Chesapeake Utilities Corporation reported lower earnings in the first quarter as warmer weather and increased expenses offset revenue growth.
The company’s net income for the quarter ended March 31, was $19.1 million, compared to $20.4 million in the same quarter of 2016.
Margin growth continued to be strong throughout the Company’s businesses, driven primarily by: income generated from the Eight Flags Energy, LLC Combined Heat & Power plant in Florida, which initiated service in the second quarter of 2016; higher gross margin from the Company’s natural gas marketing operation, Peninsula Energy Services Company, Inc. (“PESCO”); customer growth and service expansions in the company’s natural gas transmission and distribution businesses; and increased gross margin generated by the Florida Gas Reliability Infrastructure Program.
The higher margins were offset by the effects of warmer than normal weather and higher operating expenses.
The first quarter of 2017 was the third warmest first quarter on the Delmarva Peninsula during the last 50 years. The increase in total quarter-over-quarter operating expenses was partly attributable to expenses incurred to pursue growth initiatives and wind down the operations of Xeron, Inc. (“Xeron”), the Company’s former propane and crude oil trading subsidiary.
“First quarter results reflect both the continuing benefits of our growth strategy and the importance of investing in our systems and expanding our staff to deliver excellent service and maximize our future growth opportunities. Margin growth from both our regulated and unregulated businesses largely offset the first quarter impacts of warmer weather and higher costs from expanding our capacity to serve recent and future growth,” stated Michael P. McMasters, CEO of Chesapeake Utilities Corporation.
“The investment in our ability to provide our customers with excellent service and expand our capacity to identify and develop future growth opportunities is critical to ensure that we continue to generate the kind of margin growth we delivered in the first quarter, as we seek to extend our ten years of record reported earnings per share in 2017 and beyond. We will continue to execute our growth plan with financial discipline, which includes walking away from opportunities that do not meet our strict guidelines for risk and return, even after incurring due diligence costs to fully vet them, as we did this quarter, or winding down operations after carefully weighing alternatives, as we did in the case of Xeron,” added McMasters.
