
|
88
|
|
|
107
|
|
|
109
|
|
|
131
|
|
|
25
|
|
|
22
|
|
|
15
|
|
|
16
|
|
|
—
|
|
|
—
|
|
||||||||||
Net periodic cost (benefit)
(1)
|
|
47
|
|
|
83
|
|
|
(73
|
)
|
|
55
|
|
|
46
|
|
|
44
|
|
|
6
|
|
|
7
|
|
|
12
|
|
|
13
|
|
||||||||||
Amortization of pre-merger regulatory asset
|
|
—
|
|
|
—
|
|
|
191
|
|
|
191
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||||||
Total periodic cost
|
|
$
|
47
|
|
|
$
|
83
|
|
|
$
|
118
|
|
|
$
|
246
|
|
|
$
|
46
|
|
|
$
|
44
|
|
|
$
|
6
|
|
|
$
|
7
|
|
|
$
|
14
|
|
|
$
|
15
|
|
For the Three Months Ended March 31, 2018
|
|
Chesapeake
Pension Plan |
|
FPU
Pension Plan |
|
Chesapeake SERP
|
|
Chesapeake
Postretirement Plan |
|
FPU
Medical Plan |
|
Total
|
||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service credit
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
Net loss
|
|
88
|
|
|
109
|
|
|
25
|
|
|
15
|
|
|
—
|
|
|
237
|
|
||||||
Total recognized in net periodic benefit cost
|
|
88
|
|
|
109
|
|
|
25
|
|
|
(4
|
)
|
|
—
|
|
|
218
|
|
||||||
Recognized from accumulated other comprehensive loss
(1)
|
|
88
|
|
|
21
|
|
|
25
|
|
|
(4
|
)
|
|
—
|
|
|
130
|
|
||||||
Recognized from regulatory asset
|
|
—
|
|
|
88
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
||||||
Total
|
|
$
|
88
|
|
|
$
|
109
|
|
|
$
|
25
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
218
|
|
For the Three Months Ended March 31, 2017
|
|
Chesapeake
Pension Plan |
|
FPU
Pension Plan |
|
Chesapeake SERP
|
|
Chesapeake
Postretirement Plan |
|
FPU
Medical Plan |
|
Total
|
||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service credit
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
Net loss
|
|
107
|
|
|
131
|
|
|
22
|
|
|
16
|
|
|
—
|
|
|
276
|
|
||||||
Total recognized in net periodic benefit cost
|
|
107
|
|
|
131
|
|
|
22
|
|
|
(3
|
)
|
|
—
|
|
|
257
|
|
||||||
Recognized from accumulated other comprehensive loss
(1)
|
|
107
|
|
|
25
|
|
|
22
|
|
|
(3
|
)
|
|
—
|
|
|
151
|
|
||||||
Recognized from regulatory asset
|
|
—
|
|
|
106
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
106
|
|
||||||
Total
|
|
$
|
107
|
|
|
$
|
131
|
|
|
$
|
22
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
257
|
|
10.
|
Investments
|
(in thousands)
|
March 31,
2018 |
|
December 31,
2017 |
||||
Rabbi trust (associated with the Deferred Compensation Plan)
|
$
|
6,621
|
|
|
$
|
6,734
|
|
Investments in equity securities
|
20
|
|
|
22
|
|
||
Total
|
$
|
6,641
|
|
|
6,756
|
|
11.
|
Share-Based Compensation
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
(in thousands)
|
|
|
|
|
||||
Awards to non-employee directors
|
|
$
|
135
|
|
|
$
|
135
|
|
Awards to key employees
|
|
1,385
|
|
|
504
|
|
||
Total compensation expense
|
|
1,520
|
|
|
639
|
|
||
Less: tax benefit
|
|
(416
|
)
|
|
(257
|
)
|
||
Share-based compensation amounts included in net income
|
|
$
|
1,104
|
|
|
$
|
382
|
|
|
|
Number of Shares
|
|
Weighted Average
Fair Value
|
|||
Outstanding—December 31, 2017
|
|
132,642
|
|
|
$
|
59.31
|
|
Granted
|
|
49,494
|
|
|
$
|
67.76
|
|
Vested
|
|
(29,786
|
)
|
|
$
|
47.39
|
|
Expired
|
|
(3,933
|
)
|
|
$
|
49.66
|
|
Outstanding—March 31, 2018
|
|
148,417
|
|
|
$
|
66.53
|
|
12.
|
Derivative Instruments
|
|
|
At March 31, 2018
|
||||||||||
(in thousands)
|
|
Gross amounts
|
|
Amounts offset
|
|
Net amounts
|
||||||
Accounts receivable
|
|
$
|
6,555
|
|
|
$
|
2,092
|
|
|
$
|
4,463
|
|
Accounts payable
|
|
$
|
13,912
|
|
|
$
|
2,092
|
|
|
$
|
11,820
|
|
|
|
At December 31, 2017
|
||||||||||
(in thousands)
|
|
Gross amounts
|
|
Amounts offset
|
|
Net amounts
|
||||||
Accounts receivable
|
|
$
|
8,283
|
|
|
$
|
2,391
|
|
|
$
|
5,892
|
|
Accounts payable
|
|
$
|
16,643
|
|
|
$
|
2,391
|
|
|
$
|
14,252
|
|
|
|
Asset Derivatives
|
||||||||
|
|
|
|
Fair Value As Of
|
||||||
(in thousands)
|
|
Balance Sheet Location
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
||||
Propane swap agreements
|
|
Derivative assets, at fair value
|
|
$
|
4
|
|
|
$
|
13
|
|
Derivatives designated as cash flow hedges
|
|
|
|
|
|
|
||||
Natural gas futures contracts
|
|
Derivative assets, at fair value
|
|
—
|
|
|
92
|
|
||
Propane swap agreements
|
|
Derivative assets, at fair value
|
|
204
|
|
|
1,181
|
|
||
Total asset derivatives
|
|
|
|
$
|
208
|
|
|
$
|
1,286
|
|
|
|
Liability Derivatives
|
||||||||
|
|
|
|
Fair Value As Of
|
||||||
(in thousands)
|
|
Balance Sheet Location
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
||||
Natural gas futures contracts
|
|
Derivative liabilities, at fair value
|
|
$
|
300
|
|
|
$5,776
|
||
Derivatives designated as cash flow hedges
|
|
|
|
|
|
|
||||
Natural gas futures contracts
|
|
Derivative liabilities, at fair value
|
|
1,639
|
|
|
469
|
|
||
Natural gas swap contracts
|
|
Derivative liabilities, at fair value
|
|
404
|
|
|
2
|
|
||
Propane swap agreements
|
|
Derivative liabilities, at fair value
|
|
16
|
|
|
—
|
|
||
Total liability derivatives
|
|
|
|
$
|
2,359
|
|
|
$
|
6,247
|
|
|
|
|
|
Amount of Gain (Loss) on Derivatives:
|
||||||
|
|
Location of Gain
|
|
For the Three Months Ended March 31,
|
||||||
(in thousands)
|
|
(Loss) on Derivatives
|
|
2018
|
|
2017
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
||||
Realized gain on forward contracts and options
(1)
|
|
Revenue
|
|
$
|
—
|
|
|
$
|
112
|
|
Natural gas futures contracts
|
|
Cost of sales
|
|
(2,835
|
)
|
|
124
|
|
||
Propane swap agreements
|
|
Cost of sales
|
|
(9
|
)
|
|
(4
|
)
|
||
Derivatives designated as fair value hedges
|
|
|
|
|
|
|
||||
Put /Call option
(2)
|
|
Cost of sales
|
|
—
|
|
|
(9
|
)
|
||
Derivatives designated as cash flow hedges
|
|
|
|
|
|
|
||||
Propane swap agreements
|
|
Cost of sales
|
|
(464
|
)
|
|
388
|
|
||
Propane swap agreements
|
|
Other comprehensive loss
|
|
(992
|
)
|
|
(557
|
)
|
||
Natural gas futures contracts
|
|
Cost of sales
|
|
298
|
|
|
1,150
|
|
||
Natural gas swap contracts
|
|
Cost of sales
|
|
(450
|
)
|
|
1,087
|
|
||
Natural gas futures agreements
|
|
Other comprehensive income
|
|
65
|
|
|
—
|
|
||
Natural gas swap agreements
|
|
Other comprehensive loss
|
|
(1,732
|
)
|
|
—
|
|
||
Total
|
|
|
|
$
|
(6,119
|
)
|
|
$
|
2,291
|
|
(1)
|
All of the realized and unrealized gain (loss) on forward contracts represents the effect of trading activities on our condensed consolidated statements of income.
|
(2)
|
As a fair value hedge with no ineffective portion, the unrealized gains and losses associated with this call option are recorded in cost of sales, offset by the corresponding change in the value of propane inventory (hedged item), which is also recorded in cost of sales. The amounts in cost of sales offset to zero, and the unrealized gains and losses of this put option effectively changed the value of propane inventory on the condensed consolidated balance sheets.
|
13.
|
Fair Value of Financial Instruments
|
|
Three Months Ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
(in thousands)
|
|
|
|
||||
Beginning Balance
|
$
|
648
|
|
|
$
|
561
|
|
Purchases and adjustments
|
(48
|
)
|
|
2
|
|
||
Transfers
|
—
|
|
|
—
|
|
||
Distribution
|
—
|
|
|
—
|
|
||
Investment income
|
2
|
|
|
2
|
|
||
Ending Balance
|
$
|
602
|
|
|
$
|
565
|
|
14.
|
Long-Term Debt
|
|
|
March 31,
|
|
December 31,
|
||||
(in thousands)
|
|
2018
|
|
2017
|
||||
FPU secured first mortgage bonds
(1)
:
|
|
|
|
|
||||
9.08% bond, due June 1, 2022
|
|
$
|
7,983
|
|
|
$
|
7,982
|
|
Uncollateralized senior notes:
|
|
|
|
|
||||
5.50% note, due October 12, 2020
|
|
6,000
|
|
|
6,000
|
|
||
5.93% note, due October 31, 2023
|
|
18,000
|
|
|
18,000
|
|
||
5.68% note, due June 30, 2026
|
|
26,100
|
|
|
26,100
|
|
||
6.43% note, due May 2, 2028
|
|
7,000
|
|
|
7,000
|
|
||
3.73% note, due December 16, 2028
|
|
20,000
|
|
|
20,000
|
|
||
3.88% note, due May 15, 2029
|
|
50,000
|
|
|
50,000
|
|
||
3.25% note, due April 30, 2032
|
|
70,000
|
|
|
70,000
|
|
||
Long-term portion of the Revolver
(2)
|
|
25,000
|
|
|
—
|
|
||
Promissory notes
|
|
26
|
|
|
97
|
|
||
Capital lease obligation
|
|
1,712
|
|
|
2,070
|
|
||
Less: debt issuance costs
|
|
(418
|
)
|
|
(433
|
)
|
||
Total long-term debt
|
|
231,403
|
|
|
206,816
|
|
||
Less: current maturities
|
|
(9,389
|
)
|
|
(9,421
|
)
|
||
Total long-term debt, net of current maturities
|
|
$
|
222,014
|
|
|
$
|
197,395
|
|
•
|
state and federal legislative and regulatory initiatives (including deregulation) that affect cost and investment recovery, have an impact on rate structures, and affect the speed and the degree to which competition enters the electric and natural gas industries;
|
•
|
the outcomes of regulatory, tax, environmental and legal matters, including whether pending matters are resolved within current estimates and whether the costs associated with such matters are adequately covered by insurance or recoverable in rates;
|
•
|
the impact of significant changes to current tax regulations and rates;
|
•
|
the timing of certification authorizations associated with new capital projects;
|
•
|
the ability to construct facilities at or below estimated costs;
|
•
|
changes in environmental and other laws and regulations to which we are subject and environmental conditions of property that we now, or may in the future, own or operate;
|
•
|
possible increased federal, state and local regulation of the safety of our operations;
|
•
|
general economic conditions, including any potential effects arising from terrorist attacks and any hostilities or other external factors over which we have no control;
|
•
|
long-term global climate change, which could adversely affect customer demand or cause extreme weather conditions that disrupt the Company's operations;
|
•
|
the weather and other natural phenomena, including the economic, operational and other effects of hurricanes, ice storms and other damaging weather events;
|
•
|
customers' preferred energy sources;
|
•
|
industrial, commercial and residential growth or contraction in our markets or service territories;
|
•
|
the effect of competition on our businesses;
|
•
|
the timing and extent of changes in commodity prices and interest rates;
|
•
|
the ability to establish new, and maintain key, supply sources;
|
•
|
the effect of spot, forward and future market prices on our various energy businesses;
|
•
|
the extent of our success in connecting natural gas and electric supplies to transmission systems and in expanding natural gas and electric markets;
|
•
|
the creditworthiness of counterparties with which we are engaged in transactions;
|
•
|
the capital-intensive nature of our regulated energy businesses;
|
•
|
the results of financing efforts, including our ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general economic conditions;
|
•
|
the ability to successfully execute, manage and integrate merger, acquisition or divestiture plans; regulatory or other limitations imposed as a result of a merger; acquisition or divestiture, and the success of the business following a merger, acquisition or divestiture;
|
•
|
the impact on our costs and funding obligations, under our pension and other post-retirement benefit plans, of potential downturns in the financial markets, lower discount rates, and costs associated with the Patient Protection and Affordable Care Act;
|
•
|
the ability to continue to hire, train and retain appropriately qualified personnel;
|
•
|
the effect of accounting pronouncements issued periodically by accounting standard-setting bodies;
|
•
|
the timing and success of technological improvements; and
|
•
|
risks related to cyber-attacks or cyber-terrorism that could disrupt our business operations or result in failure of information technology systems.
|
•
|
executing a capital investment program in pursuit of growth opportunities that generate returns equal to or greater than our cost of capital;
|
•
|
expanding our energy distribution and transmission businesses organically as well as into new geographic areas;
|
•
|
providing new services in our current service territories;
|
•
|
expanding our footprint in potential growth markets through strategic acquisitions;
|
•
|
entering new unregulated energy markets and business lines that will complement our existing operating units and growth strategy while capitalizing on opportunities across the energy value chain; and
|
•
|
differentiating the Company as a full-service energy supplier/partner/provider through a customer-centric model.
|
|
|
Three Months Ended
|
|
|
||||||||
|
|
March 31,
|
|
Increase
|
||||||||
|
|
2018
|
|
2017
|
|
(decrease)
|
||||||
(in thousands except per share)
|
|
|
|
|
|
|
||||||
Business Segment:
|
|
|
|
|
|
|
||||||
Regulated Energy segment
|
|
$
|
26,711
|
|
|
$
|
23,395
|
|
|
$
|
3,316
|
|
Unregulated Energy segment
|
|
13,684
|
|
|
11,575
|
|
|
2,109
|
|
|||
Other businesses and eliminations
|
|
11
|
|
|
129
|
|
|
(118
|
)
|
|||
Operating Income
|
|
$
|
40,406
|
|
|
$
|
35,099
|
|
|
$
|
5,307
|
|
Other income (expense), net
|
|
68
|
|
|
(700
|
)
|
|
768
|
|
|||
Interest charges
|
|
3,664
|
|
|
2,739
|
|
|
925
|
|
|||
Pre-tax Income
|
|
36,810
|
|
|
31,660
|
|
|
5,150
|
|
|||
Income taxes
|
|
9,955
|
|
|
12,516
|
|
|
(2,561
|
)
|
|||
Net Income
|
|
$
|
26,855
|
|
|
$
|
19,144
|
|
|
$
|
7,711
|
|
Earnings Per Share of Common Stock
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.64
|
|
|
$
|
1.17
|
|
|
$
|
0.47
|
|
Diluted
|
|
$
|
1.64
|
|
|
$
|
1.17
|
|
|
$
|
0.47
|
|
(in thousands, except per share data)
|
|
Pre-tax
Income |
|
Net
Income |
|
Earnings
Per Share |
||||||
First Quarter of 2017 Reported Results
|
|
$
|
31,660
|
|
|
$
|
19,144
|
|
|
$
|
1.17
|
|
|
|
|
|
|
|
|
||||||
Increased Gross Margins:
|
|
|
|
|
|
|
||||||
Return to more normal weather
|
|
3,914
|
|
|
2,855
|
|
|
0.17
|
|
|||
TCJA impact - estimated refunds to ratepayers
(1)
|
|
(3,155
|
)
|
|
(2,302
|
)
|
|
(0.14
|
)
|
|||
Implementation of Eastern Shore settled rates*
(2)
|
|
2,843
|
|
|
2,074
|
|
|
0.13
|
|
|||
PESCO
|
|
(2,292
|
)
|
|
(1,672
|
)
|
|
(0.10
|
)
|
|||
Unregulated Energy customer consumption (non-weather)
|
|
1,682
|
|
|
1,227
|
|
|
0.07
|
|
|||
Regulated Energy customer consumption (non-weather)
|
|
949
|
|
|
692
|
|
|
0.04
|
|
|||
Natural gas growth (excluding service expansions)
|
|
802
|
|
|
585
|
|
|
0.04
|
|
|||
Service expansions*
|
|
565
|
|
|
412
|
|
|
0.03
|
|
|||
Florida electric reliability/modernization program
*
|
|
372
|
|
|
272
|
|
|
0.02
|
|
|||
GRIP*
|
|
298
|
|
|
217
|
|
|
0.01
|
|
|||
Sandpiper's margin from an industrial customer and natural gas conversions
|
|
257
|
|
|
188
|
|
|
0.01
|
|
|||
|
|
6,235
|
|
|
4,548
|
|
|
0.28
|
|
|||
|
|
|
|
|
|
|
||||||
Decreased (Increased) Other Operating Expenses:
|
|
|
|
|
|
|
||||||
Higher payroll expense
|
|
(1,559
|
)
|
|
(1,137
|
)
|
|
(0.07
|
)
|
|||
Higher depreciation, asset removal and property tax costs due to new capital investments
|
|
(1,216
|
)
|
|
(887
|
)
|
|
(0.05
|
)
|
|||
Absence of Xeron expenses, including wind-down expenses
|
|
697
|
|
|
508
|
|
|
0.03
|
|
|||
Lower outside services and facilities maintenance costs
|
|
665
|
|
|
485
|
|
|
0.03
|
|
|||
Lower regulatory expenses
|
|
242
|
|
|
177
|
|
|
0.01
|
|
|||
Lower benefit and other employee-related expenses
|
|
240
|
|
|
175
|
|
|
0.01
|
|
|||
|
|
(931
|
)
|
|
(679
|
)
|
|
(0.04
|
)
|
|||
|
|
|
|
|
|
|
||||||
Interest charges
|
|
(926
|
)
|
|
(675
|
)
|
|
(0.04
|
)
|
|||
Income taxes - TCJA impact - decreased effective tax rate
|
|
—
|
|
|
4,594
|
|
|
0.28
|
|
|||
Net other changes
|
|
772
|
|
|
(77
|
)
|
|
(0.01
|
)
|
|||
|
|
(154
|
)
|
|
3,842
|
|
|
0.23
|
|
|||
|
|
|
|
|
|
|
||||||
First Quarter of 2018 Reported Results
|
|
$
|
36,810
|
|
|
$
|
26,855
|
|
|
$
|
1.64
|
|
|
Gross Margin for the Period
(1)
|
||||||||||||||||||
in thousands
|
Quarter Ended March 31, 2018
|
|
Quarter Ended March 31, 2017
|
|
Fiscal 2017
|
|
Fiscal 2018 Estimate
|
|
Fiscal 2019 Estimate
|
||||||||||
Florida GRIP
|
$
|
3,565
|
|
|
$
|
3,267
|
|
|
$
|
13,454
|
|
|
$
|
14,287
|
|
|
$
|
14,370
|
|
Eastern Shore Rate Case
|
2,843
|
|
|
—
|
|
|
3,693
|
|
|
9,800
|
|
|
9,800
|
|
|||||
Florida Electric Reliability/Modernization Pilot Program
|
372
|
|
|
—
|
|
|
94
|
|
|
1,558
|
|
|
1,558
|
|
|||||
New Smyrna Beach, Florida Project
|
352
|
|
|
—
|
|
|
235
|
|
|
1,409
|
|
|
1,409
|
|
|||||
2017 Eastern Shore System Expansion Project - including interim services
|
1,040
|
|
|
—
|
|
|
433
|
|
|
7,446
|
|
|
15,799
|
|
|||||
Northwest Florida Expansion Project
|
—
|
|
|
—
|
|
|
—
|
|
|
3,484
|
|
|
6,032
|
|
|||||
(Palm Beach County) Belvedere, Florida Project
|
—
|
|
|
—
|
|
|
—
|
|
|
635
|
|
|
1,131
|
|
|||||
Total
|
$
|
8,172
|
|
|
$
|
3,267
|
|
|
$
|
17,909
|
|
|
$
|
38,619
|
|
|
$
|
50,099
|
|
|
Three Months Ended
|
|
|
|||||
|
March 31,
|
|
|
|||||
|
2018
|
|
2017
|
|
Variance
|
|||
Delmarva
|
|
|
|
|
|
|||
Actual HDD
|
2,295
|
|
|
1,958
|
|
|
337
|
|
10-Year Average HDD ("Delmarva Normal")
|
2,354
|
|
|
2,403
|
|
|
(49
|
)
|
Variance from Delmarva Normal
|
(59
|
)
|
|
(445
|
)
|
|
|
|
Florida
|
|
|
|
|
|
|||
Actual HDD
|
490
|
|
|
285
|
|
|
205
|
|
10-Year Average HDD ("Florida Normal")
|
517
|
|
|
536
|
|
|
(19
|
)
|
Variance from Florida Normal
|
(27
|
)
|
|
(251
|
)
|
|
|
|
Ohio
|
|
|
|
|
|
|||
Actual HDD
|
2,991
|
|
|
2,484
|
|
|
507
|
|
10-Year Average HDD ("Ohio Normal")
|
3,069
|
|
|
3,137
|
|
|
(68
|
)
|
Variance from Ohio Normal
|
(78
|
)
|
|
(653
|
)
|
|
|
|
Florida
|
|
|
|
|
|
|||
Actual CDD
|
139
|
|
|
145
|
|
|
(6
|
)
|
10-Year Average CDD ("Florida CDD Normal")
|
89
|
|
|
82
|
|
|
7
|
|
Variance from Florida CDD Normal
|
50
|
|
|
63
|
|
|
|
|
|
Three Months Ended
|
|
|
||||||||
|
|
March 31,
|
|
Increase
|
||||||||
|
|
2018
|
|
2017
|
|
(decrease)
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Revenue
|
|
$
|
109,393
|
|
|
$
|
97,654
|
|
|
$
|
11,739
|
|
Cost of sales
|
|
48,231
|
|
|
40,244
|
|
|
7,987
|
|
|||
Gross margin
|
|
61,162
|
|
|
57,410
|
|
|
3,752
|
|
|||
Operations & maintenance
|
|
23,147
|
|
|
23,580
|
|
|
(433
|
)
|
|||
Depreciation & amortization
|
|
7,516
|
|
|
6,885
|
|
|
631
|
|
|||
Other taxes
|
|
3,788
|
|
|
3,550
|
|
|
238
|
|
|||
Other operating expenses
|
|
34,451
|
|
|
34,015
|
|
|
436
|
|
|||
Operating income
|
|
$
|
26,711
|
|
|
$
|
23,395
|
|
|
$
|
3,316
|
|
(in thousands)
|
Margin Impact
|
||
Implementation of Eastern Shore settled rates
|
$
|
2,843
|
|
Return to more normal weather
|
1,017
|
|
|
Customer consumption (non-weather)
|
949
|
|
|
Natural gas growth (excluding service expansions)
|
802
|
|
|
Service expansions
|
565
|
|
|
Florida electric reliability/modernization program
|
372
|
|
|
Florida GRIP
|
298
|
|
|
Sandpiper's margin from an industrial customer and natural gas conversions
|
257
|
|
|
Other
|
(196
|
)
|
|
Total
|
6,907
|
|
|
TCJA impact - estimated refunds to ratepayers
*
|
(3,155
|
)
|
|
Quarter over quarter increase in gross margin
|
$
|
3,752
|
|
•
|
$500,000
from a
3.7 percent
increase in the average number of residential customers in the Delmarva natural gas distribution operations, as well as growth in the number of commercial and industrial customers; and
|
•
|
$302,000
from Florida natural gas customer growth, due primarily to an increase in residential and commercial customers.
|
•
|
$1.0 million
from Eastern Shore's services including those provided, on an interim basis, to industrial customers in Delaware in conjunction with Eastern Shore's 2017 Expansion Project being placed in service in December 2017; partially offset by the absence of short-term contracts totaling
$874,000
that were replaced by long-term service agreements; and
|
•
|
$352,000
generated by Peninsula Pipeline from the New Smyrna Beach Expansion Project.
|
•
|
$966,000
in higher depreciation, asset removal and property tax costs associated with recent capital investments;
|
•
|
$589,000
in higher staffing costs for additional personnel to support growth; offset by
|
•
|
$667,000
in lower costs related to outside services and facilities and maintenance costs, due primarily to lower consulting and service contractor costs, as temporary resources were replaced with permanent resources and certain consulting services were finalized/concluded in first quarter of 2017; and
|
•
|
$413,000
in lower benefits and employee-related costs (since we are self-insured for healthcare, benefits costs fluctuate depending upon filed claims).
|
|
|
Three Months Ended
|
|
|
||||||||
|
|
March 31,
|
|
Increase
|
||||||||
|
|
2018
|
|
2017
|
|
(decrease)
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Revenue
|
|
$
|
145,367
|
|
|
$
|
92,725
|
|
|
$
|
52,642
|
|
Cost of sales
|
|
115,066
|
|
|
65,906
|
|
|
49,160
|
|
|||
Gross margin
|
|
30,301
|
|
|
26,819
|
|
|
3,482
|
|
|||
Operations & maintenance
|
|
13,359
|
|
|
12,380
|
|
|
979
|
|
|||
Depreciation & amortization
|
|
2,167
|
|
|
1,903
|
|
|
264
|
|
|||
Other taxes
|
|
1,091
|
|
|
961
|
|
|
130
|
|
|||
Total operating expenses
|
|
16,617
|
|
|
15,244
|
|
|
1,373
|
|
|||
Operating income
|
|
$
|
13,684
|
|
|
$
|
11,575
|
|
|
$
|
2,109
|
|
(in thousands)
|
|
Margin Impact
|
||
PESCO
|
|
$
|
(2,292
|
)
|
Propane delivery operations - additional customer consumption - weather
|
|
1,956
|
|
|
Propane delivery operations - increased margin driven by growth and other factors
|
|
1,392
|
|
|
Aspire Energy - customer consumption - weather
|
|
941
|
|
|
Growth in wholesale propane margins and sales
|
|
379
|
|
|
Aspire Energy - increased margin driven by growth and other factors
|
|
319
|
|
|
Other
|
|
787
|
|
|
Quarter over quarter increase in gross margin
|
|
$
|
3,482
|
|
(in thousands)
|
Margin Impact
|
|
|
PESCO First Quarter 2017 Margin
|
$
|
3,467
|
|
Reversal of fourth quarter 2017 unrealized MTM loss
|
5,713
|
|
|
Margin from 2017 customer Supply Agreement that was not renewed
|
(2,124
|
)
|
|
Net impact for the Mid-Atlantic wholesale portfolio from extraordinary costs associated with 2018 Bomb Cyclone
|
(3,284
|
)
|
|
Loss for the Mid-Atlantic retail portfolio caused by capacity constraints in January and warm weather in February
|
(2,261
|
)
|
|
Other
|
(336
|
)
|
|
PESCO First Quarter 2018 Margin
|
$
|
1,175
|
|
•
|
Reversal of MTM loss recorded during the fourth quarter of 2017 as contracts settled, as well as $300,000 of unrealized gains at the end of March 31, 2018;
|
•
|
Absence of revenues from a supplier agreement in the first quarter of 2017, which was not renewed; and
|
•
|
Extraordinary costs of meeting demand requirements in the Mid-Atlantic region due to pipeline capacity constraints experienced due to the 2018 Bomb Cyclone, followed by unseasonably warm weather in February.
|
|
2018
|
||
(dollars in thousands)
|
|
||
Regulated Energy:
|
|
||
Natural gas distribution
|
$
|
53,899
|
|
Natural gas transmission
|
92,562
|
|
|
Electric distribution
|
7,972
|
|
|
Total Regulated Energy
|
154,433
|
|
|
Unregulated Energy:
|
|
||
Propane distribution
|
11,235
|
|
|
Other unregulated energy
|
5,827
|
|
|
Total Unregulated Energy
|
17,062
|
|
|
Other:
|
|
||
Corporate and other businesses
|
10,097
|
|
|
Total Other
|
10,097
|
|
|
Total 2018 Budgeted Capital Expenditures
|
$
|
181,592
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
(in thousands)
|
|
|
|
|
||||
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
66,672
|
|
|
$
|
59,954
|
|
Investing activities
|
|
(62,971
|
)
|
|
(42,193
|
)
|
||
Financing activities
|
|
(3,319
|
)
|
|
(16,239
|
)
|
||
Net increase in cash and cash equivalents
|
|
382
|
|
|
1,522
|
|
||
Cash and cash equivalents—beginning of period
|
|
5,614
|
|
|
4,178
|
|
||
Cash and cash equivalents—end of period
|
|
$
|
5,996
|
|
|
$
|
5,700
|
|
•
|
Changes in net accounts receivable and accrued revenue and accounts payable and accrued liabilities decreased cash flows by
$16.5 million
, due primarily to the timing of the receipt of customer payments as well as the timing of payments to vendors.
|
•
|
Net income, adjusted for reconciling activities, increased cash flows by
$10.2 million
, due primarily to the higher performance during the quarter, non-cash adjustments related to realized losses on sale of assets/investments, higher depreciation and amortization expenses related to increased investing activities, offset by a decrease in deferred income taxes of
$1.4 million
due to tax reform.
|
•
|
Net cash flows from changes in propane inventories increased by approximately
$5.8 million
, as a result of higher use of propane, which decreased the levels of our inventory.
|
•
|
Changes in net regulatory assets and liabilities increased cash flows by
$5.4 million
, due primarily to the change in fuel costs collected through the various cost recovery mechanisms.
|
•
|
Changes in net prepaid expenses and other current assets, customer deposits and refunds increased cash flows by
$6.6 million
.
|
•
|
Changes in accrued compensation, other assets and liabilities and income tax receivables decreased cash flow by
$4.8 million
.
|
•
|
We received
$25.0 million
in net cash proceeds from the Revolver, which was advanced on a long-term basis, partially offset by an increased repayment of short-term borrowing of
$13.1 million
under our line of credit arrangements. Our additional financing needs are a result of the additional capital expenditures during the quarter.
|
•
|
We paid
$5.1 million
in cash dividends for the
three
months ended
March 31, 2018
, compared to
$4.8 million
for the
three
months ended
March 31, 2017
.
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
|
Total
|
||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase obligations - Commodity
(1)
|
|
$
|
70,476
|
|
|
$
|
55,912
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
126,388
|
|
Total
|
|
$
|
70,476
|
|
|
$
|
55,912
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
126,388
|
|
(1)
|
In addition to the obligations noted above, we have agreements with commodity suppliers that have provisions with no minimum purchase requirements. There are no monetary penalties for reducing the amounts purchased; however, the propane contracts allow the suppliers to reduce the amounts available in the winter season if we do not purchase specified amounts during the summer season. Under these contracts, the commodity prices will fluctuate as market prices fluctuate.
|
(in thousands)
|
Balance at December 31, 2017
|
|
Increase (Decrease) in Fair Market Value
|
|
Less Amounts Settled
|
|
Balance at March 31, 2018
|
||||||||
PESCO
|
$
|
(6,153
|
)
|
|
$
|
12,274
|
|
|
$
|
(8,464
|
)
|
|
$
|
(2,343
|
)
|
Sharp
|
1,192
|
|
|
(1,469
|
)
|
|
469
|
|
|
192
|
|
||||
Total
|
$
|
(4,961
|
)
|
|
$
|
10,805
|
|
|
$
|
(7,995
|
)
|
|
$
|
(2,151
|
)
|
(in thousands)
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Total Fair Value
|
||||||||||||
Price based on ICE - PESCO
|
$
|
(2,315
|
)
|
|
$
|
(295
|
)
|
|
$
|
335
|
|
|
$
|
(69
|
)
|
|
$
|
1
|
|
|
$
|
(2,343
|
)
|
Price based on Mont Belvieu - Sharp
|
208
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
192
|
|
||||||
Total
|
$
|
(2,107
|
)
|
|
$
|
(311
|
)
|
|
$
|
335
|
|
|
$
|
(69
|
)
|
|
$
|
1
|
|
|
$
|
(2,151
|
)
|
|
|
Total
Number of
Shares
|
|
Average
Price Paid
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced Plans
|
|
Maximum Number of
Shares That May Yet Be
Purchased Under the Plans
|
|||||
Period
|
|
Purchased
|
|
per Share
|
|
or Programs
(2)
|
|
or Programs
(2)
|
|||||
January 1, 2018
through January 31, 2018 (1) |
|
388
|
|
|
$
|
76.00
|
|
|
—
|
|
|
—
|
|
February 1, 2018
through February 28, 2018 |
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
March 1, 2018
through March 31, 2018 |
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
388
|
|
|
$
|
76.00
|
|
|
—
|
|
|
—
|
|
(1)
|
Chesapeake Utilities purchased shares of stock on the open market for the purpose of reinvesting the dividend on deferred stock units held in the Rabbi Trust accounts for certain directors and senior executives under the Deferred Compensation Plan. The Deferred Compensation Plan is discussed in detail in Item 8 under the heading “Notes to the Consolidated Financial Statements—Note 16
, Employee Benefit Plans
” in our latest Annual Report on Form 10-K for the year ended
December 31, 2017
. During the quarter ended
March 31, 2018
,
388
shares were purchased through the reinvestment of dividends on deferred stock units.
|
(2)
|
Except for the purposes described in Footnote
(1)
, Chesapeake Utilities has no publicly announced plans or programs to repurchase its shares.
|
Item 6.
|
Exhibits
|
|
|
|
10.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document.
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
C
HESAPEAKE
U
TILITIES
C
ORPORATION
|
|
/
S
/ B
ETH
W. C
OOPER
|
Beth W. Cooper
Senior Vice President and Chief Financial Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended
March 31, 2018
of Chesapeake Utilities Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ M
ICHAEL
P. M
C
M
ASTERS
|
Michael P. McMasters
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended
March 31, 2018
of Chesapeake Utilities Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ B
ETH
W. C
OOPER
|
Beth W. Cooper
Senior Vice President and Chief Financial Officer
|
/
S
/ M
ICHAEL
P. M
C
M
ASTERS
|
Michael P. McMasters
|
May 8, 2018
|
/
S
/ B
ETH
W. C
OOPER
|
Beth W. Cooper
|
May 8, 2018
|