What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-08 · 232 added, 149 removed, 737 unchanged (34% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Income (Unaudited)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(in thousands, except per share data)

28 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(in thousands)

4 unchanged sentences

Cash Flow Hedges, net of tax:

Net gain on commodity contract cash flow hedges, net of tax of $ 534 and $ 7 , respectively

Reclassifications of net gain on commodity contract cash flow hedges, net of tax $( 293 ) and $( 166 ), respectively

Net gain (loss) on commodity contract cash flow hedges, net of tax of $ 72 , $( 784 ), $ 606 and $( 775 ), respectively

199 ( 2,065 ) 1,640 ( 2,045 )

Net gain (loss) on interest rate swap cash flow hedges, net of tax of $ 143 and $( 52 ), respectively

Reclassifications of net (gain) loss on commodity contract cash flow hedges, net of tax $ 11 , $ 119 , $( 282 ) and $( 48 ), respectively

30 313 ( 761 ) ( 126 )

Net gain on interest rate swap cash flow hedges, net of tax of $ 32 , $ 267 , $ 175 and $ 213 , respectively

94 758 511 612

Reclassifications of net (gain) on interest rate swap cash flow hedges, net of tax of $( 43 ), $( 33 ), $( 87 ) and $( 50 ), respectively

5 unchanged sentences

Condensed Consolidated Balance Sheets (Unaudited)

Assets March 31,

Assets June 30,

2024 December 31,

36 unchanged sentences

Condensed Consolidated Balance Sheets (Unaudited)

Capitalization and Liabilities March 31,

Capitalization and Liabilities June 30,

2024 December 31,

6 unchanged sentences

Retained earnings 525,525 488,663

Accumulated other comprehensive income (loss) ( 1,786 ) ( 2,738 )

Accumulated other comprehensive loss ( 1,576 ) ( 2,738 )

Deferred compensation obligation 9,703 9,050

12 unchanged sentences

Regulatory liabilities 19,677 13,719

Income taxes payable 818 —

Derivative liabilities, at fair value 27 354

15 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended

Six Months Ended

(in thousands)

6 unchanged sentences

Realized loss on commodity contracts and sale of assets ( 3,056 ) ( 1,032 )

Unrealized (gain) loss on investments/commodity contracts ( 830 ) ( 551 )

Unrealized gain on investments and commodity contracts ( 1,006 ) ( 1,131 )

Employee benefits and compensation ( 48 ) 218

Share-based compensation 4,512 2,919

Other, net ( 229 ) —

Changes in assets and liabilities:

1 unchanged sentence

Propane inventory, storage gas and other inventory 4,894 5,052

Regulatory assets/liabilities, net 10,059 24,607

Regulatory assets and liabilities, net 12,221 28,796

Prepaid expenses and other current assets 4,319 2,953

17 unchanged sentences

Change in cash overdrafts due to outstanding checks 235 ( 2,157 )

Net repayments under line of credit agreements ( 10,213 ) ( 107,755 )

Net borrowings (repayments) under line of credit agreements 27,003 ( 104,194 )

Proceeds from long-term debt, net of offering fees — 79,840

1 unchanged sentence

Net cash used in financing activities ( 10,057 ) ( 62,027 )

Net Decrease in Cash and Cash Equivalents ( 3,209 ) ( 3,139 )

Net Increase (Decrease) in Cash and Cash Equivalents 1,526 ( 2,035 )

Cash and Cash Equivalents—Beginning of Period 4,904 6,204

11 unchanged sentences

Compensation Treasury

Balance at March 31, 2023 17,790 $ 8,659 $ 379,703 $ 472,209 $ ( 1,983 ) $ 8,816 $ ( 8,816 ) $ 858,588

Net income — — — 16,133 — — — 16,133

Other comprehensive loss — — — — ( 1,076 ) — — ( 1,076 )

Dividend declared ($ 0.590 per share)

— — — ( 10,547 ) — — — ( 10,547 )

Issuance under various plans (3)

— — ( 8 ) — — — — ( 8 )

Share-based compensation and tax benefit (4) (5)

7 3 1,135 — — — — 1,138

Treasury stock activities — — — — — 185 ( 185 ) —

Balance at June 30, 2023 17,797 $ 8,662 $ 380,830 $ 477,795 $ ( 3,059 ) $ 9,001 $ ( 9,001 ) $ 864,228

Balance at December 31, 2022 17,741 $ 8,635 $ 380,036 $ 445,509 $ ( 1,379 ) $ 7,060 $ ( 7,060 ) $ 832,801

9 unchanged sentences

— — — — — 1,941 ( 1,941 ) —

Balance at June 30, 2023 17,797 $ 8,662 $ 380,830 $ 477,795 $ ( 3,059 ) $ 9,001 $ ( 9,001 ) $ 864,228

Balance at March 31, 2024 22,267 $ 10,838 $ 750,162 $ 521,689 $ ( 1,786 ) $ 9,562 $ ( 9,562 ) $ 1,280,903

Net income — — — 18,271 — — — 18,271

Other comprehensive income — — — — 210 — — 210

Dividend declared ($ 0.640 per share)

— — — ( 14,435 ) — — — ( 14,435 )

Issuance under various plans (3)

25 12 2,607 — — — — 2,619

Share-based compensation and tax benefit (4) (5)

7 4 2,982 — — — — 2,986

Treasury stock activities — — — — — 141 ( 141 ) —

Balance at June 30, 2024 22,299 $ 10,854 $ 755,751 $ 525,525 $ ( 1,576 ) $ 9,703 $ ( 9,703 ) $ 1,290,554

Balance at December 31, 2023 (6)

10 unchanged sentences

— — — — — 653 ( 653 ) —

Balance at March 31, 2024 22,267 $ 10,838 $ 750,162 $ 521,689 $ ( 1,786 ) $ 9,562 $ ( 9,562 ) $ 1,280,903

Balance at June 30, 2024 22,299 $ 10,854 $ 755,751 $ 525,525 $ ( 1,576 ) $ 9,703 $ ( 9,703 ) $ 1,290,554

(1) 2.0 million shares of preferred stock at $ 0.01 par value have been authorized.

1 unchanged sentence

accordingly, no information has been included in the Condensed Consolidated Statements of Stockholders’ Equity.

(2) Includes 111 thousand, 108 thousand, 110 thousand, and 108 thousand shares at March 31, 2024, December 31, 2023, March 31, 2023 and December 31, 2022, respectively, held in a Rabbi Trust related to our Non-Qualified Deferred Compensation Plan.

(2) Includes 113 thousand, 108 thousand, 110 thousand, and 108 thousand shares at June 30, 2024, December 31, 2023, June 30, 2023 and December 31, 2022, respectively, held in a Rabbi Trust related to our Non-Qualified Deferred Compensation Plan.

(3) Includes shares issued under the Retirement Savings Plan and DRIP and/or ATM as applicable.

1 unchanged sentence

(5) The shares issued under the SICP are net of shares withheld for employee taxes.

For the three months ended March 31, 2024 and 2023, we withheld 14 thousand and 20 thousand shares, respectively, for employee taxes.

For the six months ended June 30, 2024 and 2023, we withheld 14 thousand and 20 thousand shares, respectively, for employee taxes.

(6) Includes 4.4 million shares issued during 2023 related to the acquisition of FCG.

9 unchanged sentences

In the opinion of management, these financial statements reflect all adjustments that are necessary for a fair presentation of our results of operations, financial position and cash flows for the interim periods presented.

Where necessary to improve comparability, prior period amounts have been changed to conform to current period presentation.

Where necessary to improve comparability, prior period amounts have been reclassified to conform to current period presentation.

Due to the seasonality of our business, results for interim periods are not necessarily indicative of results for the entire fiscal year.

12 unchanged sentences

Calculation of Earnings Per Share

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(in thousands, except per share data)

12 unchanged sentences

Diluted Earnings Per Share $ 0.82 $ 0.90 $ 2.89 $ 2.94

(1) Weighted average shares for the quarter ended March 31, 2024 reflect the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG.

(1) Weighted average shares for the three and six months ended June 30, 2024 reflect the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG.

See Notes 3 and 9 for additional details on the acquisition and related equity offering.

12 unchanged sentences

Goodwill resulting from the acquisition is largely attributable to expansion opportunities provided within our existing regulated operations in Florida, including planned customer growth and growth in rate base through continued investment in our utility infrastructure, as well as natural gas transmission infrastructure supporting the distribution operations.

The goodwill recognized in connection with the acquisition of FCG will be deductible for income tax purposes.

The goodwill recognized in connection with the acquisition of FCG is deductible for income tax purposes.

The components of the preliminary purchase price allocation are as follows:

19 unchanged sentences

Other transaction costs of $ 15.9 million, related primarily to the debt and equity financings executed in connection with the acquisition, were deferred on the consolidated balance sheet or recorded in equity as an offset to proceeds received, as appropriate, as of December 31, 2023.

For the three months ended March 31, 2024, the Company’s consolidated results include $ 35.9 million of operating revenue and net income of $ 4.2 million attributable to FCG which includes $ 0.9 million of transaction and transition-related expenses.

For the three and six months ended June 30, 2024, the Company’s consolidated results include $ 32.5 million and $ 68.4 million of operating revenue, respectively, and $ 1.9 million and $ 6.0 million of net income, respectively, attributable to FCG.

These results include $ 1.4 million and $ 2.3 million of transaction and transition-related expenses, respectively, for the three and six months ended June 30, 2024.

Acquisition of J.T.

5 unchanged sentences

Sharp added approximately 3,000 customers and distribution of approximately 800,000 gallons of propane annually.

The transaction also includes a bulk plant with 60,000 gallons of propane storage, enabling the Company to realize efficiencies with additional storage capacity and overlapping delivery territories.

The transaction also included a bulk plant with 60,000 gallons of propane storage, enabling the Company to realize efficiencies with additional storage capacity and overlapping delivery territories.

In connection with this acquisition, we recorded $ 2.7 million in property plant and equipment, $ 0.9 million in goodwill, $ 0.2 million in working capital, and less than $ 0.1 million in intangible assets associated primarily with non-compete agreements, all of which are deductible for income tax purposes.

1 unchanged sentence

The financial results associated with this acquisition are included within our propane distribution operations within our Unregulated Energy segment.

The operating revenues and net income of this acquisition were not material to our consolidated results for the three months ended March 31, 2024.

The operating revenues and net income of this acquisition were not material to our consolidated results for the three and six months ended June 30, 2024.

Revenue Recognition

2 unchanged sentences

Typically, our customers pay for the goods and/or services we provide in the month following the satisfaction of our performance obligation.

The following tables display our revenue by major source based on product and service type for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

The following tables display our revenue by major source based on product and service type for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023

(in thousands) Regulated Energy Unregulated Energy Other and Eliminations Total Regulated Energy Unregulated Energy Other and Eliminations Total

27 unchanged sentences

$ 130,625 $ 41,419 $ ( 5,772 ) $ 166,272 $ 101,141 $ 40,751 $ ( 6,299 ) $ 135,593

(1 ) Total operating revenues for the three months ended March 31, 2024 and 2023 both include other revenue (revenues from sources other than contracts with customers) of $ 0.6 million and $ 0.1 million for our Regulated and Unregulated Energy segments, respectively.

(1 ) Total operating revenues for the three months ended June 30, 2024 include other revenue (revenues from sources other than contracts with customers) of $ 0.1 million for both our Regulated and Unregulated Energy segments, and $ 0.2 million and $ 0.1 million for our Regulated and Unregulated Energy segments, respectively, for the three months ended June 30, 2023.

The sources of other revenues include revenue from alternative revenue programs related to revenue normalization for the Maryland division and Sandpiper Energy and late fees.

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

(in thousands) Regulated Energy Unregulated Energy Other and Eliminations Total Regulated Energy Unregulated Energy Other and Eliminations Total

Energy distribution

Delaware natural gas division $ 45,321 $ — $ — $ 45,321 $ 51,016 $ — $ — $ 51,016

Florida natural gas distribution

87,873 — — 87,873 87,124 — — 87,124

Florida City Gas 68,371 — — 68,371 — — — —

FPU electric distribution 42,510 — — 42,510 45,771 — — 45,771

Maryland natural gas division 14,536 — — 14,536 16,884 — — 16,884

Sandpiper natural gas/propane operations 10,955 — — 10,955 11,161 — — 11,161

Elkton Gas 4,167 — — 4,167 5,444 — — 5,444

Total energy distribution 273,733 — — 273,733 217,400 — — 217,400

Energy transmission

Aspire Energy — 18,939 — 18,939 — 19,680 — 19,680

Aspire Energy Express 737 — — 737 733 — — 733

Eastern Shore 41,126 — — 41,126 40,302 — — 40,302

Peninsula Pipeline 16,061 — — 16,061 14,504 — — 14,504

Total energy transmission 57,924 18,939 — 76,863 55,539 19,680 — 75,219

Energy generation

Eight Flags — 9,019 — 9,019 — 9,832 — 9,832

Propane operations

Propane delivery operations — 89,612 — 89,612 — 87,295 — 87,295

Compressed Natural Gas Services

Marlin Gas Services — 7,075 — 7,075 — 7,238 — 7,238

Other and eliminations

Eliminations ( 32,606 ) ( 123 ) ( 11,648 ) ( 44,377 ) ( 29,528 ) ( 129 ) ( 13,696 ) ( 43,353 )

Other — 91 91 — — 91 91

Total other and eliminations ( 32,606 ) ( 123 ) ( 11,557 ) ( 44,286 ) ( 29,528 ) ( 129 ) ( 13,605 ) ( 43,262 )

Total operating revenues (1)

$ 299,051 $ 124,522 $ ( 11,557 ) $ 412,016 $ 243,411 $ 123,916 $ ( 13,605 ) $ 353,722

(1) Total operating revenues for the six months ended June 30, 2024 include other revenue (revenues from sources other than contracts with customers) of $ 0.7 million and $ 0.2 million for our Regulated and Unregulated Energy segments, respectively, and $ 0.8 million and $ 0.2 million for our Regulated and Unregulated Energy segments, respectively, for the six months ended June 30, 2023.

The sources of other revenues include revenue from alternative revenue programs related to revenue normalization for the Maryland division and Sandpiper Energy and late fees .

Contract Balances

The timing of revenue recognition, customer billings and cash collections results in trade receivables, unbilled receivables (contract assets), and customer advances (contract liabilities) in our condensed consolidated balance sheets.

The balances of our trade receivables, contract assets, and contract liabilities as of March 31, 2024 and December 31, 2023 were as follows:

The balances of our trade receivables, contract assets, and contract liabilities as of June 30, 2024 and December 31, 2023 were as follows:

Trade Receivables Contract Assets (Current) Contract Assets (Non-current) Contract Liabilities (Current)

6 unchanged sentences

Our current contract assets are included in other current assets in the condensed consolidated balance sheet.

Our non-current contract assets are included in other assets in the condensed consolidated balance sheet and primarily relate to operations and maintenance costs incurred by Eight Flags that have not yet been recovered through rates for the sale of electricity to our electric distribution operation pursuant to a long-term service agreement.

Our non-current contract assets are included in receivables and other deferred charges in the condensed consolidated balance sheet and primarily relate to operations and maintenance costs incurred by Eight Flags that have not yet been recovered through rates for the sale of electricity to our electric distribution operation pursuant to a long-term service agreement.

At times, we receive advances or deposits from our customers before we satisfy our performance obligation, resulting in contract liabilities.

1 unchanged sentence

Our performance obligation is satisfied over the term of the respective customer retail program on a ratable basis.

For the three months ended March 31, 2024 and 2023, the amounts recognized in revenue were not material.

For the three and six months ended June 30, 2024 and 2023, the amounts recognized in revenue were not material.

Remaining Performance Obligations

Certain of our businesses have long-term fixed fee contracts with customers in which revenues are recognized when performance obligations are satisfied over the contract term.

Revenue for these businesses for the remaining performance obligations, at March 31, 2024, are expected to be recognized as follows:

Revenue for these businesses for the remaining performance obligations, at June 30, 2024, are expected to be recognized as follows:

(in thousands) 2024 2025 2026 2027 2028 2029 2030 and thereafter

10 unchanged sentences

The evidentiary hearing on this matter was held in April 2024 with all programs, with the exception of the Offer Program, approved by the PSC and rates became effective May 1, 2024.

Delaware Natural Gas Rate Case:

In May 2024, our Delaware natural gas division provided notice to the Delaware PSC of its intent to file a petition seeking a general rate base increase based on a test period ending in December 2024.

The filing is expected to be submitted to the Delaware PSC in August 2024 and the outcome of the application will be subject to review and approval by the Delaware PSC.

Maryland Natural Gas Rate Case:

8 unchanged sentences

In January 2024, our Maryland natural gas distribution businesses filed a joint petition for approval of their proposed unified depreciation rates with the Maryland PSC.

The outcome of the filing is subject to review by the Maryland PSC which is expected to be completed in the third quarter of 2024.

A settlement agreement between the Company, PSC staff and the OPC was reached and the final order approving the settlement agreement went into effect in July 2024 which will include an annual benefit of $ 1.2 million.

Wildlight Expansion:

1 unchanged sentence

The project enables us to meet the significant growing demand for service in Yulee, Florida.

The agreement will enable us to construct the project during the build-out of the community and charge the reservation rate as each phase of the project goes into service.

The agreement enables us to construct the project during the build-out of the community and charge the reservation rate as each phase of the project goes into service.

Construction of the pipeline facilities will occur in two separate phases.

9 unchanged sentences

On July 7, 2023, the Florida OPC filed a notice of appeal with the Florida Supreme Court, which is pending.

The Florida OPC filed their initial brief on January 31, 2024.

The Florida OPC filed their initial brief on January 31, 2024 with answer briefs filed on April 30, 2024.

The RSAM is recorded as either an increase or decrease to accrued removal costs which is reflected on the Company’s balance sheets and a corresponding increase or decrease to depreciation and amortization expense.

1 unchanged sentence

In general, the net impact of these income statement line items is adjusted, in part, by RSAM or its reversal to earn the targeted regulatory ROE.

For the three months ended March 31, 2024, the Company recorded decreases to asset removal costs and depreciation expense of $ 3.4 million as a result of the RSAM adjustment.

For the three and six months ended June 30, 2024, the Company recorded decreases to asset removal costs and depreciation expense of $ 2.3 million and $ 5.7 million, respectively, as a result of the RSAM adjustment.

Storm Protection Plan:

10 unchanged sentences

In August 2023, the Florida PSC approved the GUARD program, which included $ 205.0 million of capital expenditures projected to be spent over a 10-year period.

SAFE Program :

FCG SAFE Program :

In June 2023, the Florida PSC issued the approval order for the continuation of the SAFE program beyond its 2025 expiration date and inclusion of 150 miles of additional mains and services located in rear property easements.

5 unchanged sentences

If approved, these efforts will serve to improve the safety and reliability of service to FCG's customers.

These modifications, if approved, result in an estimated additional $ 50.0 million in capital expenditures associated with the SAFE Program which would increase the total projected capital expenditures to $ 255.0 million over a 10-year period.

These modifications, if approved, will result in an estimated additional $ 50.0 million in capital expenditures associated with the SAFE Program which would increase the total projected capital expenditures to $ 255.0 million over a 10-year period.

The Commission decision is expected in September 2024.

Newberry Expansion :

1 unchanged sentence

The petition was approved by the Florida PSC in the third quarter of 2023.

Peninsula Pipeline will construct a pipeline extension, which will be used by FPU to support the development of a natural gas distribution system to provide gas service to the City of Newberry.

Peninsula Pipeline will construct a

pipeline extension, which will be used by FPU to support the development of a natural gas distribution system to provide gas service to the City of Newberry.

A filing to address the acquisition and conversion of existing Company owned propane community gas systems in Newberry was made in November 2023.

The Florida PSC approved it in April 2024.

The Company anticipates beginning the conversions of the community gas systems in the second quarter of 2024.

The Company began the conversions of the community gas systems in the second quarter of 2024.

East Coast Reinforcement Projects:

3 unchanged sentences

The Florida PSC approved the projects in March 2024.

Construction is projected to be complete in the first and second quarters of 2025 for Boynton Beach and New Smyrna Beach, respectively.

Central Florida Reinforcement Projects :

1 unchanged sentence

The projects are driven by the need for increased supply to communities in central Florida that are experiencing significant population growth.

Peninsula Pipeline will construct several pipeline extensions which will support FPU's distribution system around Plant City and Lake Mattie with an additional 5,000 Dts/d and 8,700 Dts/d, respectively.

Peninsula Pipeline will construct several pipeline extensions which will support FPU's distribution system around the Plant City and Lake Mattie areas of Florida with an additional 5,000 Dts/d and 8,700 Dts/d, respectively.

The Florida PSC approved the projects in May 2024.

Alternative Natural Gas Projects :

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for its approval of its Transportation Service Agreements with FCG for projects that will support the transportation of additional supply into FCG’s distribution system.

The projects are driven by continued growth in the regions and will facilitate additional transportation capacity, including the transportation of pipeline quality gas produced from landfills through FCG's system.

Completion of the projects is projected for the fourth quarter of 2024 for Plant City and the fourth quarter of 2025 for Lake Mattie.

Renewable Natural Gas Supply Projects :

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of Transportation Service Agreements with FCG for projects that will support the transportation of additional renewable energy supply to FCG.

The projects, located in Florida’s Brevard, Indian River and Miami-Dade counties, will bring renewable natural gas produced from local landfills into FCG’s natural gas distribution system.

Peninsula Pipeline will construct several pipeline extensions which will support FCG's distribution system in Brevard County, Indian-River County, and Miami-Dade County.

Benefits of these projects include increased gas supply to serve expected FCG growth, strengthened system reliability and additional system flexibility.

The Florida PSC approved the petition at it's July 2024 meeting with the projects estimated to be completed in the first half of 2025.

Cloud Project Amendment :

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for its approval of an amendment to its Transportation Service Agreement with FPU for a project that will support additional supply to communities in St.

Cloud Florida.

Cloud, Florida area.

The project is driven by the need to expand gas service to future communities that are expected in that area.

1 unchanged sentence

The expansion will provide FPU with an additional 10,000 Dts/d.

The Florida PSC approved the projects in May 2024.

The Florida PSC approved the project in May 2024, and it is expected to be complete in the fourth quarter of 2025.

Pioneer Supply Header Pipeline Project :

1 unchanged sentence

The project consists of the transfer of a pipeline asset from FCG to Peninsula Pipeline.

Peninsula Pipeline will proceed to provide transportation service to both FCG and FPU using the pipeline asset, which provides opportunities for additional project development.

Peninsula Pipeline will proceed to provide transportation service to both FCG and FPU using the pipeline asset, which supports continued customer growth and system reinforcement of these distribution systems.

The Florida PSC approved the petition in July 2024.

FPU Electric Rate Case :

In June 2024, our Florida Electric division provided notice to the Florida PSC of its intent to file a petition seeking a general rate base increase based on a 2025 projected test year.

The filing is expected to be submitted to the Florida PSC in August 2024 and the outcome of the application will be subject to review and approval by the Florida PSC.

Eastern Shore

3 unchanged sentences

Eastern Shore has requested certificate authorization by December 2024, with a target in-service date by the third quarter of 2025.

In December 2023, FERC issued its schedule for preparation of the Environmental Assessment.

In April 2024, the FERC issued their environmental assessment with no significant impacts noted.

In December 2023, the FERC issued its schedule for preparation of the Environmental Assessment ("EA").

April 2024, the FERC issued their EA with no significant impacts noted.

The EA comment period closed May 28, 2024, and Eastern Shore responded to the one adverse comment received.

In connection with the TCJA, which was signed into law in December 2017, our customer rates for our regulated businesses were adjusted as applicable as approved by the regulators.

Regulatory liabilities related to accumulated deferred income taxes (“ADIT”) associated with the TCJA amounted to $ 85.5 million and $ 85.8 million at March 31, 2024 and December 31, 2023, respectively.

Regulatory liabilities related to accumulated deferred income taxes (“ADIT”) associated with the TCJA amounted to $ 85.2 million and $ 85.8 million at June 30, 2024 and December 31, 2023, respectively.

With the exception of the ADIT balance of $ 34.2 million attributable to Eastern Shore, such amounts are being amortized in accordance with approvals received from the Delaware, Maryland, and Florida PSCs in 2018 and 2019.

7 unchanged sentences

and Winter Haven, Key West, Pensacola, Sanford and West Palm Beach, Florida.

As of March 31, 2024 and December 31, 2023, we had approximately $ 3.5 million and $ 3.6 million, respectively, in environmental liabilities related to the former MGP sites, and related regulatory assets of approximately $ 0.5 million at the respective balance sheet dates for future recovery of environmental costs from customers.

As of June 30, 2024 and December 31, 2023, we had approximately $ 3.4 million and $ 3.6 million, respectively, in environmental liabilities related to the former MGP sites, and related regulatory assets of approximately $ 0.3 million and $ 0.5 million at the respective balance sheet dates for future recovery of environmental costs from customers.

Environmental liabilities for our MGP sites are recorded on an undiscounted basis based on the estimate of future costs provided by independent consultants.

3 unchanged sentences

The Environmental Protection Agency has approved a "site-wide ready for anticipated use" status for the Sanford, Florida MGP site, which is the final step before delisting a site.

The remaining remediation expenses for the Sanford MGP site are immaterial.

The remaining remediation expenses for the Sanford MGP site are not material.

The remedial actions approved by the Florida Department of Environmental Protection have been implemented on the east parcel of our West Palm Beach Florida site.

9 unchanged sentences

Florida Natural Gas has firm transportation service contracts with FGT and Gulfstream.

Pursuant to a capacity release program approved by the Florida PSC, all of the capacity under these agreements has been released to various third parties.

Pursuant to a capacity release program approved by the Florida PSC, all of the capacity under these agreements has been released to various third

Under the terms of these capacity release agreements, Chesapeake Utilities is contingently liable to FGT and Gulfstream should any party, that acquired the capacity through release, fail to pay the capacity charge.

7 unchanged sentences

Failure to comply with the ratios specified in the Gulf Power agreement could also result in FPU having to provide an irrevocable letter of credit.

As of March 31, 2024, FPU was in compliance with all of the requirements of its fuel supply contracts.

As of June 30, 2024, FPU was in compliance with all of the requirements of its supply contracts.

Eight Flags provides electricity and steam generation services through its CHP plant located on Amelia Island, Florida.

4 unchanged sentences

The Board of Directors has authorized us to issue corporate guarantees securing obligations of our subsidiaries and to obtain letters of credit securing our subsidiaries' obligations.

The maximum authorized liability under such guarantees and letters of credit as of March 31, 2024 was $ 35.0 million.

The aggregate amount guaranteed related to our subsidiaries at March 31, 2024 was approximately $ 24.4 million with the guarantees expiring on various dates through March 2025.

The maximum authorized liability under such guarantees and letters of credit as of June 30, 2024 was $ 35.0 million.

The aggregate amount guaranteed related to our subsidiaries at June 30, 2024 was $ 27.0 million with the guarantees expiring on various dates through June 2025.

In addition, the Board has authorized us to issue specific purpose corporate guarantees.

The amount of specific purpose guarantees outstanding at March 31, 2024 was $ 4.0 million.

As of March 31, 2024, we have issued letters of credit totaling approximately $ 7.0 million related to the electric transmission services for FPU's electric division, the firm transportation service agreement between TETLP and our Delaware and Maryland divisions, the capacity agreement between NEXUS and Aspire, the storage agreement between Bay Gas Storage Company and FCG as well as our primary insurance carriers.

The amount of specific purpose guarantees outstanding at June 30, 2024 was $ 4.0 million.

As of June 30, 2024, we have issued letters of credit totaling $ 7.0 million related to various transportation, transmission, capacity and storage agreements as well as our primary insurance carriers.

These letters of credit have various expiration dates through February 2025 and to date, none have been used.

12 unchanged sentences

The remainder of our operations are presented as “Other businesses and eliminations,” which consists of unregulated subsidiaries that own real estate leased to Chesapeake Utilities, as well as certain corporate costs not allocated to other operations.

The following table presents financial information about our reportable segments:

Three Months Ended

The following tables present financial information about our reportable segments:

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(in thousands)

8 unchanged sentences

Total intersegment revenues $ 5,818 $ 6,345 $ 11,648 $ 13,696

Operating Income

Operating Income (Loss)

Regulated Energy $ 40,505 $ 29,291 $ 98,614 $ 66,916

8 unchanged sentences

(1) All significant intersegment revenues are billed at market rates and have been eliminated from consolidated operating revenues.

(in thousands) March 31, 2024 December 31, 2023

(in thousands) June 30, 2024 December 31, 2023

Identifiable Assets

8 unchanged sentences

We maintain an effective shelf registration statement with the SEC for the issuance of shares under our DRIP and other plans.

Depending on our capital needs and subject to market conditions, in addition to other possible debt and equity offerings, we may issue additional shares under the direct stock purchase component of the DRIP.

For the three months ended March 31, 2024, we received net proceeds of $ 0.1 million under the DRIP.

There were no issuances under DRIP during 2023.

Depending on our capital needs and subject to market conditions, we may issue additional shares under the direct stock purchase component of the DRIP in addition to other possible debt and equity offerings.

For the six months ended June 30, 2024, we received net proceeds of $ 2.5 million for issuances under the DRIP.

There were no issuances under the DRIP during 2023.

Our most recent ATM equity program, which allowed us to issue and sell shares of our common stock up to an aggregate offering price of $ 75.0 million, expired in June 2023.

1 unchanged sentence

Defined benefit pension and postretirement plan items, unrealized gains (losses) of our propane swap agreements designated as commodity contract cash flow hedges, and the unrealized gains (losses) of our interest rate swap agreements designated as cash flow hedges are the components of our accumulated other comprehensive loss.

The following tables present the changes in the balances of accumulated other comprehensive loss components as of March 31, 2024 and 2023.

The following tables present the changes in the balances of accumulated other comprehensive loss components as of June 30, 2024 and 2023.

All amounts in the following tables are presented net of tax.

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Net current-period other comprehensive income (loss) 27 879 256 1,162

As of March 31, 2024 $ ( 2,571 ) $ 376 $ 409 $ ( 1,786 )

As of June 30, 2024 $ ( 2,557 ) $ 605 $ 376 $ ( 1,576 )

As of December 31, 2022 $ ( 2,506 ) $ 1,092 $ 35 $ ( 1,379 )

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Net prior-period other comprehensive income (loss) 21 ( 2,171 ) 470 ( 1,680 )

As of March 31, 2023 $ ( 2,496 ) $ 674 $ ( 161 ) $ ( 1,983 )

As of June 30, 2023 $ ( 2,485 ) $ ( 1,079 ) $ 505 $ ( 3,059 )

Deferred gains or losses for our commodity contract and interest rate swap cash flow hedges are recognized in earnings upon settlement and are included in the effects of gains and losses from derivative instruments.

3 unchanged sentences

Employee Benefit Plans

Net periodic (benefit) cost for the FPU Pension Plan for the three months ended March 31, 2024 and 2023 is set forth in the following table:

Three Months Ended

Net periodic (benefit) cost for the FPU Pension Plan for the three and six months ended June 30, 2024 and 2023 is set forth in the following table:

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(in thousands)

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Total periodic (benefit) cost $ ( 56 ) $ 75 $ ( 112 ) $ 150

Amounts reclassified from accumulated other comprehensive income (loss) and regulatory assets were not material during the three months ended March 31, 2024 and 2023.

Net periodic benefit costs for our other pension and postretirement benefit plans were not material for the three months ended March 31, 2024 and 2023.

Amounts reclassified from accumulated other comprehensive income (loss) and regulatory assets were not material during the three and six months ended June 30, 2024 and 2023.

Net periodic benefit costs for our other pension and postretirement benefit plans were not material for the three and six months ended June 30, 2024 and 2023.

The components of our net periodic costs have been recorded or reclassified to other expense, net in the condensed consolidated statements of income.

Pursuant to their respective regulatory orders, FPU and Chesapeake Utilities continue to record, as a regulatory asset, a portion of their unrecognized postretirement benefit costs related to their regulated operations.

Pursuant to their respective regulatory orders, FPU and Chesapeake Utilities continue to record a portion of their unrecognized postretirement benefit costs related to their regulated operations as a regulatory asset.

The portion of the unrecognized pension and postretirement benefit costs related to FPU’s unregulated operations and Chesapeake Utilities' operations is recorded to accumulated other comprehensive income (loss).

During the three months ended March 31, 2024, there were no contributions to the FPU Pension Plan and we do not expect to contribute to the FPU Pension Plan during 2024.

During the three and six months ended June 30, 2024, there were no contributions to the FPU Pension Plan and we do not expect to contribute to the FPU Pension Plan during 2024.

The Chesapeake SERP, the Chesapeake Postretirement Plan and the FPU Medical Plan are unfunded and are expected to be paid out of our general funds.

Cash benefits paid under these other postretirement benefit plans for the three months ended March 31, 2024 were immaterial.

Cash benefits paid under these other postretirement benefit plans for the three and six months ended June 30, 2024 were immaterial.

We expect to pay total cash benefits of less than $ 1.0 million for these other postretirement benefit plans in 2024.

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The participants are credited with gains or losses on those investments.

Assets held in the Rabbi Trust, recorded as Investments on the condensed consolidated balance sheet, had a fair value of $ 13.2 million at March 31, 2024 and $ 12.3 million at December 31, 2023.

Assets held in the Rabbi Trust, recorded as Investments on the condensed consolidated balance sheet, had a fair value of $ 13.6 million at June 30, 2024 and $ 12.3 million at December 31, 2023.

The assets of the Rabbi Trust are at all times subject to the claims of our general creditors.

Share-Based Compensation

Our key employees and non-employee directors have been granted share-based awards through our SICP.

Our key employees and non-employee directors have been granted share-based awards through our SICP, which has awards outstanding under the current 2023 plan and the previous 2013 plan.

We record these share-based awards as compensation costs over the respective service period for which services are received in exchange for an award of equity or equity-based compensation.

The compensation cost is based primarily on the fair value of the shares awarded, using the estimated fair value of each share on the date it was granted, and the number of shares to be issued at the end of the service period.

The table below presents the amounts included in net income related to share-based compensation expense for the three months ended March 31, 2024 and 2023:

Three Months Ended

The table below presents the amounts included in net income related to share-based compensation expense for the three and six months ended June 30, 2024 and 2023:

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(in thousands)

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Our President and CEO has the right to issue awards of shares of our common stock to other officers and key employees of the Company contingent upon various performance goals and subject to SEC transfer restrictions.

We currently have several outstanding multi-year performance plans, which are based upon the successful achievement of long-term goals, growth and financial results and comprise both market-based and performance-based conditions and targets.

We currently have several outstanding multi-year performance awards, which are based upon the successful achievement of long-term goals, growth and financial results and comprise both market-based and performance-based conditions and targets.

The fair value per share, tied to a performance-based condition or target, is equal to the market price per share on the grant date.

For the market-based conditions, we used the Monte Carlo valuation to estimate the fair value of each share granted.

The table below presents the summary of the stock activity for awards to key employees for the three months ended March 31, 2024:

The table below presents the summary of the stock activity for awards to key employees for the six months ended June 30, 2024:

(in thousands, except per share data) Number of Shares Weighted Average

Fair Value/Share

Outstanding—December 31, 2023 213 $ 117.74

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Expired ( 27 ) $ 86.24

Forfeited — $ —

Outstanding—March 31, 2024 253 $ 117.89

During the three months ended March 31, 2024, we granted awards of 110 thousand shares of common stock to officers and key employees under the SICP, including awards granted in February 2024.

Outstanding—June 30, 2024 253 $ 117.89

During the six months ended June 30, 2024, we granted awards of 110 thousand shares of common stock to officers and key employees under the SICP, including awards granted in February 2024.

The shares granted are multi-year awards that will vest no later than the three-year service period ending December 31, 2026.

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Total combined payments for the employees’ tax obligations to the taxing authorities were approximately $ 1.5 million.

At March 31, 2024, the aggregate intrinsic value of the SICP awards granted to key employees was approximately $ 27.2 million.

At March 31, 2024, there was approximately $ 14.2 million of unrecognized compensation cost related to these awards, which will be recognized through 2026.

At June 30, 2024, the aggregate intrinsic value of the SICP awards granted to key employees was approximately $ 26.9 million.

At June 30, 2024, there was approximately $ 12.8 million of unrecognized compensation cost related to these awards, which will be recognized through 2026.

Non-employee Directors

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Accordingly, our directors that served on the Board as of May 2024 each received approximately 1 thousand shares of common stock, respectively, with a weighted average fair value of $ 110.53 per share.

At March 31, 2024, there was less than $ 0.1 million of unrecognized compensation expense related to shares granted to non-employee directors.

At June 30, 2024, there was $ 0.7 million of unrecognized compensation expense related to shares granted to non-employee directors.

This expense will be recognized over the remaining service period ending in May 2025.

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Occasionally, we may enter into interest rate swap agreements to mitigate risk associated with changes in short-term borrowing rates.

As of March 31, 2024, our natural gas and electric distribution operations did not have any outstanding derivative contracts.

As of June 30, 2024, our natural gas and electric distribution operations did not have any outstanding derivative contracts.

Volume of Derivative Activity

As of March 31, 2024, the volume of our commodity derivative contracts were as follows:

As of June 30, 2024, the volume of our commodity derivative contracts were as follows:

Business unit Commodity Contract Type Quantity hedged (in millions) Designation Longest Expiration date of hedge

Sharp Propane (gallons) Purchases 8.8 Cash flow hedges June 2026

Sharp Propane (gallons) Purchases 10.5 Cash flow hedges March 2027

Sharp entered into futures and swap agreements to mitigate the risk of fluctuations in wholesale propane index prices associated with the propane volumes that are expected to be purchased and/or sold during the heating season.

Under the futures and swap agreements, Sharp will receive the difference between (i) the index prices (Mont Belvieu prices in March 2024 through June 2026) and (ii) the per gallon propane swap prices, to the extent the index prices exceed the contracted prices.

Under the futures and swap agreements, Sharp will receive the difference between (i) the index prices (Mont Belvieu prices in June 2024 through March 2027) and (ii) the per gallon propane swap prices, to the extent the index prices exceed the contracted prices.

If the index prices are lower than the contract prices, Sharp will pay the difference.

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The change in the fair value of the swap agreements is recorded as unrealized gain (loss) in other comprehensive income (loss) and later recognized in the statement of income in the same period and in the same line item as the hedged transaction.

We expect to reclassify unrealized gains of approximately $ 0.5 million from accumulated other comprehensive income (loss) related to our commodity cash flow hedges to earnings during the 12 -month period ended March 31, 2025.

We expect to reclassify unrealized gains of approximately $ 0.7 million from accumulated other comprehensive income (loss) related to our commodity cash flow hedges to earnings during the 12 -month period ended June 30, 2025.

Interest Rate Swap Activities

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In September 2022, we entered into an interest rate swap with a notional amount of $ 50.0 million through September 2025, with pricing of 3.98 percent.

Our interest rate swap is cash settled monthly as the counter-party pays us the 30-day SOFR rate less the fixed rate.

In July 2024, we entered into an agreement for an additional interest rate swap effective August 1, 2024 through August 2029, at a notional amount of $ 50.0 million and pricing of 3.97 percent.

Our interest rate swaps are cash settled monthly as the counter-party pays us the 30-day SOFR rate less the fixed rate.

We designate and account for interest rate swaps as cash flow hedges.

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Margin requirements consist of initial margin that is posted upon the initiation of a position, maintenance margin that is usually expressed as a percent of initial margin, and variation margin that fluctuates based on the daily mark-to-market relative to maintenance margin requirements.

We currently maintain a broker margin account for Sharp included within other current assets on the consolidated balance sheet with a balance of $ 2.8 million and $ 2.1 million as of March 31, 2024 and December 31, 2023, respectively.

Financial Statements Presentation

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We did not have any derivative contracts with a credit-risk related contingency.

Fair values of the derivative contracts recorded in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, are as follows:

Fair values of the derivative contracts recorded in the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023, are as follows:

Derivative Assets

Fair Value As Of

(in thousands) Balance Sheet Location March 31, 2024 December 31, 2023

(in thousands) Balance Sheet Location June 30, 2024 December 31, 2023

Derivatives designated as cash flow hedges

3 unchanged sentences

$ 1,372 $ 1,067

(1) Derivative assets, at fair value, include $ 1.0 million in current assets in the condensed consolidated balance sheet at both March 31, 2024 and December 31, 2023, with the remainder of the balance classified as long-term.

(1) Derivative assets, at fair value, include $ 1.2 million in current assets in the condensed consolidated balance sheet at June 30, 2024 and $ 1.0 million at December 31, 2023, with the remainder of the balance classified as long-term .

Derivative Liabilities

Fair Value As Of

(in thousands) Balance Sheet Location March 31, 2024 December 31, 2023

(in thousands) Balance Sheet Location June 30, 2024 December 31, 2023

Derivatives designated as cash flow hedges

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Total Derivative Liabilities (1)

(1) Derivative liabilities, at fair value, were not material at March 31, 2024, and included $ 0.4 million in current liabilities in the condensed consolidated balance sheet at December 31, 2023, with the remainder of the balance classified as long-term.

The effects of gains and losses from derivative instruments on the condensed consolidated financial statements are as follows:

(1) Derivative liabilities, at fair value, included less than $ 0.1 million in current liabilities in the condensed consolidated balance sheet at June 30, 2024 and $ 0.4 million at December 31, 2023, with the remainder of the balance classified as long-term.

The effects of gains and losses from derivative instruments on the condensed consolidated statements of income are as follows:

Amount of Gain (Loss) on Derivatives

Location of Gain For the Three Months Ended March 31,

Location of Gain For the Three Months Ended June 30, For the Six Months Ended June 30,

(in thousands) (Loss) on Derivatives 2024 2023 2024 2023

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Financial Assets and Liabilities Measured at Fair Value

The following tables summarize our financial assets and liabilities that are measured at fair value on a recurring basis and the fair value measurements, by level, within the fair value hierarchy as of March 31, 2024 and December 31, 2023:

Fair Value Measurements Using:

As of March 31, 2024 Fair Value Quoted Prices in

As of June 30, 2024 Fair Value Quoted Prices in

Active Markets

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Derivative liabilities $ 1,281 $ — $ 1,281 $ —

The changes in the fair value of Level 3 investments for the three months ended March 31, 2024 and 2023 were immaterial.

The changes in the fair value of Level 3 investments for the six months ended June 30, 2024 and 2023 were not material.

Investment income from the Level 3 investments is reflected in other income, net in the condensed consolidated statements of income.

At March 31, 2024, there were no non-financial assets or liabilities required to be reported at fair value.

At June 30, 2024, there were no non-financial assets or liabilities required to be reported at fair value.

We review our non-financial assets for impairment at least on an annual basis, as required.

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The fair value of short-term debt approximates the carrying value due to its near-term maturities and because interest rates approximate current market rates (Level 2 measurement).

At March 31, 2024, long-term debt, which includes current maturities but excludes debt issuance costs, had a carrying value of approximately $ 1.2 billion, compared to the estimated fair value of $ 1.1 billion.

At June 30, 2024, long-term debt, which includes current maturities but excludes debt issuance costs, had a carrying value of approximately $ 1.2 billion, compared to the estimated fair value of approximately $ 1.1 billion.

At December 31, 2023, long-term debt, which includes the current maturities but excludes debt issuance costs, had a carrying value of approximately $ 1.2 billion, compared to a fair value of approximately $ 1.2 billion.

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Our outstanding long-term debt is shown below:

March 31, December 31,

June 30, December 31,

(in thousands) 2024 2023

1 unchanged sentence

5.68% notes, due June 2026 $ 5,800 $ 8,700

6.39% notes, due December 2026 100,000 100,000

6.44% notes, due December 2027 100,000 100,000

6.43% notes, due May 2028 2,800 3,500

3.73% notes, due December 2028 10,000 10,000

6.45% notes, due December 2028 100,000 100,000

3.88% notes, due May 2029 25,000 30,000

6.62% notes, due December 2030 100,000 100,000

3.25% notes, due April 2032 56,000 59,500

3.48% notes, due May 31, 2038 50,000 50,000

3.58% notes, due November 30, 2038 50,000 50,000

3.98% notes, due August 20, 2039 100,000 100,000

6.71% notes, due December 2033 100,000 100,000

2.98% notes, due December 2034 70,000 70,000

3.00% notes, due July 2035 50,000 50,000

2 unchanged sentences

5.43% notes, due March 2038 80,000 80,000

5.43% notes, due March 14, 2038 80,000 80,000

6.39% notes, due December 2026 100,000 100,000

6.44% notes, due December 2027 100,000 100,000

6.45% notes, due December 2028 100,000 100,000

6.62% notes, due December 2030 100,000 100,000

6.71% notes, due December 2033 100,000 100,000

3.48% notes, due May 2038 50,000 50,000

3.58% notes, due November 2038 50,000 50,000

6.73% notes, due December 2038 50,000 50,000

3.98% notes, due August 2039 100,000 100,000

2.95% notes, due March 2042 50,000 50,000

Equipment security note

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On November 20, 2023, we issued Senior Notes in the aggregate principal amount of $ 550.0 million at an average interest rate of 6.54 percent that were used to partially finance our acquisition of FCG which closed during the fourth quarter of 2023.

These notes have varying maturity dates of between three and 15 years, and the outstanding principal balance of the notes will be due on their respective maturity dates with interest payments payable semiannually until the principal has been paid in full.

These notes have varying final maturity dates of between three and 15 years, and the outstanding principal balance of the notes (net of annual payments on the 6.73 percent notes which begin in 2029) will be due on their respective maturity dates with interest payments payable semiannually until the principal has been paid in full.

These Senior Notes have similar covenants and default provisions as our other Senior Notes.

On March 14, 2023 we issued 5.43 percent Senior Notes due in March 2038 in the aggregate principal amount of $ 80.0 million and used the proceeds received from the issuances of the Senior Notes to reduce short-term borrowings under our Revolver credit facility and to fund capital expenditures.

These Senior Notes have similar covenants and default provisions as our other Senior Notes, and have an annual principal payment beginning in the sixth year after the issuance.

Shelf Agreements

We have entered into Shelf Agreements with Prudential and MetLife, whom are under no obligation to purchase any unsecured debt, with terms that extend through February 2026.

At March 31, 2024, a total of $ 255.0 million of borrowing capacity was available under these agreements.

We have entered into Shelf Agreements with Prudential and MetLife with terms that extend through February 2026, however neither of such lenders have any obligation to purchase debt thereunder.

At June 30, 2024, a total of $ 255.0 million of borrowing capacity was available under these agreements.

Short-Term Borrowings

We are authorized by our Board of Directors to borrow up to $ 375.0 million of short-term debt, as required.

At March 31, 2024 and December 31, 2023, we had $ 170.4 million and $ 179.9 million, respectively, of short-term borrowings outstanding at a weighted average interest rate of 5.83 percent during each period.

There were no borrowings outstanding under the sustainable investment sublimit of the 364-day tranche at March 31, 2024.

We have entered into several amendments to our Revolver which resulted in modifications to both tranches of the facility.

The most recent amendment in October 2023 increased our funded indebtedness ratio from 65 percent to 70 percent during the quarter in which the acquisition of FCG was consummated and the quarter subsequent to the closing of the acquisition.

The amendment in August 2023 renewed the 364-day tranche of the Revolver providing for $ 175.0 million of short-term debt capacity.

Additionally, the amendment under the 364-day tranche prescribed that borrowings would bear interest (i) based upon the SOFR, plus a 10 -basis point credit spread adjustment, and an applicable margin of 1.05 percent or less, with such margin based on total indebtedness as a percentage of total capitalization or (ii) the base rate, solely at our discretion.

Further, the amendment provided that borrowings under the 364-day green loan sublimit would bear interest at (i) the SOFR rate plus a 10 -basis point credit spread adjustment and an applicable margin of 1.00 percent or less, with such margin based on total indebtedness as a percentage of total capitalization or (ii) the base rate plus 0.05 percent or less, solely at our discretion.

The amendment entered into in 2022 reset the benchmark interest rate to SOFR and eliminated a previous covenant which capped our investment limit to $ 150.0 million for investments where we maintain less than 50 percent ownership.

The 364-day tranche of the Revolver expires in August 2024 and the five-year tranche expires in August 2026.

Borrowings under both tranches of the Revolver are subject to a pricing grid, including the commitment fee and the interest rate charged based upon our total indebtedness to total capitalization ratio for the prior quarter.

As of March 31, 2024, the pricing under the 364-day tranche of the Revolver included a commitment fee of 10 basis points on undrawn amounts and an interest rate of 80 basis points over SOFR plus a 10 -basis point SOFR adjustment on outstanding balances.

As of March 31, 2024, the pricing under the five-year tranche of the Revolver included a commitment fee of 10 -basis points on undrawn amounts and an interest rate of 100 -basis points over SOFR plus a 10 -basis point SOFR adjustment on outstanding balances.

As of June 30, 2024, we are authorized by our Board of Directors to borrow up to $ 375.0 million of short-term debt, as required.

At June 30, 2024 and December 31, 2023, we had $ 207.1 million and $ 179.9 million, respectively, of short-term borrowings outstanding at a weighted average interest rate of 5.95 percent and 5.83 percent, respectively.

There were no borrowings outstanding under the sustainable investment sublimit of the 364-day tranche at June 30, 2024.

In August 2024, we amended and restated our Revolver which increased the total borrowing capacity to $ 450.0 million, including $ 250.0 million available under the 364-day tranche which now expires in August 2025 and $ 200.0 million available under the five-year tranche which now expires in August 2029.

Borrowings under both tranches of the amended and restated Revolver continue to be subject to a pricing grid, including the commitment fee and the interest rate charged based upon our total indebtedness to total capitalization ratio for the prior quarter.

The 364-day tranche continues to bear interest (i) based upon the SOFR, plus a 10 -basis point credit spread adjustment, and an applicable margin of 1.05 percent or less, with such margin based on total indebtedness as a percentage of total capitalization or (ii) the base rate, solely at our discretion.

The five-year tranche continues to bear interest (i) based upon the SOFR, plus a 10-basis point credit spread adjustment, and an applicable margin of 1.25 percent or less, with such margin based on total indebtedness as a percentage of total capitalization or (ii) the base rate, solely at our discretion.

As of June 30, 2024, the pricing under the 364-day tranche of the Revolver included a commitment fee of 10 -basis points on undrawn amounts and an interest rate of 80 -basis points over SOFR plus a 10 -basis point SOFR adjustment on outstanding balances.

As of June 30, 2024, the pricing under the five-year tranche of the Revolver included a commitment fee of 10 -basis points on undrawn amounts and an interest rate of 100 -basis points over SOFR plus a 10 -basis point SOFR adjustment on outstanding balances.

We also utilize interest rate swaps to manage rate risk under our Revolver.

For additional information on interest rate swaps, including swaps currently in place related to our short-term borrowings, see Note 12, Derivative Instruments .

The availability of funds under the Revolver is subject to conditions specified in the credit agreement, all of which we currently satisfy.

1 unchanged sentence

We are required by the financial covenants in the Revolver to maintain, at the end of each fiscal year, a funded indebtedness ratio as described above.

As of March 31, 2024, we were in compliance with this covenant.

Our total available credit under the Revolver at March 31, 2024 was $ 197.6 million.

As of March 31, 2024, we had issued $ 7.0 million in letters of credit to various counterparties under the Revolver.

As of June 30, 2024, we were in compliance with this covenant.

Our total available credit under the Revolver at June 30, 2024 was $ 163.0 million.

As of June 30, 2024, we had issued $ 7.0 million in letters of credit to various counterparties under the Revolver.

These letters of credit are not included in the outstanding short-term borrowings and we do not anticipate that they will be drawn upon by the counterparties.

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For additional information regarding the acquisition and related financing, see Note 3, Acquisitions, Note 9, Stockholders Equity , and Note 14, Long-Term Debt .

For additional information on interest rate swaps related to our short-term borrowings, see Note 12, Derivative Instruments .

We have entered into lease arrangements for office space, land, equipment, pipeline facilities and warehouses.

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We lease land at various locations throughout our service territories to enable us to inject natural gas into underground storage and distribution systems, for bulk storage capacity, for our propane operations and for storage of equipment used in repairs and maintenance of our infrastructure.

We lease natural gas compressors to ensure timely and reliable transportation of natural gas to our customers.

We lease natural gas compressors to ensure timely and reliable

transportation of natural gas to our customers.

We also lease warehouses to store equipment and materials used in repairs and maintenance for our businesses.

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The exercise of lease renewal options is at our sole discretion.

The amounts disclosed in our consolidated balance sheet at March 31, 2024, pertaining to the right-of-use assets and lease liabilities, are measured based on our current expectations of exercising our available renewal options.

The amounts disclosed in our consolidated balance sheet at June 30, 2024, pertaining to the right-of-use assets and lease liabilities, are measured based on our current expectations of exercising our available renewal options.

Our existing leases are not subject to any restrictions or covenants that would preclude our ability to pay dividends, obtain financing or enter into additional leases.

As of March 31, 2024, we have not entered into any leases, which have not yet commenced, that would entitle us to significant rights or create additional obligations.

As of June 30, 2024, we have not entered into any leases, which have not yet commenced, that would entitle us to significant rights or create additional obligations.

The following table presents information related to our total lease cost included in our condensed consolidated statements of income:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in thousands) Classification 2024 2023 2024 2023

1 unchanged sentence

Operations expense $ 738 $ 780 $ 1,474 $ 1,568

(1) Includes short-term leases and variable lease costs, which are immaterial .

The following table presents the balance and classifications of our right of use assets and lease liabilities included in our condensed consolidated balance sheet at March 31, 2024 and December 31, 2023:

(in thousands) Balance sheet classification March 31, 2024 December 31, 2023

(1) Includes short-term leases and variable lease costs, which are not material .

The following table presents the balance and classifications of our right of use assets and lease liabilities included in our condensed consolidated balance sheet at June 30, 2024 and December 31, 2023:

(in thousands) Balance sheet classification June 30, 2024 December 31, 2023

Operating lease assets Operating lease right-of-use assets $ 11,201 $ 12,426

2 unchanged sentences

Total lease liabilities $ 11,794 $ 13,004

The following table presents our weighted-average remaining lease terms and weighted-average discount rates for our operating leases at March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

The following table presents our weighted-average remaining lease terms and weighted-average discount rates for our operating leases at June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

Weighted-average remaining lease term ( in years )

2 unchanged sentences

Operating leases 3.5 % 3.5 %

The following table presents additional information related to cash paid for amounts included in the measurement of lease liabilities included in our condensed consolidated statements of cash flows as of March 31, 2024 and 2023:

Three Months Ended

Six Months Ended

(in thousands) 2024 2023

Operating cash flows from operating leases $ 1,469 $ 1,465

The following table presents the future undiscounted maturities of our operating and financing leases at March 31, 2024 and for each of the next five years and thereafter:

The following table presents the future undiscounted maturities of our operating and financing leases at June 30, 2024 and for each of the next five years and thereafter:

(in thousands) Operating Leases (1)

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements