PR Newswire | Feb 24, 2021 05:00PM EST

Updates Earnings And Capital Guidance

02/24 15:59 CST

Chesapeake Utilities Corporation Reports Record Results For Fiscal Year 2020; Updates Earnings And Capital Guidance- Earnings Per Share ("EPS")* increased to $4.26 in 2020 from $3.96 in 2019- 2020 EPS from continuing operations was a record $4.21, an increase of $0.49 or 13.2 percent over 2019- Fourth quarter 2020 EPS from continuing operations increased $0.20, or 19.2 percent- Expansion projects, customer growth, and pipeline replacement programs generated $15.5 million in additional gross margin** for 2020- Finalization of the Hurricane Michael regulatory proceeding resulted in $10.9 million in gross margin**- Acquisitions completed in 2019 and 2020 added $5.3 million in incremental gross margin**- Pipeline expansion projects and full year impact of acquisitions completed in 2020 are expected to further enhance growth going forward- The COVID-19 pandemic reduced net income by $1.0 million or $0.06 per share, which includes offsetting benefits from the establishment of regulatory assets totaling $1.9 million and reflecting the positive tax impacts from implementation of the CARES Act provisions- Issued $63.7 million of equity in the fourth quarter of 2020 to permanently finance recent capital investments, resulting in an equity to total capitalization ratio of 50 percent at year end- Announced new earnings and capital investment guidance through 2025 based upon the Company's current investment and earnings outlook DOVER, Del., Feb. 24, 2021

DOVER, Del., Feb. 24, 2021 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today announced financial results for the year and the fourth quarter ended December 31, 2020. Net income for 2020 was $71.5 million, or $4.26 per share compared to $65.2 million, or $3.96 per share for 2019. The Company's net income from continuing operations for 2020 was $70.6 million, or $4.21 per share. This represents an increase of $9.5 million, or $0.49 per share, above 2019 results.

Fourth quarter 2020 net income was $22.4 million, or $1.28 per share compared to $22.6 million, or $1.37 per share in 2019. The fourth quarter 2019 EPS results included $0.33 per share associated with a one-time gain from discontinued operations for our natural gas marketing business that we have exited. The Company's net income from continuing operations for the quarter ended December 31, 2020 was $21.7 million, or $1.24 per share compared to $17.1 million, or $1.04 for the same quarter of 2019.

Higher earnings for 2020 reflect increased earnings from the Hurricane Michael regulatory settlement reached with the Florida Public Service Commission ("PSC"); pipeline expansion projects; contributions from the acquisitions of Boulden, Inc. ("Boulden"), Elkton Gas Company ("Elkton Gas") and Western Natural Gas Company ("Western Natural Gas"); organic growth in the natural gas distribution operations, increased margin from Marlin Gas Services, LLC ("Marlin Gas Services"); higher retail propane margins and from gains on two property sales. The property sales were made possible due to the consolidation of certain operations. These increases were offset by $4.3 million in lower gross margin due to a decline in customer consumption driven primarily by weather and the unfavorable net impact of the coronavirus ("COVID-19") pandemic, which included the establishment of regulatory assets totaling $1.9 million for estimated net expense increases in our distribution utilities in accordance with the applicable PSC orders. We are continuing to review the various cost impacts associated with COVID-19 and will adjust these estimates, as necessary, in the future. Earnings for the fourth quarter were impacted by the factors noted above.

In March 2020, the U.S. Centers for Disease Control and Prevention ("CDC") declared a national emergency due to the rapidly growing outbreak of COVID-19. In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. These restrictions significantly impacted economic conditions in the United States in 2020 and are expected to continue well into 2021. Chesapeake Utilities is considered an "essential business," which allows the Company to continue its operational activities and construction projects while the social distancing restrictions remain in place. In response to the COVID-19 pandemic and related restrictions, the Company implemented its pandemic response plan, which includes having all employees who can work remotely do so in order to promote social distancing and providing personal protective equipment to field employees to reduce the spread of COVID-19. For the year ended December 31, 2020, the estimated consolidated impact that COVID-19 had on our earnings was approximately $1.0 million, after reflecting the impact of the regulatory assets we established in the fourth quarter of 2020 for the net incremental expenses incurred by our natural gas and electric distribution businesses as well as the tax benefits from the CARES Act. Absent these positive impacts, the COVID-19 pandemic significantly reduced our operating income as a result of the reduced consumption of energy largely in the commercial and industrial sectors and incremental expenses incurred, including additional personal protective equipment, recording higher levels of bad debt expense and authorizing premium pay for frontline field personnel. The additional operating expenses we incurred support the ongoing delivery of our essential services during these unprecedented times. We will continue to monitor developments affecting our employees, customers, suppliers, stockholders and take additional precautions as warranted to operate safely and to comply with the CDC, Occupational Safety and Health Administration, and state and local requirements in order to protect our employees, customers and the communities.

"To say that 2020 was another remarkable year of performance would be an understatement. Our employees helped the Company deliver another year of record-breaking performance, our 14th year of consecutive earnings growth, despite the many headlines and challenges that not only faced us as a company but at a personal level and also as a country - a global pandemic, social justice inequities and political turmoil. Our team rose to the challenges, working together to deliver strong performance, to capitalize on many new growth opportunities, to keep our current expansion projects on target, and to drive efficiency, increased collaboration and continuous improvement across the organization," stated Jeffry M. Householder, President and Chief Executive Officer. "Our employees were determined that the challenges before us would not sidetrack our long-standing track record. We reported record earnings, added customers at a record pace, prudently issued equity to restore our capital structure back to our target ratio, and achieved positive shareholder returns. Strategically, we successfully completed seamless integrations of Boulden, Elkton Gas and Western Natural Gas - all while continuing to harvest organic growth, successfully settling the Hurricane Michael limited proceeding, expanding our pipeline and distribution service capacity and ensuring safe, reliable and clean energy service to our customers while staying connected to our communities. In recognition of our team's success and our future outlook as guided by our most recent strategic plan update, we have affirmed our existing financial guidance through 2022 and also extended our earnings and capital guidance through 2025."

Capital Investment and Earnings Guidance Update

The Company has continued to review its projections and affirms its EPS guidance of $4.70 to $4.90 per share for 2022, as previously announced in February 2020. After taking into consideration its recent strategic planning process, the expected impacts of COVID-19, including the anticipated regulatory relief and opportunities for continued collaboration across the enterprise, the Company is extending its EPS guidance for three more years through 2025 to a range of $6.05 to $6.25 per share.

As the basis for its expanded EPS guidance, the Company's updated strategic plan supported the extension of its capital expenditure guidance. At the end of 2017, Management provided capital expenditure guidance of $750 million to $1 billion for the five years ended 2022. Through 2020, the Company has expended approximately $677.7 million and therefore, expects to hit the low end of the capital guidance range one year early in 2021. Given the capital forecast within the updated strategic plan, the Company is issuing new guidance forecasting capital expenditures of $750 million to $1 billion for the five years ended 2025.

*Unless otherwise noted, EPS information is presented on a diluted basis.

**This press release includes references to non-Generally Accepted Accounting Principles ("GAAP") financial measures, including gross margin. A "non-GAAP financial measure" is generally defined as a numerical measure of a company's historical or future performance that includes or excludes amounts, or that is subject to adjustments, so as to be different from the most directly comparable measure calculated or presented in accordance with GAAP. Our management believes certain non-GAAP financial measures, when considered together with GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period.

The Company calculates "gross margin" by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane, and the cost of labor spent on direct revenue-producing activities and excludes depreciation, amortization and accretion. Other companies may calculate gross margin in a different manner. Gross margin should not be considered an alternative to operating income or net income, both of which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structures for unregulated businesses. The Company's management uses gross margin in measuring its business units' performance.

Operating Results for the Years Ended December 31, 2020 and 2019

Consolidated Results

Year Ended December 31,

(in thousands) 2020 2019 Change Percent Change

Gross margin $350,260$325,104 $25,1567.7 %

Depreciation, amortization and 77,913 63,415 14,498 22.9 %property taxes

Other operating expenses 159,624 155,404 4,220 2.7 %

Operating income $112,723$106,285 $6,438 6.1 %

Operating income for the year ended December 31, 2020 increased by $6.4 million, or 6.1 percent, compared to the same period in 2019. Operating income for the period was reduced by an estimated $6.4 million due to unfavorable impacts of COVID-19, after the establishment of $1.9 million of regulatory assets that were recognized in the fourth quarter of 2020 in accordance with the respective PSC orders. Excluding the negative impacts of COVID-19, operating income for the year increased by $12.8 million. The higher performance for 2020 is a result of many different drivers, including the settlement of the Hurricane Michael regulatory proceeding, pipeline expansions, organic growth, gross margin contributions from natural gas and propane acquisitions completed in 2019 and 2020, and higher retail propane margins per gallon. Further contributing to the improved performance in 2020 was margin growth from the Company's investments in the ongoing Florida Gas Reliability Infrastructure Program ("GRIP") and increased demand for Marlin Gas Services' compressed natural gas ("CNG") transportation services. These increases were partially offset by higher operating expenses related to growth initiatives and reduced customer consumption primarily due to milder weather during 2020.

Regulated Energy Segment

Year Ended December 31,

(in thousands) 2020 2019 Change Percent Change

Gross margin $260,752$240,203 $20,5498.6 %

Depreciation, amortization and 64,367 51,683 12,684 24.5 %property taxes

Other operating expenses 104,261 101,936 2,325 2.3 %

Operating income $92,124 $86,584 $5,540 6.4 %

Operating income for the Regulated Energy segment for 2020 was $92.1 million, an increase of $5.5 million, or 6.4 percent, compared to 2019. As mentioned previously, the Company established $1.9 million in regulatory assets based on the estimated net expense increases associated with COVID-19 as authorized by the various PSCs. Excluding the estimated unfavorable COVID-19 impacts of $4.2 million for the year, operating income increased $9.7 million as a result of the Hurricane Michael regulatory proceeding settlement, higher gross margin from expansion projects completed by Eastern Shore Natural Gas Company ("Eastern Shore") and Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), organic growth in our natural gas distribution businesses, contribution from the Elkton Gas acquisition and margin growth from GRIP. These increases were offset by lower customer consumption driven primarily by milder weather; higher depreciation, amortization and property taxes, including amortization of the regulatory asset associated with the Hurricane Michael regulatory proceeding settlement; new expenses associated with Elkton Gas; and higher other operating expenses.

The key components of the increase in gross margin are shown below:

(in thousands)

Margin contribution from Hurricane Michael regulatory proceeding $10,864settlement

Eastern Shore and Peninsula Pipeline service expansions 8,006

Natural gas distribution customer growth (excluding service 3,370 expansions)

Margin contribution from the Elkton Gas acquisition (completed July1,344 2020)

Florida GRIP 1,239

Eastern Shore margin from capital relocation and non-service 1,033 expansion projects

Unfavorable COVID-19 impacts on gross margin (3,834)

Decreased customer consumption - primarily weather related (1,340)

Other (133)

Year-over-year increase in gross margin $20,549

The major components of the increase in other operating expenses are as follows:

(in thousands)

Unfavorable COVID-19 impacts (higher operating expenses) $2,285

Insurance (non-health) expense - both insured and self-insured 1,442 components

Operating expenses from the Elkton Gas acquisition 651

Deferral of net expense increases of COVID-19 under PSC orders (1,925)

Other variances (128)

Year-over-year increase in other operating expenses $2,325

Unregulated Energy Segment

Year Ended December 31,

(in thousands) 2020 2019 Change Percent Change

Gross margin $89,746 $85,266 $4,4805.3 %

Depreciation, amortization and 13,438 11,598 1,840 15.9 %property taxes

Other operating expenses 55,644 53,730 1,914 3.6 %

Operating income $20,664 $19,938 $726 3.6 %

Operating income for the Unregulated Energy segment for 2020 was $20.7 million, an increase of $0.7 million compared to 2019. Excluding the estimated COVID-19 impacts of $1.7 million, operating income increased $2.4 million as a result of incremental gross margin from the acquisitions of the Boulden and Western Natural Gas propane assets, higher retail propane margins per gallon, increased demand for Marlin Gas Services' CNG transportation services and higher rates from Aspire Energy. These increases were partially offset by reduced gross margins from overall warmer temperatures, higher depreciation, amortization and property taxes, expenses associated with recent acquisitions, and increased insurance expenses.

The key components of the increase in gross margin are shown below:

(in thousands)

Propane Operations

Boulden and Western Natural Gas acquisitions (completed December $3,9602019 and October 2020)

Increased retail propane margins per gallon driven by favorable 1,937 market conditions and supply management

Decreased customer consumption - primarily weather related (2,448)

Marlin Gas Services

Increased demand for CNG services 1,821

Aspire Energy

Higher margins from negotiated rate increases 1,312

Decreased customer consumption - primarily weather related (517)

Unfavorable COVID-19 impacts on gross margin (1,457)

Other variances (128)

Year-over-year increase in gross margin $4,480

The key components of the increase in other operating expenses are as follows:

(in thousands)

Operating expenses from Boulden and Western Natural Gas acquisitions$1,510

Insurance expense (non-health) - both insured and self-insured 645

Other variances (241)

Year-over-year increase in other operating expenses $1,914

Operating Results for the Quarters Ended December 31, 2020 and 2019

Consolidated Results

Three Months Ended December 31,

(in thousands) 2020 2019 Change Percent Change

Gross margin $96,841$88,900$7,9418.9 %

Depreciation, amortization and 20,810 16,078 4,732 29.4 %property taxes

Other operating expenses 40,826 43,181 (2,355)(5.5) %

Operating income $35,205$29,641$5,56418.8 %

Operating income during the fourth quarter of 2020 increased by $5.6 million, or 18.8 percent, compared to the same period in 2019. As mentioned in the annual results discussion, in the fourth quarter of 2020, regulatory assets totaling $1.9 million were recorded related to the net expense increases of COVID-19 incurred in the Company's regulated distribution businesses and authorized by the respective PSCs. This amount included $0.9 million of net expense increases that were previously recognized in the earlier quarters of 2020. Operating income for the quarter also increased as a result of the settlement of the Hurricane Michael regulatory proceeding, higher operating income from organic growth projects (pipeline expansions and new customer additions), gross margin contributions from acquisitions completed in 2019 and 2020, increased demand for Marlin Gas Services' CNG transportation services and margin growth from GRIP. These improvements were partially offset by decreased margin from customer consumption associated with milder weather during the quarter.

Regulated Energy Segment

Three Months Ended December 31,

(in thousands) 2020 2019 Change Percent Change

Gross margin $69,007$63,054$5,9539.4 %

Depreciation, amortization and 17,223 12,989 4,234 32.6 %property taxes

Other operating expenses 26,035 28,791 (2,756)(9.6) %

Operating income $25,749$21,274$4,47521.0 %

Operating income for the Regulated Energy segment increased by $4.5 million in the fourth quarter of 2020 compared to the same period in 2019. Higher operating income was a result of the settlement of the Hurricane Michael regulatory proceeding, expansion projects completed and underway by Eastern Shore and Peninsula Pipeline, contribution from the Elkton Gas acquisition, organic growth in the Company's natural gas distribution businesses and margin from increased investments in the Florida GRIP. These increases were partially offset by higher depreciation, amortization and property taxes including amortization of the regulatory asset associated with the Hurricane Michael regulatory proceeding settlement, new expenses associated with the Elkton Gas acquisition and milder weather. In the fourth quarter of 2020, as mentioned above, $1.9 million of regulatory assets were recorded, which offset the quarter's negative impacts from COVID-19.

The key components of the increase in gross margin are shown below:

(in thousands)

Margin contribution from Hurricane Michael regulatory proceeding $2,603settlement

Eastern Shore and Peninsula Pipeline service expansions 2,529

Margin contributions from the Elkton Gas acquisition (completed in 986 July 2020)

Natural gas growth (excluding service expansions) 873

Florida GRIP 561

Decreased customer consumption - primarily weather related (657)

Unfavorable COVID-19 impacts (1,200)

Other variances 258

Quarter-over-quarter increase in gross margin $5,953

The major components of the decrease in other operating expenses are as follows:

(in thousands)

Deferral of net expense increases of COVID-19 under PSC orders$(1,925)

Facilities maintenance costs and outside services (1,279)

Payroll, benefits and other employee-related expenses (552)

Operating expenses from the Elkton Gas acquisition 540

Unfavorable COVID-19 impacts (higher operating expenses) 342

Other variances 118

Quarter-over-quarter decrease in other operating expenses $(2,756)

Unregulated Energy Segment

Three Months Ended December 31,

(in thousands) 2020 2019 Change Percent Change

Gross margin $27,864$25,926$1,9387.5 %

Depreciation, amortization and 3,568 3,056 512 16.8 %property taxes

Other operating expenses 14,682 14,249 433 3.0 %

Operating income $9,614 $8,621 $993 11.5 %

Operating income for the Unregulated Energy segment increased by $1.0 million for the three months ended December 31, 2020, compared to the same period in 2019. Improved performance was driven by incremental margin from the propane acquisitions of Boulden and Western Natural Gas, margin growth from Marlin Gas Services and higher rates for Aspire Energy. These increases were partially offset by milder weather, expenses associated with recent acquisitions, higher depreciation, amortization and property taxes.

The major components of the increase in gross margin are shown below:

(in thousands)

Marlin Gas Services - increased gross margin from demand for CNG $1,127transportation services

Propane Operations:

Boulden and Western Natural Gas acquisitions (completed December 1,196 2019 and October 2020)

Decreased customer consumption - primarily weather related (897)

Aspire Energy - higher margins from negotiated rate increases 862

Unfavorable COVID-19 impacts on gross margin (312)

Other variances (38)

Quarter-over-quarter increase in gross margin $1,938

The major components of the increase in other operating expenses are as follows:

(in thousands)

Operating expenses from Boulden and Western Natural Gas acquisitions $574

Depreciation, amortization and property tax costs due to new capital 254 investments

Payroll, benefits and other employee-related expenses (263)

Other variances (132)

Quarter-over-quarter increase in other operating expenses $433

Conference Call

Chesapeake Utilities will host a conference call on Thursday, February 25, 2021 at 4:00 p.m. Eastern Time to discuss the Company's financial results for the year and quarter ended December 31, 2020. To participate in this call, dial 877.224.1468 and reference Chesapeake Utilities Corporation's 2020 Financial Results Conference Call. To access the replay recording of this call, the accompanying transcript, and other pertinent quarterly information, use the link CPK - Conference Call Audio Replay, or visit the Investors/Events and Presentations section of Company's website at www.chpk.com.

About Chesapeake Utilities Corporation

Chesapeake Utilities is a diversified energy company engaged in natural gas transmission and distribution; electricity generation and distribution; propane gas distribution; mobile compressed natural gas services; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at https://www.chpk.com.

Please note that Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.

For more information, contact:

Beth W. CooperExecutive Vice President, Chief Financial Officer, and Assistant Corporate Secretary 302.734.6799

Financial Summary

(in thousands, except per-share data)

Year Ended Quarter Ended

December 31, December 31,

2020 2019 2020 2019

Gross Margin

Regulated Energy segment $ 260,752 $ 240,203 $ 69,007 $ 63,054

Unregulated Energy segment 89,746 85,266 27,864 25,926

Other businesses and (238) (365) (30) (80)eliminations

Total Gross Margin $ 350,260 $ 325,104 $ 96,841 $ 88,900

Operating Income

Regulated Energy segment $ 92,124 $ 86,584 $ 25,749 $ 21,274

Unregulated Energy 20,664 19,938 9,614 8,621segment

Other businesses and (65) (237) (157) (254)eliminations

Total Operating Income 112,723 106,285 35,206 29,641

Other income (expense), net 3,222 (1,847) 224 (1,117)

Interest Charges 21,765 22,224 6,313 5,641

Income from ContinuingOperations Before Income 94,180 82,214 29,117 22,883Taxes

Income Taxes on Continuing 23,538 21,114 7,456 5,760Operations

Income from Continuing 70,642 61,100 21,661 17,123Operations

Income (loss) fromDiscontinued Operations, Net 686 (1,349) 691 39of Tax

Gain on sale of Discontinued 170 5,402 - 5,402Operations, Net of tax

Net Income $ 71,498 $ 65,153 $ 22,352 $ 22,564

Weighted Average CommonShares Outstanding:

Basic 16,711,579 16,398,443 17,439,993 16,403,776

Diluted 16,770,735 16,448,486 17,505,291 16,461,112

Basic Earnings Per Share ofCommon Stock

Earnings from Continuing $ 4.23 $ 3.73 $ 1.24 $ 1.05Operations

Earnings from Discontinued 0.05 0.24 0.04 0.33Operations

Basic Earnings Per Share of $ 4.28 $ 3.97 $ 1.28 $ 1.38Common Stock

Diluted Earnings Per Shareof Common Stock

Earnings from Continuing $ 4.21 $ 3.72 $ 1.24 $ 1.04Operations

Earnings from Discontinued 0.05 0.24 0.04 0.33Operations

Diluted Earnings Per Share $ 4.26 $ 3.96 $ 1.28 $ 1.37of Common Stock

Financial Summary Highlights

Key variances in continuing operations for the year ended December 31, 2020included:

(in thousands, except per share data) Pre-tax Net Earnings Income Income Per Share

Year ended December 31, 2019 Reported Results $ 82,214 $ 61,100 $ 3.72from Continuing Operations

Adjusting for unusual items:

Unfavorable COVID-19 impacts (5,864) (4,284) (0.26)

Decreased customer consumption - primarily (4,305) (3,145) (0.19)weather related

Interest expense associated with the early (961) (715) (0.04)extinguishment of FPU mortgage bonds

Favorable income tax impact associated with the - 1,841 0.11CARES Act

Gains from sales of assets 3,162 2,317 0.14

Deferral of COVID expenses under PSC orders 1,925 1,432 0.09

(6,043) (2,554) (0.15)

Increased (Decreased) Gross Margins:

Hurricane Michael Settlement Margin Impact* 10,864 7,936 0.47

Eastern Shore and Peninsula Pipeline service 8,006 5,849 0.35expansions*

Margin from recent acquisitions* 5,304 3,875 0.23

Natural gas growth (excluding service 3,370 2,462 0.15expansions)

Increased retail propane margins per gallon 1,937 1,415 0.08

Increased demand for CNG services for Marlin 1,821 1,331 0.08Gas Services*

Aspire Energy rate increases 1,312 959 0.06

Florida GRIP* 1,239 905 0.05

Eastern Shore margin from capital improvements 1,033 755 0.05and non-service expansion projects*

34,886 25,487 1.52

(Increased) Decreased Other Operating Expenses (Excluding Cost of Sales):

Depreciation and amortization associated withHurricane Michael regulatory proceeding (7,133) (5,210) (0.31)settlement

Depreciation, amortization and property tax (6,262) (4,575) (0.27)costs due to new capital investments

Operating expenses from recent acquisitions (3,269) (2,388) (0.14)

Insurance (2,088) (1,525) (0.09)

Payroll, benefits and other employee-related 716 523 0.03expenses

(18,036) (13,175) (0.78)

Interest charges^(1) (1,232) (900) (0.05)

Increased share count from 2020 equity - - (0.08)offerings

Other income tax effects - (1,060) (0.06)

Lower pension expense 1,777 1,298 0.08

Net Other Changes 614 446 0.01

Year ended December 31, 2020 Reported Results $ 94,180 $ 70,642 $ 4.21from Continuing Operations

* See the Major Projects and Initiatives table later in this press release.

^(1) Interest charges includes amortization of a regulatory liability of$1.5 million related to the Hurricane Michael regulatory proceeding settlement.

Key variances in continuing operations for the fourth quarter ended December 31, 2020 included:

(in thousands, except per share) Pre-tax Net Earnings Income Income Per Share

Fourth Quarter 2019 Reported Results from $22,883$17,123$1.04 Continuing Operations



Adjusting for Unusual items:

Decreased customer consumption - primarily (1,375) (1,023) (0.06) weather related

Unfavorable COVID-19 impacts (1,040) (774) (0.04)

Interest expense associated with the early (961) (715) (0.04) extinguishment of FPU mortgage bonds

Favorable income tax impact associated with - 172 0.01 the CARES Act

Deferral of COVID-19 expenses under PSC 1,925 1,432 0.08 orders

(1,451) (908) (0.05)



Increased (Decreased) Gross Margins:

Hurricane Michael Settlement Margin Impact* 2,603 1,942 0.11

Eastern Shore and Peninsula Pipeline service 2,529 1,881 0.11 expansions*

Margin from recent acquisitions* 2,182 1,623 0.09

Increased demand for CNG services for Marlin 1,127 839 0.05 Gas Services*

Aspire Energy rate increases 862 641 0.04

Natural gas growth (excluding service 873 650 0.04 expansions)

Florida GRIP* 561 417 0.02

10,737 7,993 0.46



(Increased) Decreased Other Operating Expenses (Excluding Cost of Sales):

Depreciation, amortization and property tax (2,530) (1,882) (0.11) costs due to new capital investments

Hurricane Michael settlement agreement - (1,778) (1,326) (0.08) depreciation and amortization impact

Operating expenses from recent acquisitions (1,369) (1,018) (0.06)

Facilities maintenance costs and outside 1,302 968 0.06 services

Payroll, benefits and other employee-related 938 698 0.04 expenses

(3,437) (2,560) (0.15)



Interest Charges^(1) (349) (260) (0.01)

Increased share count from 2020 equity - - (0.06) offerings

Other income tax effects - (272) (0.02)

Lower pension expense 646 481 0.03

Net Other Changes 88 64 -

Fourth Quarter 2020 Reported Results from $29,117$21,661$1.24 Continuing Operations

* See the Major Projects and Initiatives table later in this press release.

^(1) Interest charges includes amortization of a regulatory liability of$0.3 million related to the Hurricane Michael regulatory proceeding settlement.

The following information highlights certain key factors contributing to the Company's results for the year ended December 31, 2020:

Recently Completed and Ongoing Major Projects and Initiatives

The Company constantly pursues and develops additional projects and initiatives to serve existing and new customers, and to further grow its businesses and earnings, with the intention of increasing shareholder value. The following represent the major projects/initiatives recently completed and currently underway. In the future, the Company will add new projects and initiatives to this table once substantially finalized and the associated earnings can be estimated.

Gross Margin for the Period

Year Ended December 31, Estimate for Fiscal

(in thousands) 2019 2020 2021 2022

Pipeline Expansions:

Western Palm Beach County, $2,139 $4,167 $4,984 $5,227 Florida Expansion ^(1)

Del-Mar Energy Pathway ^(1) (2)731 2,462 4,385 6,708

Auburndale 283 679 679 679

Callahan Intrastate Pipeline ^ - 3,851 7,564 7,564 (2)

Guernsey Power Station - - 514 1,486

Total Pipeline Expansions 3,153 11,159 18,126 21,664



CNG Transportation 5,410 7,231 7,900 8,500



RNG Transportation - - 1,000 1,000



Acquisitions:

Boulden Propane 329 3,900 4,200 4,409

Elkton Gas - 1,344 3,992 4,200

Western Natural Gas - 389 1,800 1,854

Total Acquisitions 329 5,633 9,992 10,463



Regulatory Initiatives:

Florida GRIP 13,939 15,178 16,739 17,712

Hurricane Michael regulatory - 10,864 11,014 11,014 proceeding

Capital Cost Surcharge Programs- - 1,500 3,000

Total Regulatory Initiatives 13,939 26,042 29,253 31,726



Total $22,831 $50,065 $66,271$73,353

^(1) Includes gross margin generated from interim services.

^(2) Includes gross margin from natural gas distribution services.

Detailed Discussion of Major Projects and Initiatives

Pipeline Expansions

Western Palm Beach County, Florida ExpansionPeninsula Pipeline is constructing four transmission lines to bring additional natural gas to the Company's distribution system in West Palm Beach, Florida. The first phase of this project was placed into service in December 2018 and generated incremental gross margin of $2.0 million for the year ended December 31, 2020 compared to 2019. The Company expects to complete the remainder of the project in phases through the second quarter of 2021, and estimates that the project will generate annual gross margin of $5.0 million in 2021 and $5.2 million in 2022.

Del-Mar Energy PathwayIn December 2019, the FERC issued an order approving the construction of the Del-Mar Energy Pathway project. Eastern Shore anticipates that this project will be fully in-service by the beginning of the fourth quarter of 2021. The new facilities will: (i) ensure an additional 14,300 Dts/d of firm service to four customers, (ii) provide additional natural gas transmission pipeline infrastructure in eastern Sussex County, Delaware, and (iii) represent the first extension of Eastern Shore's pipeline system into Somerset County, Maryland. Construction of the project began in January 2020, and interim services in advance of this project generated additional gross margin of $1.7 million for the year ended December 31, 2020. The estimated annual gross margin from this project including natural gas distribution service in Somerset County, Maryland, is approximately $4.4 million in 2021 and $6.7 million annually thereafter.

AuburndaleIn August 2019, the Florida PSC approved Peninsula Pipeline's Transportation Service Agreement with the Florida Division of Chesapeake Utilities. Peninsula Pipeline purchased an existing pipeline owned by the Florida Division of Chesapeake Utilities and Calpine, and has completed the construction of pipeline facilities in Polk County, Florida. Peninsula Pipeline provides transportation service to the Florida Division of Chesapeake Utilities; these facilities increased both delivery capacity and downstream pressure as well as introduced a secondary source of natural gas for the Florida Division of Chesapeake Utilities' distribution system. Peninsula Pipeline generated additional gross margin from this project of $0.4 million for the year ended December 31, 2020 compared to 2019 and expects to generate annual gross margin of $0.7 million in 2021 and beyond.

Callahan Intrastate PipelineIn May 2018, Peninsula Pipeline announced a plan to construct a jointly owned intrastate transmission pipeline with Seacoast Gas Transmission in Nassau County, Florida. The 26-mile pipeline will serve growing demand in both Nassau and Duval Counties. This project was placed in service in June 2020, one month earlier than initially forecasted, and generated $3.9 million in additional gross margin for the year ended December 31, 2020. The pipeline is expected to generate $7.6 million annually in gross margin in 2021 and beyond.

Guernsey Power StationGuernsey Power Station, LLC ("Guernsey Power Station") and our affiliate, Aspire Energy Express, LLC ("Aspire Energy Express"), entered into a precedent firm transportation capacity agreement whereby Guernsey Power Station will construct a power generation facility and Aspire Energy Express will provide firm natural gas transportation service to this facility. Guernsey Power Station commenced construction of the project in October 2019. Aspire Energy Express is expected to commence construction of the gas transmission facilities to provide the firm transportation service to the power generation facility in the fourth quarter of 2021. This project is expected to produce gross margin of approximately $0.5 million in 2021 and $1.5 million in 2022 and beyond.

CNG Transportation

Marlin Gas Services provides CNG temporary hold services, contracted pipeline integrity services, emergency services for damaged pipelines and specialized gas services for customers who have unique requirements. For the year ended December 31, 2020, Marlin Gas Services generated additional gross margin of $1.8 million compared to the year ended December 31, 2019. The Company estimates that Marlin Gas Services will generate annual gross margin of approximately $7.9 million in 2021 and $8.5 million in 2022, with potential for additional growth in future years. Marlin Gas Services continues to actively expand the territories it serves, as well as leverage its patented technology to serve other markets, including pursuing liquefied natural gas transportation opportunities and renewable natural gas transportation opportunities from diverse supply sources to various pipeline interconnection points, as further outlined below.

RNG Transportation

Noble Road Landfill RNG ProjectIn September 2020, Fortistar and Rumpke Waste & Recycling announced commencement of construction of the Noble Road Landfill RNG Project in Shiloh, Ohio. The project includes the construction of a new state-of-the-art facility that will utilize advanced, patented technology to treat landfill gas by removing carbon dioxide and other components to purify the gas and produce pipeline quality RNG. Aspire Energy will utilize its existing natural gas gathering assets to inject the RNG from this project to its system for distribution to end use customers. Once flowing the RNG volume will represent nearly 10% of Aspire Energy's gas gathering volumes. The project is expected to be in service in the fourth quarter of 2021.

Bioenergy DevcoIn June 2020, the Company's Delmarva natural gas operations and Bioenergy Devco ("BDC"), a developer of anaerobic digestion facilities that create renewable energy and healthy soil products from organic material, entered into an agreement related to the development of a project to create renewable natural gas. BDC and the Company's affiliates are collaborating on this project in addition to several other project sites where organic waste can be converted into a potentially carbon-negative energy source. This project will provide the Company the opportunity to maintain the value of the green attributes of renewable natural gas as the gas is being distributed to natural gas distribution customers.

The renewable natural gas resource created from organic material at BDC's anaerobic digestion facilities in Delaware, will be processed for use by the Company's Delmarva natural gas operations. Marlin Gas Services will transport the sustainable fuel from the BDC facility to an Eastern Shore interconnection, where it will be introduced to the distribution system and ultimately distributed to the Company's natural gas customers.

CleanBay ProjectIn July 2020, the Company's Delmarva natural gas operations and CleanBay Renewables Inc. ("CleanBay") announced a new partnership to bring renewable natural gas to the Company's operations. As part of this partnership, Eastern Shore and Marlin Gas Services will transport the renewable natural gas produced at CleanBay's planned Westover, Maryland bio-refinery, to the Company's natural gas infrastructure in the Delmarva Peninsula region where it is ultimately delivered to the Delmarva natural gas distribution end use customers.

At the present time, the Company expects to generate $1.0 million in 2021 in incremental margin from renewable natural gas transportation beginning in 2021. As the Company continues to finalize contract terms associated with some of these projects, additional information will be provided regarding incremental margin at a future time.

Acquisitions

Boulden PropaneIn December 2019, the Company's propane distribution subsidiary, Sharp Energy, Inc. ("Sharp"), acquired certain propane customers and operating assets of Boulden which provides propane distribution service to approximately 5,200 customers in Delaware, Maryland and Pennsylvania. The customers and assets acquired from Boulden have been assimilated into Sharp. The operations acquired from Boulden generated $3.6 million of incremental gross margin for the year ended December 31, 2020 compared to 2019. The Company estimates that this acquisition will generate gross margin of approximately $4.2 million in 2021 and $4.4 million in 2022, with the potential for additional growth in future years.

Elkton GasIn July 2020, the Company closed on the acquisition of Elkton Gas, which provides natural gas distribution service to approximately 7,000 residential and commercial customers within a franchised area of Cecil County, Maryland. The purchase price was approximately $15.6 million, which included $0.6 million of working capital. Elkton Gas' territory is contiguous to Chesapeake's franchised service territory in Cecil County, Maryland. The Company generated $1.3 million in additional gross margin from Elkton Gas for the year ended December 31, 2020 and estimates that this acquisition will generate gross margin of approximately $4.0 million in 2021 and $4.2 million in 2022 and beyond.

Western Natural GasIn October 2020, Sharp acquired certain propane operating assets of Western Natural Gas, which provides propane distribution service throughout Jacksonville, Florida and the surrounding communities, for approximately $6.7 million, net of cash acquired. The acquisition was accounted for as a business combination within the Company's Unregulated Energy Segment in the fourth quarter of 2020. The Company generated $0.4 million in additional gross margin from Western Natural Gas Company in 2020 and estimates that this acquisition will generate gross margin of approximately $1.8 million in 2021 and slightly more in years thereafter.

Regulatory Initiatives

Florida GRIPFlorida GRIP is a natural gas pipe replacement program approved by the Florida PSC that allows automatic recovery, through rates, of costs associated with the replacement of mains and services. Since the program's inception in August 2012, the Company has invested $164.9 million of capital expenditures to replace 331 miles of qualifying distribution mains, including $21.0 million and $16.7 million of new pipes during 2020 and 2019, respectively. GRIP generated additional gross margin of $1.2 million for the year ended 2020 compared to 2019.

Hurricane MichaelIn October 2018, Hurricane Michael passed through FPU's electric distribution operation's service territory in Northwest Florida and caused widespread and severe damage to FPU's infrastructure resulting in 100 percent of its customers in the Northwest Florida service territory losing electrical service.

In August 2019, FPU filed a limited proceeding requesting recovery of storm-related costs associated with Hurricane Michael (capital and expenses) through a change in base rates. FPU also requested treatment and recovery of certain storm-related costs as regulatory assets for items currently not allowed to be recovered through the storm reserve as well as the recovery of capital replaced as a result of the storm. Recovery of these costs included a component of an overall return on capital additions and regulatory assets. In March 2020, FPU filed an update to the original filing to account for actual charges incurred through December 2019, revised the amortization period of the storm-related costs from 30 years as originally requested to 10 years, and included costs related to Hurricane Dorian of approximately $1.2 million in this filing.

In September 2019, FPU filed a petition, with the Florida PSC, for approval of its consolidated electric depreciation rates. The petition was joined to the Hurricane Michael docket. The approved rates, which were part of the settlement agreement in September 2020 that is described below, were retroactively applied effective January 1, 2020.

In September 2020, the Florida PSC approved a settlement agreement between FPU and the Office of the Public Counsel regarding final cost recovery and rates associated with Hurricane Michael. Previously, the Florida PSC approved an interim rate increase, subject to refund, effective January 1, 2020, associated with the restoration effort following Hurricane Michael. FPU fully reserved these interim rates, pending a final resolution and settlement of the limited proceeding. The settlement agreement allowed FPU to: (a) refund the over-collection of interim rates through the fuel clause; (b) record regulatory assets for storm costs in the amount of $45.8 million including interest which will be amortized over six years; (c) recover these storm costs through a surcharge for a total of $7.7 million annually; and (d) collect an annual increase in revenue of $3.3 million to recover capital costs associated with new plant and a regulatory asset for the cost of removal and undepreciated plant. The new base rates and storm surcharge were effective on November 1, 2020. The following table summarizes the impact of Hurricane Michael regulatory proceeding for the year ended December 31, 2020:

For the Year Ended

(in thousands) December 31, 2020

Gross Margin $10,864

Depreciation (1,184)

Amortization of regulatory assets 8,317

Operating income 3,731

Amortization of liability associated with interest (1,475) expense

Pre-tax income 5,206

Income tax expense 1,403

Net income $3,803



Capital Cost Surcharge ProgramsIn December 2019, the FERC approved Eastern Shore's capital cost surcharge to become effective January 1, 2020. The surcharge, an approved item in the settlement of Eastern Shore's last general rate case, allows Eastern Shore to recover capital costs associated with mandated highway or railroad relocation projects that required the replacement of existing Eastern Shore facilities. Eastern Shore expects to produce gross margin of approximately $1.5 million in 2021 and $3.0 million in 2022 from relocation projects.

Other Major Factors Influencing Gross Margin

Weather and ConsumptionWeather conditions accounted for decreased gross margin of $4.3 million in 2020 compared to 2019 and $5.8 million compared to Normal temperatures as defined below. The following table summarizes heating degree day ("HDD") and cooling degree day ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the year and quarter ended December 31, 2020 compared to 2019.

HDD and CDD Information

For the Years Ended For the Quarters Ended December 31, December 31,

2020 2019 Variance2020 2019 Variance

Delmarva

Actual HDD 3,7164,089(373) 1,3001,513(213)

10-Year Average HDD 4,2944,379(85) 1,4971,533(36) ("Normal")

Variance from Normal (578)(290) (197)(20)



Florida

Actual HDD 647 619 28 304 240 64

10-Year Average HDD 763 792 (29) 255 260 (5) ("Normal")

Variance from Normal (116)(173) 49 (20)



Ohio

Actual HDD 5,2185,500(282) 1,8351,967(132)

10-Year Average HDD 5,7015,983(282) 2,0102,133(123) ("Normal")

Variance from Normal (483)(483) (175)(166)



Florida

Actual CDD 2,7753,200(425) 363 360 3

10-Year Average CDD 2,9822,93943 316 314 2 ("Normal")

Variance from Normal (207)261 47 46

Natural Gas Distribution GrowthCustomer growth for the Company's natural gas distribution operations, as a result of the addition of new customers (excluding acquisitions) and the conversion of customers from alternative fuel sources to natural gas service, generated $3.4 million of additional margin for the year ended December 31, 2020 compared to 2019. The average number of residential customers served on the Delmarva Peninsula and Florida increased by approximately 5.3 percent and 4.1 percent, respectively during 2020. On the Delmarva Peninsula, a larger percentage of the margin growth was generated from residential growth given the expansion of gas into new housing communities and conversions to natural gas as our distribution infrastructure continues to build out. In Florida, as new communities continue to build out due to population growth and infrastructure is added to support the growth, there is increased load from both residential customers as well as new commercial and industrial customers. The details are provided in the following table:

Gross Margin Increase

For the Year Ended December 31, 2020

(in thousands) Delmarva PeninsulaFlorida

Customer growth:

Residential $ 1,516 $807

Commercial and industrial380 667

Total customer growth $ 1,896 $1,474

Capital Investment Growth and Associated Financing Plans

The Company's capital expenditures were $195.9 million (including the purchase of certain propane assets of Western Natural Gas and certain natural gas assets of Elkton Gas) for 2020. The following table shows total capital expenditures for the year ended December 31, 2020 by segment and by business line:

For the Year Ended

(dollars in thousands) December 31, 2020

Regulated Energy:

Natural gas distribution $ 85,257

Natural gas transmission 58,609

Electric distribution 3,234

Total Regulated Energy 147,100

Unregulated Energy:

Propane distribution 15,455

Energy transmission 19,398

Other unregulated energy 11,442

Total Unregulated Energy 46,295

Other:

Corporate and other businesses 2,480

Total 2020 Capital Expenditures$ 195,875

The Company's actual 2020 capital expenditures fell in the range of investment guidance provided in November 2020 of between $195 million to $215 million. From January 1, 2018 through December 31, 2020, the Company has invested $677.7 million in new capital expenditures.

The following table shows a range of the forecasted 2021 capital expenditures by segment and by business line:

Estimate for Fiscal 2021

(dollars in thousands) Low High

Regulated Energy:

Natural gas distribution $79,000 $85,000

Natural gas transmission 55,000 60,000

Electric distribution 9,000 13,000

Total Regulated Energy 143,000 158,000

Unregulated Energy:

Propane distribution 9,000 12,000

Energy transmission 14,000 15,000

Other unregulated energy 8,000 12,000

Total Unregulated Energy 31,000 39,000

Other:

Corporate and other businesses 1,000 3,000

Total 2021 Forecasted Capital Expenditures$175,000 $200,000

The capital expenditure projection is subject to continuous review and modification. Actual capital requirements may vary from the above estimates due to a number of factors, including changing economic conditions, capital delays because of COVID-19 that are greater than currently anticipated, customer growth in existing areas, regulation, new growth or acquisition opportunities and availability of capital. Historically, actual capital expenditures have typically lagged behind the forecasted amounts.

In light of the 2021 capital expenditure projection, the Company expects to reach the low end of the current capital expenditures guidance range of $750 million to $1 billion for the five-year period between 2018-2022, in 2021 - one year early. In conjunction with resetting the EPS guidance, the Company is also resetting and extending its capital expenditure guidance as well. Given its updated strategic plan, the Company is issuing new guidance forecasting capital expenditures of $750 million to $1 billion over the future five-year period (2021-2025).

The Company's target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent. The Company's equity to total capitalization ratio, including short-term borrowings, was 50 percent as of December 31, 2020 within the target range.

The Company may utilize more temporary short-term debt, when the financing cost is attractive, as a bridge to the permanent long-term financing, or if the equity markets are more volatile. In September 2020, the Company entered into a $375.0 million syndicated revolving line of credit (the "Revolver"), with six participating lenders. The Revolver expires on September 29, 2021 and has a tiered commitment fee and interest rate schedule, based upon a pre-determined spread over LIBOR, depending upon the Company's total capitalization. As of December 31, 2020, the applicable commitment fee was 0.175 percent and the spread over LIBOR for the interest rate was 1.125 percent. As a result of entering into the Revolver, in September 2020, the Company terminated and paid outstanding balances for all previously existing bilateral lines of credit and its previous revolving credit facility. The Company's available credit under the new Revolver at December 31, 2020 was $196.9 million. More information about the Revolver as well as the renewal of several debt private placement shelf agreements is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

In terms of equity capital, the Company also maintains an effective shelf registration statement with the Securities and Exchange Commission for the issuance of shares under its Dividend Reinvestment and Direct Stock Purchase Plan (the "DRIP"). In June 2020, the Company also filed a shelf registration statement with the Securities and Exchange Commission, which provides for the issuance of shares of its common stock via a variety of offering types. In August 2020, the Company filed a prospectus supplement under the shelf registration statement for an At-the-Market ("ATM") program under which the Company may issue and sell shares of common stock up to an aggregate offering price of $75.0 million. In the third and fourth quarters of 2020, the Company issued 1.0 million shares of common stock through our DRIP and the ATM programs and received net proceeds of approximately $83.0 million which were added to our general funds.

Depending on the Company's capital needs and subject to market conditions, in addition to other debt and equity offerings, the Company may consider, as necessary in the future, issuing additional shares under the direct stock purchase component of the DRIP, the ATM program, or pursuant to its shelf registration statement.

Chesapeake Utilities Corporation and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

For the Periods Ended December 31, 2020 and 2019

(in thousands, except shares and per share data)

Year Ended Fourth Quarter

2020 2019 2020 2019

Operating Revenues

Regulated Energy $ 352,746 $ 343,006 $ 93,511 $ 91,405

Unregulated Energy 152,526 154,151 48,060 45,166

Other businesses and (17,074) (17,552) (4,533) (4,597)eliminations

Total Operating Revenues 488,198 479,605 137,038 131,974

Operating Expenses

Regulated energy cost of 91,994 102,803 24,504 28,351sales

Unregulated energy and 45,944 51,698 15,691 14,723other cost of sales

Operations 142,055 137,845 36,540 38,285

Maintenance 15,587 15,679 3,892 4,479

Gain from a settlement (130) (130) - -

Depreciation and 58,117 45,424 15,324 11,812amortization

Other taxes 21,908 20,001 5,881 4,683

Total operating expenses 375,475 373,320 101,832 102,333

Operating Income 112,723 106,285 35,206 29,641

Other income (expense), 3,222 (1,847) 224 (1,117)net

Interest charges 21,765 22,224 6,313 5,641

Income from ContinuingOperations Before Income 94,180 82,214 29,117 22,883Taxes

Income Taxes on Continuing 23,538 21,114 7,456 5,760Operations

Income from Continuing 70,642 61,100 21,661 17,123Operations

Income/(Loss) fromDiscontinued Operations, 686 (1,349) 691 39Net of tax

Gain on sale ofDiscontinued Operations, 170 5,402 - 5,402Net of tax

Net Income $ 71,498 $ 65,153 $ 22,352 $ 22,564

Weighted Average CommonShares Outstanding:

Basic 16,711,579 16,398,443 17,439,993 16,403,776

Diluted 16,770,735 16,448,486 17,505,291 16,461,112

Basic Earnings Per Share ofCommon Stock:

Earnings Per Share from $ 4.23 $ 3.73 $ 1.24 $ 1.05Continuing Operations

Earnings from 0.05 0.24 0.04 0.33Discontinued Operations

Basic Earnings per Share of $ 4.28 $ 3.97 $ 1.28 $ 1.38Common Stock

Diluted Earnings Per Shareof Common Stock:

Earnings Per Share from $ 4.21 $ 3.72 $ 1.24 $ 1.04Continuing Operations

Earnings/(Loss) Per Sharefrom Discontinued 0.05 0.24 0.04 0.33Operations

Diluted Earnings Per Share $ 4.26 $ 3.96 $ 1.28 $ 1.37of Common Stock

Chesapeake Utilities Corporation and Subsidiaries

Consolidated Balance Sheets (Unaudited)

As of December 31,

Assets 2020 2019

(in thousands, except shares and per share data)

Property, Plant and Equipment

Regulated energy $ 1,577,576 $ 1,441,473

Unregulated energy 300,647 265,209

Other 30,769 39,850

Total property, plant and equipment 1,908,992 1,746,532

Less: Accumulated depreciation and amortization (368,743) (336,876)

Plus: Construction work in progress 60,929 54,141

Net property, plant and equipment 1,601,178 1,463,797

Current Assets

Cash and cash equivalents 3,499 6,985

Trade and other receivables 61,675 50,899

Less: Allowance for credit losses (4,785) (1,337)

Trade receivables, net 56,890 49,562

Accrued revenue 21,527 20,846

Propane inventory, at average cost 5,906 5,824

Other inventory, at average cost 5,539 6,067

Regulatory assets 10,786 5,144

Storage gas prepayments 2,455 3,541

Income taxes receivable 12,885 20,050

Prepaid expenses 13,239 13,928

Derivative assets, at fair value 3,269 -

Other current assets 436 2,879

Total current assets 136,431 134,826

Deferred Charges and Other Assets

Goodwill 38,731 32,668

Other intangible assets, net 8,292 8,129

Investments, at fair value 10,776 9,229

Operating lease right-of-use assets 11,194 11,563

Regulatory assets 113,806 73,407

Receivables and other deferred charges 12,079 49,579

Total deferred charges and other assets 194,878 184,575

Total Assets $ 1,932,487 $ 1,783,198

Chesapeake Utilities Corporation and Subsidiaries

Consolidated Balance Sheets (Unaudited)

As of December 31,

Capitalization and Liabilities 2020 2019

(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 8,499 7,984(authorized 50,000,000 shares)

Additional paid-in capital 348,482 259,253

Retained earnings 342,969 300,607

Accumulated other comprehensive loss (2,865) (6,267)

Deferred compensation obligation 5,679 4,543

Treasury stock (5,679) (4,543)

Total stockholders' equity 697,085 561,577

Long-term debt, net of current maturities 508,499 440,168

Total capitalization 1,205,584 1,001,745

Current Liabilities

Current portion of long-term debt 13,600 45,600

Short-term borrowing 175,644 247,371

Accounts payable 60,253 54,068

Customer deposits and refunds 33,302 30,939

Accrued interest 2,905 2,554

Dividends payable 7,683 6,644

Accrued compensation 13,994 16,236

Regulatory liabilities 6,284 5,991

Derivative liabilities, at fair value 127 1,844

Other accrued liabilities 15,240 12,077

Total current liabilities 329,032 423,324

Deferred Credits and Other Liabilities

Deferred income taxes 205,388 180,656

Regulatory liabilities 142,736 127,744

Environmental liabilities 4,299 6,468

Other pension and benefit costs 30,673 30,569

Operating lease - liabilities 9,872 9,896

Deferred investment tax credits and other 4,903 2,796liabilities

Total deferred credits and other liabilities 397,871 358,129

Environmental and other commitments andcontingencies ^(1)

Total Capitalization and Liabilities $ 1,932,487 $ 1,783,198

^(1)Refer to Note 20 and 21 in the Company's Annual Report on Form 10-K forfurther information.

Chesapeake Utilities Corporation and Subsidiaries

Distribution Utility Statistical Data (Unaudited)

For the Three Months Ended December 31, 2020 For the Three Months Ended December 31, 2019

Delmarva Chesapeake Delmarva Chesapeake Utilities' FPU NG FPU Electric NG Utilities' FPU NG FPU Electric NG Distribution^(2) Florida NG Distribution Distribution Distribution Florida NG Distribution Distribution Division Division

Operating Revenues

(in thousands)

$ 15,167 $ 1,655 $ 8,690 $ 10,401 $ 15,569 $ 1,587 $ 8,169 $ 10,618Residential

7,598 1,706 6,436 8,778 8,087 1,622 6,784 9,416Commercial

2,693 3,302 6,676 380 2,300 3,232 6,753 511Industrial

Other (1) 4,825 1,169 3,470 (1,668) 5,425 419 356 (2,145)

TotalOperating $ 30,283 $ 7,832 $ 25,272 $ 17,891 $ 31,381 $ 6,860 $ 22,062 $ 18,400Revenues

Volumes (in Dts for natural gas and KWHs for electric)

829,951 94,775 396,777 69,737 918,892 92,584 355,510 71,039Residential

940,837 1,153,767 378,371 73,024 977,449 1,157,869 439,246 76,916Commercial

1,568,322 6,546,177 1,187,577 828 1,410,990 7,095,966 1,280,375 9,546Industrial

Other 73,937 - 899,896 - 82,532 - 802,196 -

Total 3,413,047 7,794,719 2,862,621 143,589 3,389,863 8,346,419 2,877,327 157,501

Average Customers

85,434 18,325 61,151 25,229 74,884 17,511 58,280 24,759Residential

7,790 1,591 4,014 7,315 7,112 1,556 3,959 7,271Commercial

196 16 2,521 2 169 16 2,455 2Industrial

Other 9 - 15 - 19 - 12 -

Total 93,429 19,932 67,701 32,546 82,184 19,083 64,706 32,032

For the Year Ended December 31, 2020 For the Year Ended December 31, 2019

Chesapeake Chesapeake Delmarva Utilities' FPU NG FPU ElectricDelmarva Utilities' FPU NG FPU Electric Florida NG DistributionDistributionNG Distribution NG Distribution^(2)Division DistributionFlorida NG Distribution Division

Operating Revenues (in thousands)

Residential $64,640 $ 6,428 $32,547 $45,550 $62,708 $ 6,232 $32,016 $45,738

Commercial 30,788 6,498 24,247 34,494 33,070 6,418 26,708 38,254

Industrial 9,138 13,055 25,999 1,336 8,314 12,682 24,520 2,128

Other (1) 290 4,869 7,356 (4,517) 152 3,153 (826) (8,704)

Total Operating $104,856 $ 30,850 $90,149 $76,863 $104,244 $ 28,485 $82,418 $77,416 Revenues



Volumes (in Dts for natural gas and KWHs for electric)

Residential 3,697,300 364,048 1,533,316 305,020 3,871,032 352,104 1,392,382 306,445

Commercial 3,671,768 4,424,053 1,497,452 293,262 3,776,388 4,475,776 1,714,574 310,856

Industrial 5,236,104 27,562,112 4,653,692 14,806 5,358,474 27,768,125 4,968,745 27,929

Other 270,013 - 2,900,247 - 220,541 - 2,574,925 -

Total 12,875,185 32,350,213 10,584,707 613,088 13,226,435 32,596,005 10,650,626 645,230



Average Customers

Residential 84,191 17,920 60,016 25,044 73,995 17,262 57,653 24,573

Commercial 7,764 1,584 3,990 7,280 7,097 1,546 3,932 7,243

Industrial 195 16 2,514 2 169 17 2,436 2

Other 16 - 14 - 15 - 12 -

Total 92,166 19,520 66,534 32,326 81,276 18,825 64,033 31,818



^(1) Operating Revenues from "Other" sources include unbilled revenue, under(over) recoveries of fuel cost, conservation revenue, other miscellaneouscharges, fees for billing services provided to third parties and adjustmentsfor pass-through taxes.

^(2) Operating revenues, volumes and average customers for the Delmarva naturalgas distribution operations includes those for Elkton Gas which was acquired inJuly 2020.

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SOURCE Chesapeake Utilities Corporation