Good day, everyone, and welcome to the Chesapeake Utilities Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Alex Whitelam, Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. We appreciate you joining today as we highlight Chesapeake Utilities Fourth Quarter and Full Year Results for 2022. As you saw in our press release issued yesterday, the company finished the year with strong financial results despite the sweeping changes in the macroeconomic environment. Given our 2022 results and positive outlook, we increased our EPS and capital expenditures guidance, which continues our long-proven track record of delivering top-level performance. As shown on Slide 2, participating with me on the call today are Jeff Householder, President and Chief Executive Officer; Beth Cooper, Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary; and Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer. We also have other members of our management team joining us virtually. Today's presentation can be accessed on our website under the Investors page and Events and Presentation subsection. After our prepared remarks, we will open the call up for questions. Moving to Slide 3. I'd like to remind you that matters discussed in this conference call may include forward-looking statements that involve risks and uncertainties. Forward-looking statements and projections could differ materially from our actual results. The safe harbor for forward-looking statements section of the company's 2022 Form 10-K provides further information on the factors that could cause such statements to differ from our actual results. Additionally, the company evaluates its performance based on non-GAAP adjusted gross margin and has provided the appropriate disclosures in accordance with the SEC's Regulation G. A reconciliation of GAAP gross margin to non-GAAP adjusted gross margin is provided in the appendix of this presentation and in our earnings release. Now I'll turn the call over to Jeff to provide some opening remarks on the company's financial results, including the key drivers of our record performance. Jeff?

Thank you, Alex. Good morning, and thank you for joining our call today. To start on Slide 4. I'd like to thank and congratulate all of my colleagues for another record year at Chesapeake Utilities. The dedication and hard work of our employees is the backbone of our success. In 2022, we hit a number of important and impressive milestones, not the least of which was the achievement of our 16th consecutive year with increased earnings, an achievement that very few companies are forced on us to accomplish. For the year, we reported earnings per share of $5.04, which was an increase of 6.6% compared to 2021. This level of earnings growth was the result of more than $37 million of incremental adjusted gross margin and continued expense management throughout the year. Our margin growth was largely driven by our recent acquisitions, transmission service expansions, pipeline replacement programs and strong natural gas distribution customer growth in both our Delmarva and Florida service territories. They also benefited from increased margins and demand for services in our unregulated businesses. We took important steps throughout the year to mitigate higher costs associated with increased interest rates and the inflationary environment. Beth will talk about this in a bit, but I'd like to again thank all our colleagues who work hard to generate a record level of margin growth while managing expenses across our businesses. A great job by all. 2022 was our 62nd consecutive year of paying quarterly dividends. Our track record of paying increased dividends annually now stands at 19 consecutive years. Our strong conviction to support dividend growth through earnings growth continues to provide long-term return upside for our investors. Our 2022 capital investment level was lower than originally anticipated. For the year, we deployed $141 million in capital expenditures. As…

Thank you, Jeff, and good morning, everyone. I'd also like to congratulate and acknowledge the team for an outstanding year. Achieving our success would not be possible without the incredible work of our talented workforce. Let me provide some additional details on our recent performance. As you'll see on slide 8, diluted earnings per share were $5 and 4 cents for the year, an increase of 6.6% over 2021. More specifically, some of the key margin drivers for the year included contributions from the acquisitions of Diversified Energy, Davenport, Fernando Gas and Theia meter station, continued infrastructure expansions and strong customer organic growth in our own natural gas distribution businesses. Also, additional growth from the various regulated infrastructure programs and recovery mechanisms in our Florida, Elton and Eastern Shore business units. We achieved higher margins per gallon in our legacy propane businesses and there was increased demand for Marlin CNG, RNG and LNG services and finally increased consumption in our natural gas distribution protein and aspire energy businesses. On slide nine, our financial summary shows adjusted gross margin increased 14.1 million and $37.2 million for the fourth quarter and full year respectively. Operating income in the quarter increased an impressive 16.6% over last year's fourth quarter, and for the year, operating income was up 9% compared to 2021. While interest cost increased over 21% year over year, Chesapeake still delivered its six-piece consecutive year of increased earnings and at a pace of 6.6%. On slide 10, let me walk through the key drivers of our approximate 15% earnings growth in the quarter. First, we recognize a penny gain from interest received from a federal income tax refund. Contributions from our recent acquisitions generated an incremental $0.13 in earnings for the quarter. Our poor businesses delivered additional margin contributions that increased…

Thank you, Beth, and good morning. It is good to be with you all. On Slide 17 and 18 regulatory initiatives, including details on the natural gas base rate case proceeding in Florida. On January 21, 2023, the Florida PSC approved of approximately $171.2 million for our 4 Florida gas units, which will now be consolidated. This approval included a common equity return of 10.25%. In addition to the incremental $17.2 million, approximately $19.9 million of adjusted gross margin formerly recovered through the gas reliability infrastructure program surcharge will be incorporated into base rates. The new rates are expected to be finalized in mid-March, following the PSB vote on Tuesday and will be implemented for all meter readings beginning March 1, 2023. Additionally, Florida Public Utilities storm protection plan and storm protection plan cost recovery mechanisms were approved in the fourth quarter of 2022. These plans allow for the recovery of investments to further protect our electric system in the event of a storm and prevent loss of service. We expect approximately $1.1 million in adjusted gross margin associated with these plans for 2023, $2.1 million in 2024 and continued investment going forward. As mentioned, SKU is nearing completion of its gas reliability infrastructure program, which began in 2012. Through the end of 2022, we have invested more than $200 million to replace approximately 353 miles of qualified distribution mains, increasing the safety and reliability of our systems for many Floridians. In Elk in Maryland, we continue to invest in the systems integrity by upgrading the adamant into service towards the end of 2021 and going forward, we expect the project will generate $400,000 in adjusted gross margin for 2023 and beyond. Finally, our Eastern Shore natural gas interstate transmission unit has authority to recover capital costs associated with mandated…

Given our strong performance in 2022, the projects in our pipeline of opportunities and our overall outlook for growth, we've increased our capital investment and earnings expectations. Let me begin with capital expenditures on Slide 21, where we show our historical capital expenditures going since 2022, impacted our ability to deploy capital. However, we see $40 million of investments shifting into 2023. Therefore, we expect approximately $200 million to $230 million of total capital investment this year. You may also recall that we do not include any acquisitions in this guidance range. So any potential deals closed in 2023 would be additive, and we would adjust our guidance accordingly. On Slide 22, given the $369 million we have invested in 2021 and 2022, we've updated our long-term capital expenditures range to $900 million to $1.1 billion for the 2021 through 2025 period. This new range indicates a $125 million increase at midpoint compared to our previous range of $750 million to $1 billion. Turning to Slide 23, let me provide our updated EPS guidance. In 2025, we now expect to deliver diluted earnings per share in the range of $6.15 to $6.35. This is an increase from our previous guidance range of $6.05 to $6.25. Our new range represents a compound annual growth rate of 9.9% to 10.3% over the 8-year period from 2017 through 2025. To close on Slide 24, 2022 was another record year for Chesapeake Utilities. We're pleased with our performance, and we remain well positioned to deliver strong financial performance in 2023 and beyond. Our proven strategy and business model, along with the strength of our balance sheet, paved the way for a bright future, one that allows us to expand our regulated utilities and our highly complementary unregulated businesses. We're also excited with the opportunities we see to advance the sustainability of the communities we serve and continue our track record of top quartile financial performance. And with that, Alex, why don't we open it up for questions.

Thanks, Jeff. Todd, please open the line.

[Operator Instructions]. Our first question will come from Chris Ellinghaus with Siebert Williams Shank.

What can we expect from RNG efforts in the next 12 months or so given your acquisition and your new project, should we be expecting additional news out of that area?

Well, I would hope so. We are fairly focused right now, as you might imagine, on the Circle Dairy project that we've announced and I think later this afternoon. In fact, we're having a ground breaking over on that site. And so we'll be working pretty hard to get that under construction and up and running the early part of next year. And along with that, we continue to look for opportunities to engage our Marlin Gas Services business and transporting R&D, including deliveries from that dairy into our new interconnection point in Uli, Florida. And beyond that, we obviously bought the Planet Found assets last year with the notion that we would bring in additional technical expertise for poultry waste. And so we're continuing to pursue that. So there are, I think, a number of opportunities for pipeline development that would support delivery of RNG into the market area, opportunities for Marlin to transport RNG. We're certainly going to build the [indiscernible] and gas processor at Full Circle Dairy. And then we continue down the path to take a very hard look at poultry-related waste energy projects on the Delmarva in Florida and a couple of other states, certainly in Ohio. So I think you'll see us actively look for projects. We're not running out trying to buy the first thing that we see. Obviously, that hasn't been our course of action. We're pretty deliberate about this stuff. We are fairly conservative in our view of these projects, and we're looking for things that not only support an environmental objective, but they also are profitable for our shareholders. So we're carefully exploring a lot of opportunities.

Okay. Great. The increase in the guidance, was there anything specific related to that? Or is that just increasing confidence overall?

It Chris is both, really. I mean, there's multiple projects that were underway. And then as you're familiar, we have a strategic planning process that we undertake every year looking at the various projects across our enterprise. And so as we've recently come out of our kind of last strategic planning session, looking at projects, we had right into the next one. And so it gave us an opportunity to evaluate where we thought the projects that are underway and those that are going to start to go into the queue where those would likely land in regards to CapEx and earnings. And that was really the impetus to raise at $0.10, both at the low and high end.

Okay. And as far as the supply chain goes, do you feel like the issues that affected 2022 are behind you and aren't likely to affect the next few years of capital?

I'd like to think that that's the case. It was interesting, a lot of the supply chain issues that ultimately impacted some of our projects were our supply chain issues. It wasn't that we couldn't get pipe or meters or fittings or anything like that. We were seeing our customers or potential customers having difficulties accessing CNG vehicles, for example. So the same type of chip issues and other supply chain issues that were affecting vehicles across the globe, we're also affecting the delivery of vehicles that we were poised to fuel. And so some of the margins, for example, that we were presuming would show up, didn't show up because they couldn't get the vehicles. And so you're beginning to see that clear up as we're seeing it throughout the vehicle markets outside of CNG. We also had a number of customers, large scale customers that we're contemplating fuel conversions to natural gas. And obviously, when you saw the market changes in the supply areas, moving the natural gas prices around creating some volatility that caused some customers to take a step back and think about what they were doing with their fuel toys. And so most all of that has now cleared up because that market hasn't dropped back to where we'd like to see it, but the volatility seems to be moving out of it. So we have those kinds of issues that were affecting us, and it wasn't so much us as it was a lot of issues for our customers trying to make choices and access vehicle products.

That makes a lot...

I'm sorry. Because the only other thing I was going to add, and Jeff, if you want to add to this would be one of the things that we hope we will not see as many delays in would be in some of the regulatory reviews that our projects undertake. And so Chris, we've tried to think about that and look at that very carefully as we've set our CapEx guidance for this year, but our Southern expansion project, for example, took a lot longer than we originally expected. So we're hoping in 2023, we don't experience some of those regulatory and permitting delays that we did experience in 2022, but that's, to me, something that there could be uncertainty around...

Yes, that's an excellent point. And I think what you've seen us well, you haven't seen it I'll tell you what we are doing now is actually contemplating regulatory processes, especially at FERC, but also at the state level in many cases, that are just going to take longer than traditionally we've seen in the past. And so we're beginning to build that in, obviously, to our forecast and projections of the timing on these projects and especially the timing of margins coming on.

You guys have continued to have very strong customer growth. But with inflation, has this put you any closer to regulatory schedule changes in the northern territories?

We -- Chris, we're continuing, again, to see very strong customer growth in our northern service territory. But we are going to be required in Maryland as part of an acquisition that we did to actually go back into Maryland, and we'll be approaching that on a consolidated basis, similar to what we did in Florida. In Delaware, certainly, we'll monitor as we always do our earnings, our returns where they're coming in. But to date, so far, you've seen us have strong customer growth that's been able to sustain us without having to go in for rate cases on a routine basis. So we continue to evaluate it. So far, growth is strong, but we'll keep monitoring it, and there always is the opportunity for us to go in at the appropriate time.

[Operator Instructions] We'll take our next question from Brian Russo with Sidoti & Company.

Just to follow up on the regulatory strategy. You're obviously pending the final order from the Florida PSC. It seems like all of the items that were approved back in January, specifically on cost of service. And I believe it's a 13-month average forward 2020 test year. It seems as if you're able to capture quite a bit of the inflationary pressures and the rising interest rates at your regulated segment. And could you just remind me what percentage of the overall rate base or the overall regulated segment Florida contributes? And then just a follow-up, when do you expect to file in Maryland?

So in regards to the overall business, when you look at just investment in Florida overall, and I can get you more specific numbers, Brian. But Florida is about 45% of our total investment as a company. And when you look at it on a regulated, it's about a 50-50 split. And that includes all regulated investments throughout the company. So Florida is a very big piece of our regulated portfolio. It's actually the largest single by itself state in which we operate and are regulated. And so this -- as you know, this whole rate case initiative that we went in to consolidate all of our various businesses was very significant. It was also significant in that we had not been in since prior to the SPU rate case. Your second question, which was around Maryland, our requirement to come back in Maryland as early 2024. So we'll be preparing and get you ready for that this year.

Okay. Great. And yes, just on the RNG opportunities. Is it fair to say that you now have platforms for growth, both in Delmarva and in Northern Florida to kind of grow off. And when I look at the project large project margin contribution. It seems -- it's only about $1 million or so of incremental margin through 2024. So I was just curious, are we going to see more contribution in 2025, maybe as these projects that have been announced kind of maybe ramp up in terms of scale and margin contribution.

Currently, the plan is -- we're anticipating that full circle [indiscernible] will come on about halfway through 2024. And so the full benefit of that particular project, the full year impact that you would see would be in 2025. In the case of Planet Found, as we had indicated on that particular project, there's some scaling up that we're looking to do in that facility right now. They're taking the gas, so to speak, it's being generated out of the facility that's being used to generate electricity. And so we're looking at some opportunities to actually transfer that to -- or actually process it to be pipeline quality natural gas, a small part of that. And there's also some potential opportunities to expand beyond that. But again, Brian, we haven't said a lot of that into motion yet. So I think realistically, you're talking 2025 or beyond for that. There could be some other projects, as Jeff indicated, that we announced. But again, they take several years from the time that you start, you get all of the permits, et cetera, and you actually can construct the facility. Stuff. I don't know if you want to add anything.

No, I think that's well said. One of the things that we are looking at, as you guys may have been looking at this as well, are the ERANs. And while the federal program that supported the credits for renewable attributes so the green attributes coming out of these projects that were originally directed toward vehicles and Ford displacing gasoline and diesel emission issues that appears to be expanding into electricity. And so some of the projects that were on our list to convert to renewable gas, pipeline quality gas, as Beth mentioned, and move into a pipeline, potentially, you could see them as electric generation projects with a cogeneration or some other generation at site and still be eligible for a fairly significant credits. And so that's beginning to change the view of many of us that are looking at these renewable energy projects and thinking about the economics of trying to introduce the green attributes into a pathway to market into California and to other states that have opportunities to pay us for delivering those green attributes as opposed to keeping them hold and generating renewable electricity from them. So it's an interesting shift and one that we're just starting to evaluate as well. It actually opens up a number of very interesting possibilities for us, especially some of these smaller scale projects.

Okay. Great. And then lastly, just to clarify on the increased 2025 guidance. And it triangulates with the CapEx, but is all the CapEx accounted for, meaning it's in your projects that have been announced on the unregulated side as well as the regulated projects that are embedded currently in the base case base case. I'm trying to get a sense for how do we track your progress in achieving that guidance? And at what point after new projects might be awarded to projects become incremental...

So Brian, I guess, what I would say, and I don't know if this answers your question. So if it doesn't, please feel free to ask me again. But what I would say is in looking at our capital forecast and then trying to identify what we wanted to announce as our CapEx guidance for 2023. We looked at those projects that were in motion. We looked at those projects that are about to be filed or we're pretty far along and expect a filing to be undertaken this year and for us to begin constructing facilities -- on the unregulated side, that would include dollars that are related to investments that we have announced, like the Full Circle dairy project. And then finally, what the number does not include, and we try to separate this out to provide more transparency is it does not include acquisitions because for us, those are opportunistic. And so that was the reason actually in the CapEx chart that was now included within the deck that we broke out the acquisitions, and we actually included the base level of organic CapEx that we've experienced going all the way back to the SPU acquisition. And so you can see that this year, with the dollars that rolled over, coupled with again projects that are either announced very far along soon to be announced or we expect to undertake a little later this year. And we feel like that 200 to 230 really should be the level that we land for the year. If I missed it, please just feel free to ask it again.

Our next question comes from Tate Sullivan with Maxim Group.

On the Wild Lake expansion, I mean, such a big housing development project and you put detail in the press release about the phases of that project. So does the pipeline injection point probably use your Marlin vehicles through completion of the entire project into 2025? Or is that almost permanent that pipeline injection on...

Actually, it's a permanent installation that we made. It's actually a few miles down the pipeline from the actual Wildlight development project that you referenced. We've actually delivered over 1,000 trader loads of RNG into that injection point already from a landfill that was waiting on a pipeline expansion from other utilities to serve it. So it's a fairly active injection point serving really our entire nasal County. And right now you can actually get the gas down the Duvall County and the placement of that point. So it will remain, and we will be moving RNG from the full circle are into that point. So I'm fairly certain of before it's over with. And it will serve not just Wildlight, but potentially other customers, including our Eight Flags CHP plants located on [indiscernible]. So it's in service. It will remain in service. It's capable of receiving not just R&D, but obviously CNG and LNG as well. So we could use it as an emergency service point. We can use it as a peaking facility or to provide obvious R&G deliveries.

Would you say in your entire service territory, is this the first kind of objective that's used that actively? Or do you have others?

Yes. Yes, it is. Yes. We are building a couple of other points like that in our northern service areas. And I suspect before it's over with, and we're already looking at engineering design, we'll have 2 or 3 more in Florida scattered across the Peninsula.

I mean with that comment, I mean -- I mean, 1,000 trailer loads with Marlin, are you operating? And if you can comment, are you operating at full capacity at Marlin? Or do you continue to order and build more tanks from online?

Well, we order and build as the market allows us to. And so I don't mean to be particularly vague there. But I mean, obviously, as we encounter opportunities in the marketplace when we increase our capital assets accordingly, the 1,000 tank loads are more than 1,000 actually from the landfill in North Florida. Again, it was a nice opportunity for us to provide services for the landfill operator and the developer of the RNG project, which was not us and one of our sister utilities here in Florida. And so we look for those types of longer-term contracted opportunities from Marlin to move R&D. That's exactly why we bought that company and what we're trying to do with it. So we're looking for those opportunities all the time, not just in Florida.

And then is Wildlight housing? I remember while a bit ago one of your Analyst Days, I mean, you pointed to many housing development projects. Is Wildlight much larger than any of the housing developments going on in Delaware or forecasts for housing development?

Yes. I wouldn't say that there -- I would say there are large housing developments on the Peninsula, but I wouldn't say, [indiscernible], to your question. I mean Wildlight is enormous and huge as we've talked about. And so 20,000 homes, I cannot recall any developments that up north or that large by themselves. You may have a group of development. Certainly, Shell Brothers and others have built substantial development, much smaller, but they are multiple developments up there. So similar type of opportunity, but I would say, smaller scale overall individually.

And then you mentioned clean energy fuels in the release and is this the first project that you’ve had with that company? And I imagine given that company’s growth can represent more projects going forward. Is that the case? A –Jeff Householder: I think this is – I believe that that’s accurate. We may have done something somewhere along the way for them before, but it wasn’t significant, at least as significant as this is. And so we built a pipeline to serve their facility down in Central Florida. And yes, we’d love to do as many projects as we could with those guys.

There are no further questions in queue at this time. I will turn the floor back over to Jeff Householder for any additional or closing remarks.

Okay. Thank you, and thanks to all of you for joining us this morning. We appreciate your time and your continued interest in the company, and we'll talk to you soon. Good bye.

Thank you. This concludes today's Chesapeake Utilities fourth quarter and full year 2022 earnings conference call. Please disconnect your lines at this time, and --