Chesapeake Utilities Corporation (NYSE:CPK) Q4 2023 Earnings Call Transcript
Chesapeake Utilities Corporation (NYSE:CPK) Q4 2023 Earnings Call Transcript February 23, 2024
Chesapeake Utilities Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, and welcome to the Chesapeake Utilities' Fourth Quarter and Full Year 2023 Earnings Conference Call. At this time all participants have been placed on a listen-only mode and the floor will be opened for your questions following the presentation. [Operator Instructions] I would now like to turn the call over to Beth Cooper, Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary. Please go ahead.
Beth Cooper: Thank you, and good morning, everyone. I'm Beth Cooper, Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary of Chesapeake Utilities. We appreciate you joining us today for our fourth quarter and full year 2023 earnings call. Today's presentation can be accessed on our website under the Investors page and Events and Presentation subsection. After our prepared remarks, as we typically do, we will open the call up for questions. As you saw in our press release, we delivered excellent performance in 2023. Our incremental earnings from regulatory initiatives and growth investments, including one month of results from Florida City Gas, more than offset lower energy consumption due to warmer temperatures across our service territories, along with the year's significant increase in interest costs.
These items are detailed within the financial results that we will cover in just a few minutes. With me today are Jeff Householder, Chairman of the Board, President and Chief Executive Officer; and Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer; as well as other members of our management team who are joining us remotely. On Slide 3, we have our typical disclaimers. I would 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 2023 annual report on Form 10-K provides further information on the factors that could cause such statements to differ from our actual results.
Additionally, the company evaluates its performance based on certain non-GAAP measures, including adjusted gross margin, adjusted net income and adjusted earnings per share, and the accompanying information includes the appropriate disclosures in accordance with the SEC's Regulation G. A reconciliation of these non-GAAP measures to the related GAAP measures has been provided in the appendix of this presentation, our earnings release and our 2023 Form 10-K. Now I'd like to turn the call to Jeff. Jeff?
Jeff Householder: Thank you, Beth. Good morning, and thank you for joining our call today. I'll begin with Slide 4, our financial highlights for the year. In 2023, our team executed successfully on all fronts, leading to our 17th year of increased earnings, excluding the Florida City Gas transaction costs. We also had a milestone 20th consecutive year of increased annual dividends. In spite of significantly warmer temperatures and rising interest rates, we generated adjusted EPS of $5.31, representing 5.4% growth over 2022, largely driven by incremental gross margins of $33.9 million. The team's collective efforts drove this performance while successfully consummating the largest acquisition in our history, closing the transaction in record time.
Our legacy businesses continued their impressive growth trajectory as we invested $211 million in capital projects, advanced our regulatory initiatives, and prudently managed expenses. We continued expanding our footprint with strong customer gains in our regulated natural gas distribution businesses, with an impressive 5.4% average residential customer growth rate for our combined Delmarva service territories and nearly 4% in Florida. We also delivered on several opportunities to expand our natural gas transmission systems, and we're not slowing down. Currently, Peninsula Pipeline has four projects before the Florida Public Service Commission for approval. These projects include over 35 miles transmission infrastructure designed to meet growing customer demand in our gas distribution systems.
Additionally, Eastern Shore Natural Gas's Worcester Resiliency upgrade project is progressing well. We'll discuss these expansion projects in more detail later in the presentation. Of course, our most significant growth effort in 2023 was the successful completion of the Florida City Gas acquisition. It was a strategic move for us, more than doubling our footprint in a very attractive market where we have already operated for 40 years. We expect the transaction to drive significant incremental earnings growth well into the future as we deploy our operational and regulatory expertise on a much broader scale. Late in the fourth quarter of 2023, we began the process of integrating our Florida natural gas businesses, which we'll discuss in a moment.
But I'd like to note that we are already executing on projects that demonstrate the value of this strategic acquisition. For example, we are finishing the regulatory applications for new capital projects to connect three landfill RNG sites to FCG's distribution system. We expect these filings to be submitted before the end of the month. In December, we also once again expanded our propane footprint in North Carolina, adding 3,000 new customers with the acquisition of J.T. Lee and Son's propane assets. This acquisition allows us to expand within growth areas in North Carolina and capture synergies with our prior acquisitions in the state. Our performance in 2023, along with our expectations for FCG's contributions, validates our strategic growth models and reinforces our commitment to achieving our earnings and capital guidance.
Today, we are reaffirming our outlook for $6.15 to $6.35 per share in 2025 and $7.75 to $8 in 2028, as well as our five-year capital expenditure guidance of $1.5 billion to $1.8 billion by 2028. We're looking at 2024 as a transition year as we continue the FCG integration and execute on the organic opportunities across our combined businesses. For this reason, we're providing 2024 EPS guidance of $5.33 to $5.45 per share to give you more clarity on our pathway to 2028. Turning now to Slide 5, where we provide details on the growth drivers behind the $33.9 million of incremental margin that we achieved, you can see that we were able to more than offset the impact of the warmer weather and interest rate increases. The key drivers of growth in 2023 were our regulated infrastructure replacement programs and improved cost recovery mechanisms, rate changes resulting from the recent Florida natural gas base rate proceeding, our pipeline expansions and natural gas distribution organic growth and increased fees in margins per gallon in our propane business.
In addition, FCG contributed $8.7 million in December after the completion of the transaction. On Slide 6, we break down our 2023 capital investments, which surpassed $211 million. Approximately 80% of the capital investment in our legacy businesses was in our Regulated Energy segment. I'd like to take a moment to highlight just a couple of the capital projects that we completed in 2023, and that will contribute to incremental margin in 2024. Eastern Shore Natural Gas completed its Southern Expansion project in the fourth quarter of 2023, which will produce adjusted gross margin of $2.3 million in 2024 and beyond. And Peninsula Pipeline completed its Beachside Pipeline Expansion early in the second quarter of 2023. That project contributed $1.8 million to our gross margin in 2023, and will continue to contribute approximately $2.4 million in future years.
Our regulated investments in safety and reliability under our approved infrastructure programs will also continue, including programs like GUARD and SAFE in Florida, where we are able to recognize timely cost recovery on these investments. Last year, we also launched the largest business transformation and technology improvement initiative in the company's history. The first step in the five-year initiative is the implementation of our SAP customer service application, which is intended to improve the customer experience in our regulated utilities, standardized processes across our distribution systems, and drive operational efficiencies. We currently have regulatory approval to defer the cost of the CIS technology implementation, and we'll seek permanent rate recovery of these technology improvements as appropriate in upcoming rate cases or limited proceedings.
Slide 7 shows the impressive customer growth in our regulated natural gas distribution utilities. Our average annual residential customer additions far outpaces the national average, and this trend is expected to continue. You can also see the step change that the FCG acquisition brings in terms of incremental customers. Looking ahead, our customer base is projected to grow annually by approximately 3% in Florida and 4% on Delmarva over the next five years. These projections are driven by expected customer demand in our service territories, which have very attractive demographics as well as our backlog of open lots in existing communities. We have continued to see strong residential customer growth even with the increases in mortgage rates over the past year.
Our disciplined capital investments will drive earnings growth well into the future. Slide 8 shows our major projects and initiatives that will drive incremental margin of approximately $15 million and $11 million in 2024 and 2025, respectively. I'll take a brief moment to highlight a few of the new projects shown here. Our Worcester Resiliency Upgrade project, which Jim will speak about shortly, is an $80 million capital investment currently pending before FERC. We also recently filed four Peninsula Pipeline projects with the Florida Public Service Commission. These transmission projects are designed to increase supply capacity and enhance system reliability, primarily for our distribution operations. We continue to expand our systems in Florida to meet customer demand.
Once approved, we will begin construction immediately and expect to begin generating margins in late 2024 or early 2025. As I mentioned earlier, we are also finalizing the regulatory filings for three RNG transmission projects that will provide pathways for produced RNG to get to market via the Florida City Gas distribution systems. These new projects are also expected to begin generating margin at the end of 2024 and into early 2025. As shown on Slide 9, on November 30, 2023, we successfully completed the FCG acquisition in record time, thanks to the dedication and enthusiasm of our team. Any organization is only as good as its people, and we were thrilled to officially welcome Florida City Gas employees to the Chesapeake Utilities family late last year.
We're lucky to have such a great group join our team. Culturally, there's a strong fit, which certainly helps keep our integration and growth plans on track and on time. Strategically, Florida City Gas also meshes well with our legacy businesses with significant opportunities to drive growth, identify operational synergies and begin to pursue recovery of the transaction premium. We began the integration process for purpose in December, and Beth will discuss our plans in more detail shortly. I'll discuss a few of the broader areas now. One, there are one-time transaction synergies. For example, several FCG management employees return to their former NextEra positions, and we've been able to absorb these jobs within our existing management team.
Two, we are pursuing operating efficiencies across the Florida Natural Gas businesses as well as our entire enterprise. Again, as an example, we will jointly administer both the FPU and FCG infrastructure replacement programs and find operational efficiencies as a result. Three, we are executing proactive regulatory initiatives. For example, we will begin the work to consolidate various tariff provisions as we did previously with our other gas utilities, along with the initial efforts to address the goodwill related to the FCG transaction. And four, we will make prudent capital investments on a much broader scale. I've already mentioned a couple of times the RNG transmission project filings that we're preparing, and we had previously noted the significant expected capital investments over the next five years for FCG infrastructure replacement and to meet FCG customer demand.
The key takeaway here is that the FCG acquisition, along with continued robust investment in our legacy businesses, supports our goal of delivering top quartile performance for years to come. Moving to Slide 10. In December, Sharp added to its propane footprint by acquiring operating assets from JT Lee & Sons in Cape Fear, North Carolina. We added 3,000 customers, about 800,000 gallons of annual propane distribution and 60,000 gallons of propane storage, and we were happy to welcome their talented team. As we said last year, we are not pursuing additional large transformational deals like FCG, but may undertake smaller bolt-on transactions like this one that provides scale and operating efficiencies. With that, I'll turn the call back to Beth.
Beth?
Beth Cooper: Thanks, Jeff. I'll begin with Slide 11, which shows the key drivers of our 2023 performance. Our core businesses continued to generate strong performance, delivering $1.50 of incremental EPS this year. And this was in the face of headwinds from significantly warmer weather that lowered customer consumption and impacted earnings by $0.54. Higher operating expenses linked to growth in our core business resulted in a $0.47 impact, representing only 48.1% of the incremental margin. We were diligent about managing cost to offset warmer temperatures. The company was not immune to the challenging economic environment and the impact that had on interest rates. Those higher rates drove a $0.45 offset. One month of incremental earnings from the Florida City Gas acquisition generated an $0.18 uplift.
As Jeff said, these results are exclusive of the contribution from Florida City Gas' $25 million reserve surplus amortization mechanism or RSAM, which was approved by the Florida Public Service Commission in June 2023. The RSAM is recorded as an increase or decrease to accrued removal costs on the balance sheet with a corresponding increase or decrease to depreciation and amortization expense. The RSAM provided a $5.1 million pretax or $0.20 per share reduction to depreciation expense in 2023. On Slide 12, you can see that adjusted gross margin for 2023 increased $33.9 million and operating income increased $7.9 million or 5.5% for the year. Excluding Florida City Gas transaction-related expenses, our operating income increased $18.2 million or 12.8%.
Interest charges were over 50% higher this year as the effects of the ongoing rising rate environment continued throughout the end of the year, and we incurred additional financing costs associated with Florida City Gas. Again, despite these impacts, adjusted EPS for the year improved by $0.27 per share, representing 5.4% growth. Moving to Slide 13. Adjusted gross margin for our Regulated Energy segment was up 10.4% over last year. Operating income also increased, delivering 18.4% growth as adjusted, driven primarily by, first, permanent rate changes associated with the Florida Natural Gas rate base rate proceedings, second, Florida City Gas’ earnings contribution for December, third, continued strong customer growth in natural gas distribution operations, including propane CGS conversions, fourth, additional pipeline expansions in our natural gas transmission entities, and finally, incremental margin from our regulated infrastructure program.
These factors were partially offset by the weather related reductions in customer consumption as discussed earlier. Adjusted gross margin for the unregulated energy segment increased 2.2% over last year. As you can see on Slide 14, while at the operating income level our results were down by 10.7% versus last year. Lower consumption largely from weather drove the performance, although we partially mitigated this through rate and fee management within propane and Aspire Energy. Slide 15 shows our history of strong dividend growth and specifically the approximate 9% dividend compounded annual growth rate that we have delivered over the last 10 years. This dividend growth has been a key component of the more than 12% compound annual shareholder return over the same period.
We are proud of this history and are committed to continuing our track record of driving value and returns for our shareholders. Our philosophy remains grounded in the pursuit of top quartile earnings growth, which drives top tier dividend growth, as well as continued reinvestment of 45% to 50% of our earnings back into the business to support continued capital investments. Slide 16 shows our earnings outlook, including our diluted EPS outlook for 2024, 2025 and 2028. As you know, we typically provide a medium and longer-term earnings outlook, which aligns with our long-term strategic plan and outlook as well as our investment plans and expected returns. We recognize that we are now a larger company with a markedly larger footprint and more significant growth opportunities.
We are also integrating a company that was a subsidiary of a much larger entity, but which is complementary to our existing operations. Therefore, this year we are providing current year guidance as an exception. Our outlook includes our expectations for integration synergies and efficiencies, as well as some of the scale opportunities that come from deploying our expertise across a broader enterprise. It also reflects the delay in margin ramp from new capital projects that we have identified given our expected timelines for the required approvals and construction. On Slide 17, we have outlined the pathway to our 2024 guidance. Importantly, we continue to expect strong contributions from our legacy assets as well as Florida City Gas. Our legacy businesses are expected to generate approximately $0.40 to $0.50 per share of incremental earnings.
Florida City Gas is projected to add about $0.35 to $0.45 of earnings per share, which includes the interest cost associated with financing the acquisition. We see incremental opportunities to add an additional approximately $0.20 to $0.30 per share across the enterprise as we continue the integration. And finally, the shares issued to finance Florida City Gas will result in an impact of about $1 per share as shown on this slide. We are providing these incremental ranges to give you an indication of the relative size of the contributing factors, and we expect to be able to tighten the incremental ranges over the year as we implement our plan to get us to $5.33 to $5.45 per share. So let me touch on some of these initiatives and the levers we are pulling to achieve our targets.
First, we have cost savings or synergies. This is the broadest category with the largest expected impact for 2024. This bucket includes immediate opportunities from one-off transaction synergies as Jeff mentioned, as well as additional savings we have identified. Already, we have realized cost savings by eliminating some duplicative roles, including several leadership positions where FCG team members remained with NextEra. We also achieved synergies from the absence of certain corporate and shared service costs that NextEra had allocated to this business. Offsetting a portion of these synergies though are some transition costs we are paying to NextEra until we convert over their systems. Additionally, we will also incur some incremental corporate expenses in such areas as audit fees and insurance.
In addition, as you know, we have spent considerable time working to optimize our operations while fostering the culture that has underscored our success. We have worked to eliminate operational silos by simplifying our organizational structure, moving toward greater standardization of our processes, improving technology, and increasing collaboration across our businesses. We are continuing these efforts recognizing we have additional opportunities for these types of improvements across our now larger enterprise. Finally, we will continue to be laser focused on managing our payroll and T&E expenses in the same way and following the same approach we have exhibited over the last several years in managing our cost. As you can see on this slide in green, we also have a number of key levers that we are managing in order to achieve our near-term guidance that provide a pathway to achieving our long-term guidance.
While we have shown some of them as equal pieces, the reality is that some of these may contribute more to our earnings in 2024 as a percentage than in 2025, and some of these areas will have a longer ramp, but a more significant ongoing impact. For example, we are evaluating a number of proactive regulatory initiatives, including considering the timing of a recovery of a portion of the goodwill and consolidating best practices among the two natural gas utilities in regards to many of the various recovery mechanisms. These are just two of the many regulatory items we are evaluating. We do know that we will continue to utilize the $25 million RSAM that we mentioned earlier to enable Florida City Gas to achieve its allowed return. On the technology front, we are already underway in the planning for the Florida City Gas billing system to convert to our new billing system.
We have begun dedicating some of the Florida City Gas team members to this effort, which will continue to ramp throughout the year. We also expect to generate savings as we more broadly integrate them to our various systems. The next area, asset optimization or utilization has become another common phrase within the Chesapeake organization. We continuously look at our facilities and assets with an eye towards streamlining our operations. As we look across our larger organization, we see opportunities to eliminate duplicative or underutilized facilities and assets. We also have more strategic initiatives which provide the greatest upside when we think about the next five years. Chesapeake has consistently identified and executed upon opportunities across its value chain to generate incremental margin growth.
Already, Marlin has contracted with Florida City Gas to provide backup service in their highly concentrated, but growing markets. Additionally, we are considering multiple opportunities to utilize our intrastate pipeline operations to support growth opportunities across the system. These are just some of the many similar opportunities that we are pursuing. And in terms of new capital investment, our earnings growth has been driven by the execution of prudent capital investment plans. We talked about similar plans for Florida City Gas when we announced the deal, and we are really excited about the expected capital investment opportunities created through these new service territories. In the near-term, you will see us accelerate both the safe and guard replacement programs.
As Jeff mentioned earlier, we also expect to file very soon and announce the financial economics associated with three capital projects, where we will connect RNG to Florida City Gas’ system. We are also well underway on multiple intrastate pipeline projects that we hope to announce later this year. Again, while we will begin to see an impact from opportunities to accelerate infrastructure replacement programs and new projects in 2024, these will really pay off more over time and are a key driver of our 2025 and longer term 2028 outlook. As I mentioned and as shown to the right, we've already recognized benefits from the transaction in just three short months. We are committed to achieving the guidance we have established for 2024, 2025 and the longer term and look forward to updating you on our progress throughout the year.
Turning to Slide 19, we show our forecasted 2024 to 2028 capital investment and as you can see, we are reaffirming our previous capital investment guidance of $1.5 billion to $1.8 billion by 2028 and we continue to expect an approximate run rate of $300 million to $360 million per year, including for 2024. On Slide 20, we show more detail on this projected capital expenditure spend for the five-year period. As you can see, with Florida City Gas, we are more heavily weighted toward our regulated energy segment with almost 90% of our capital expenditure plan dedicated to our regulated asset base. These investments will drive continued regulated customer growth, bolster the safety and reliability of our systems, and by investing in pipelines and interconnect, create additional pathways to market for sustainable fuels.
More specifically, we expect to invest between $600 million and $645 million in regulated distribution growth, $435 million to $590 million in regulated transmission growth, $300 million to $340 million in regulated infrastructure programs, $140 million to $165 million in investments in our unregulated businesses and $70 million to $90 million in support of our five year technology roadmap. Turning to Slide 21. With our FCG financing plan, our top priority was to maintain a strong balance sheet and we executed a financing plan consistent with an investment grade ratings profile. As this slide shows, we accomplished our financing objectives, achieving an equity to total capitalization ratio of 47% at the end of 2023. On October 31, we priced a $550 million private placement with a weighted coupon rate of 6.54%.
In early November, we raised about $380 million in gross proceeds post-green shoot in an equity offering. As a result, we issued 4.4 million shares, resulting in 22.2 million shares outstanding at year end. For the year, stockholders equity increased by $413 million or approximately 50%, primarily driven by our equity financing for the Florida City Gas acquisition, our strong net income performance and issuances through our dividend reinvestment and stock compensation plan. This was partially offset by dividend payments of approximately $44 million. We are also reinvesting about 55% or greater of our earnings back into our business to fund future capital investments. Historically, we have also dribbled out smaller amounts of equity over time to manage to our target capital structure.
We will continue to follow this strategy as we carry out our five year capital plans. As you can see on Slide 22, we have a long-term debt profile that has minimal maturities over the next two years. This gives us the flexibility to execute on our robust capital plan while making progress on the integration and navigating through the uncertain economic environment. Now, I would like to touch on our financing capacity and requirements, which are highlighted on Slide 23. The strength of our balance sheet and our liquidity position supports our investment plan. We have remaining capacity on our shelf agreements and revolving credit facility, which provides more immediate access to debt capital. From 2024 through 2028 we anticipate securing additional permanent financing to support our capital projection, which we will do through an appropriate mix of equity and debt with a target to achieve an equity to total capitalization ratio of 50% by 2028.
Finally, as promised last quarter post-acquisition, we will be pursuing a credit rating. With that, I will now turn the call over to Jim. Jim?
Jim Moriarty: Thank you, Beth and good morning. It’s great to be with you all today. Moving to Slide 24, we provide an overview of key regulatory initiatives that were recently completed or are well underway. In Florida, we have three full quarters of earnings associated with the permanent rate changes from our recent Florida rate case and we expect to recognize close to $17.2 million in 2024. Florida City Gas rates became effective on May 1, 2023 with an incremental $14.1 million rate increase and an allowed ROE of 8.5% to 10.5%. On January 30, 2024, we filed a rate case for our Maryland division, Sandpiper Energy and Elkton Gas, which I will cover in more detail on the next slide. Our proposal to consolidate the three entities builds off of the process that we followed in Florida.
While each jurisdiction is different we are looking forward to a similarly constructive process in Maryland. On the infrastructure side, we have a number of program initiatives underway, including the GUARD and SAFE programs in Florida. These programs are contributing to our ability to maintain safe and reliable service for our customers, which also contribute to margin growth over the next 10 years. Let me spend a few minutes highlighting our Maryland rate case shown on Slide 25. As I mentioned, we proposed consolidating our three Maryland distribution companies into one legal entity required to come back pursuant to a previous regulatory filing for Sandpiper Energy, we are proposing a $6.9 million rate increase, which is the first rate increase we have sought in 16 years.
Inclusive in the filing are other tariff changes, including a new technology cost recovery rider, a proposed underserved area rate which will enable expansions to meet demand, as well as a program for evaluating extensions to multifamily projects. On Slide 26, we highlight another significant project well underway, the Worcester Resiliency Upgrade, an approximately $80 million project for a liquefied natural gas storage project in Maryland. This facility, which consists of five low-profile horizontal storage tanks will allow Eastern Shore Natural Gas to provide critical energy service during the peak winter heating season, particularly to our growing distribution utilities on the Delmarva Peninsula. The FERC held a public scoping session for the local community in December, and it was rewarding to hear all attendees speak in favor of the project.
Eastern Shore continues to execute its robust public outreach and engagement program, most recently holding update meetings with officials representing the project area and also conducting emergency response training with first responders. The FERC's environmental assessment is the next major milestone, which is anticipated to be issued in April of 2024. I would like to spend a moment to review the hydrogen initiatives we have underway to help advance hydrogen's potential as a common fuel source. In the near term, as shown on Slide 27, we are helping to foster a productive and supportive landscape with dedicated initiatives related to safety, awareness, training, education and community involvement as well as conducting real-world testing. The work is laying the foundation for eventual hydrogen production and delivery to end users or for industrial processes through service contracts.
As a partner on the MACH2 Hydrogen Hub project, we are working to bring affordable and environmentally responsible solutions to customers in Delaware, Southern New Jersey, and Southeastern Pennsylvania. Beyond MACH2, we have made Marlin fleet investments and have conducted tests at eight flags to demonstrate hydrogen's potential as a viable option for industrial gas users. We are also working on other sustainable energy initiatives and look forward to updating you at the appropriate time. As we have highlighted many times, our company culture is firmly rooted in the safety of our teams and communities. In line with our culture, we implemented our safety data management system in 2023 and then unveiled the system to our employees at the beginning of 2024.
In addition, we broke ground on our second safety town located in DeBary, Florida on January 31, 2024. We will share more detail on our dedicated safety programs in our inaugural safety and reliability report, which will be published soon. We are transitioning this year from a single large sustainability report to three smaller focused topical reports as well as through investor-focused tables. This enhanced reporting approach will drive more routine reporting that ensures a steadier release of fresh information throughout the year through these reports, and we will share the data widely through our micro site, press releases, and social media. Finally, I would like to showcase a recent achievement that really demonstrates the entrepreneurial, innovative and competitive market mindset embedded throughout our entire enterprise.
Recently, at our first dairy manure RNG facility at Full Circle Dairy in Florida, we introduced a groundbreaking new technology. A fully self-contained CNG, RNG fueled farm irrigation and waste pumping unit. This unit, which will be delivered in March of 2024, opens future opportunities for farms to convert equipment to CNG, RNG fuel. I would like to congratulate this team and all of our teams that work hard every day on equally impressive projects. With that, I will turn the call back to Jeff. Jeff?
Jeff Householder: Thank you, Jim. In summary, we remain committed to delivering on the attractive opportunities across our growth platforms. That includes executing on the incremental opportunities provided by the FCG acquisition and achieving returns that deliver value to our stakeholders. We believe that our disciplined investments will continue to drive top quartile earnings performance into the future. In addition to the transformative projects we initiated and completed in 2023, we continue to take a customer-centric view of our energy delivery mission and are excited about our initiatives to enhance the customer experience. Altogether, Chesapeake Utilities is an attractive investment opportunity. Our shareholders benefit from an energized team that is focused on customers and investments to serve those customers in growing service areas.
We are very committed to continuing our long-term history of superior performance. With that, we'll take your questions. Thank you. Operator?
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