Chesapeake Utilities (NYSE:CPK) reported what management called a record year in 2025, extending its streak to 19 consecutive years of earnings growth as customer additions, large capital investments, and contributions from both regulated and unregulated operations lifted results.
2025 results: double-digit growth and record capital spending
Chair, President and CEO Jeff Householder said the company produced adjusted earnings of $6.01 per share in 2025, representing 12% growth versus 2024. CFO Beth Cooper added that Chesapeake generated approximately $639 million of adjusted gross margin and $141 million of adjusted net income, with both measures up at a double-digit pace year over year.
- $19 million of transmission project margin
- $14 million of incremental infrastructure margin
- About $13 million of gross margin tied to completed rate cases in Maryland, Delaware, and Florida electric jurisdictions
Cooper said the year’s earnings drivers added $2.41 per share of incremental benefit, partially offset by $1.79 per share from higher expenses and financing costs. She attributed incremental adjusted EPS to transmission expansion projects ($0.58), infrastructure projects ($0.43), higher demand and customer growth ($0.51 total), and permanent rates from three rate cases completed in 2025 ($0.39). Unregulated businesses contributed $0.29 of net incremental earnings per share, with Marlin Virtual Pipeline Transportation cited as a key driver.
On the headwinds side, Cooper noted a $0.51 per share impact from the absence of a 2024 RSAM benefit tied to Florida City Gas, plus higher depreciation and amortization ($0.31) and higher operating expenses ($0.41) associated with growth. Financing activity reduced adjusted EPS by $0.35, as Chesapeake accelerated its return to a 50% equity capitalization.
Customer growth and expansion opportunities
Householder said the company added nearly 11,000 customers in 2025 across its natural gas and electric distribution areas. Residential customer growth was 4.1% in Delmarva, 3.6% at Florida Public Utilities, and 2.2% at Florida City Gas. Management said these customer additions produced $7.4 million of incremental adjusted gross margin in 2025.
The company also discussed opportunities in Ohio, which Householder described as a growing market for data center development. Chesapeake said it is beginning construction on the Duncan Plains pipeline to support AEP’s data center fuel cell and is providing temporary virtual pipeline service through Marlin for a data center construction project north of Columbus.
During Q&A, management said it continues to view Delmarva growth as strong and ongoing, citing continued development and related infrastructure buildout, particularly in southern Delaware. Executives also described higher-growth pockets within Florida City Gas’ service territory, including areas around Port St. Lucie/Vero Beach and parts of Brevard County.
Florida City Gas: depreciation ruling and planned rate case
Executive Vice President and Chief Policy and Risk Officer Jim Moriarty provided an update on Florida City Gas’ depreciation study. He said the Florida Public Service Commission denied the company’s request to amortize a $19 million excess depreciation reserve over two years and instead adopted staff’s recommendation to recover $6.8 million over the life of the assets. Management said the outcome results in annual depreciation savings of about $500,000.
Because the order arrived late in the year, Chesapeake said it chose not to reopen 2025 results and instead will apply “two years’ worth” of reduced depreciation expense—about $1 million—in 2026.
Moriarty said Chesapeake filed a notice of intent to submit a general rate case for Florida City Gas in mid-April 2026, seeking appropriate cost recovery and an improved allowed return on equity. The company expects interim rates to be effective by early July 2026 and said it anticipates Florida City Gas returning to its earnings contribution levels in 2027 and beyond. Moriarty also described interim rates as typically becoming effective about 60 days after filing and said the process generally uses existing rate base and the low end of the allowed ROE range, while noting the company expects to debate certain components with regulators.
2026 plans: capital program, major projects, and ERP transformation
Looking ahead, Householder introduced the company’s 2026 theme: “Transforming for Growth: Powered by People.” Chesapeake issued 2026 capital expenditure guidance of $450 million to $500 million, which includes higher technology spending tied to its multiyear enterprise resource planning implementation (1CORE). Management noted that about 20% to 30% of 2026 capital is expected to drive margin growth in 2027 or later due to regulatory recovery timelines and project completion schedules.
For major projects, the company said nearly all are generating margin through interim or full service, contributing $22.8 million of adjusted gross margin in 2025. Chesapeake forecast these projects will contribute about $47 million of gross margin in 2026 and an additional $9 million in 2027.
Householder also announced the Delmarva Regional Enhancement Project for Eastern Shore Natural Gas, which includes more than 20 miles of 16- and 24-inch pipeline and looping to add firm capacity and improve reliability. Chesapeake estimated capital investment of approximately $75 million with an in-service target around the end of 2028.
In addition, Chesapeake said Accomack County, Virginia, awarded a $6.5 million grant to begin feasibility, design, and engineering work for potential infrastructure that could extend natural gas service from Princess Anne, Maryland, into Virginia’s Eastern Shore.
On business transformation, Moriarty said Chesapeake will invest about $75 million in 2026 on its 1CORE ERP project and is targeting a Q2 2027 go-live date. Executives said the ERP effort is expected to improve decision-making and drive efficiencies across customer service, supply chain, field services, and finance, but they did not provide a quantified savings target.
Financing, dividends, and long-term outlook
Cooper said Chesapeake ended 2025 at its 50% equity capitalization target, supported by $123 million of equity issuance (961,000 shares) and $76 million of retained earnings. She also noted the company received its inaugural credit rating from Fitch during the year and completed a $200 million debt issuance in August and September, while extending private placement shelf capacity. Chesapeake ended 2025 with 78% of its total $755 million capacity available across its revolver and shelf facilities.
The company said it plans to refinance the first tranche of debt issued in connection with the Florida City Gas acquisition and expects to fund its 2026 capital program with a mix of retained earnings, equity, and debt while generally maintaining a 50/50 capital structure. During Q&A, Cooper said refinancing could reduce coupon rates by roughly 50 to 100 basis points if market conditions remain similar.
On shareholder returns, Cooper said Chesapeake’s annualized dividend of $2.74 per share reflects a 7% increase from 2024 and aligns with a long-term dividend CAGR of 9%. She reiterated the board-approved payout target of 45% to 50%, while noting the company retained 54% of earnings in 2025 to support capital investment.
Chesapeake reaffirmed its 2028 adjusted EPS range of $7.75 to $8.00 and said it remains on track for its long-term adjusted EPS growth target of 8%. Management also said it does not plan to provide annual EPS guidance for 2026, consistent with its historical practice outside of the period immediately following the Florida City Gas acquisition.
About Chesapeake Utilities (NYSE:CPK)
Chesapeake Utilities Corporation (NYSE: CPK) is a diversified energy services holding company headquartered in Dover, Delaware. Through its operating subsidiaries, the company engages in natural gas distribution, transmission and storage; propane distribution; wholesale propane supply; and contract compression and natural gas liquids processing. Its core mission is to provide safe, reliable and cost-effective energy solutions to residential, commercial and industrial customers across multiple U.S.
