What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-07 · 264 added, 546 removed, 432 unchanged (65% of the section changed)

13 unchanged sentences

• the impact of significant changes to current tax regulations and rates;

• the timing of certification authorizations associated with new capital projects and the ability to construct facilities at or below estimated costs;

• the timing of certification authorizations associated with new capital projects and the ability to construct facilities at or below estimated costs, and within estimated timeframes;

• changes in environmental and other laws and regulations to which we are subject and environmental conditions of property that we now, or may in the future, own or operate;

• changes in the current political environment, including the effect of the U.S.

Presidential election on the economy and consumer confidence;

• changes in the current political environment, including the effects the Presidential administration could have on energy policy, the economy and consumer confidence;

• possible increased federal, state and local regulation of the safety of our operations;

1 unchanged sentence

• the inherent hazards and risks involved in transporting and distributing natural gas, electricity and propane;

• the economy in our service territories or markets, the nation, and worldwide, including the impact of economic conditions (which we do not control) on demand for natural gas, electricity, propane or other fuels;

• the economy in our service territories or markets, the nation, and worldwide, including the impact of economic conditions (which we do not control) such as the risk and uncertainties associated with tariffs and trade wars, on demand for natural gas, electricity, propane or other fuels;

• risks related to cyber-attacks or cyber-terrorism that could disrupt our business operations or result in failure of information technology systems or result in the loss or exposure of confidential or sensitive customer, employee or Company information;

• issues relating to the implementation and effective use of technologies to support our business, including artificial intelligence;

• adverse weather conditions, including the effects of hurricanes, ice storms and other damaging weather events;

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• the impacts associated with a pandemic, including the duration and scope of the pandemic the corresponding impact on our supply chains, our personnel, our contract counterparties, general economic conditions and growth, the financial markets and any costs to comply with governmental mandates.

Chesapeake Utilities is a Delaware corporation formed in 1947.

We are a diversified energy company engaged, through our operating divisions and subsidiaries, in regulated energy, unregulated energy and other businesses.

We operate primarily on the east coast of the United States and provide natural gas distribution and transmission;

electric distribution and generation;

propane gas distribution;

mobile compressed natural gas services;

steam generation;

and other energy-related services.

Our strategy is focused on growing earnings from a stable regulated energy delivery foundation and investing in related businesses and services that provide opportunities for returns greater than traditional utility returns.

We seek to identify and develop opportunities across the energy value chain, with emphasis on midstream and downstream investments that are accretive to earnings per share, consistent with our long-term growth strategy and create opportunities to continue our record of top tier returns on equity relative to our peer group.

Our growth strategy includes the continued investment and expansion of our regulated operations that provide a stable base of earnings, as well as investments in other related non-regulated businesses and services including sustainable energy initiatives.

By investing in these related business and services, we create opportunities to sustain our track record of higher returns, as compared to a traditional utility.

Chesapeake Utilities Corporation is a Delaware corporation formed in 1947 with operations primarily in the Mid-Atlantic region, North Carolina, South Carolina, Florida and Ohio.

We are an energy delivery company engaged in the distribution of natural gas, electricity and propane, the transmission of natural gas, the generation of electricity and steam, and in providing mobile compressed natural gas and other energy-related services to our customers.

Our strategy is focused on growing earnings from a stable regulated energy delivery foundation and investing in related businesses and services that together provide opportunities for returns greater than traditional utility returns.

We seek to identify and develop opportunities across the energy value chain, with emphasis on regulated midstream and downstream investments that are accretive to earnings per share and create opportunities to continue our record of top tier returns on equity relative to our peer group.

The Company’s growth strategy includes the continued investment and expansion of the Company’s regulated operations that provide a stable base of earnings, as well as investments in other related non-regulated businesses and services including sustainable investments, such as renewable natural gas-related investments.

Currently, our growth strategy is focused on the following platforms, including:

• Prudently deploying investment capital.

◦ Optimizing the earnings growth in our existing businesses, which includes organic growth, territory expansions, and new products and services as well as increased opportunities to transform the Company with a focus on people, process, technology and organizational structure.

◦ Optimizing the earnings growth in our existing businesses, which includes organic growth, territory expansions, and new products and services.

◦ Identification and pursuit of additional pipeline expansions, including new interstate and intrastate transmission projects.

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Revenue and earnings are typically greater during the first and fourth quarters, when consumption of energy is normally highest due to colder temperatures.

Sustainability Initiatives

We continue to remain steadfast in regards to our sustainability commitments, including the following:

• Maintaining a leading role in the journey to a lower carbon future in our service areas.

• Continuing to promote a diverse and inclusive workplace and further the sustainability of the communities we serve.

• Operating our businesses with integrity and the highest ethical standards.

Sustainability Across the Company

Our focus on sustainability is supported and shared across the organization by the dedication and efforts of our Board of Directors and its Committees, as well as the entrepreneurship and dedication of our team.

As stewards of long-term enterprise value, our Board of Directors is committed to overseeing the sustainability of the Company, its environmental stewardship initiatives, its safety and operational compliance practices.

These commitments guide our mission to deliver energy that makes life better for the people and communities we serve.

They impact every aspect of the relationships we have with our stakeholders.

In April of 2024, we unveiled our first in a series of

sustainability micro-reports, with the first report focused on Safety and Reliability.

The Safety and Reliability Report will be followed by at least two additional micro-reports.

The second report, published in September 2024, focused on the Company’s environmental stewardship, including progress on environmental sustainability initiatives and mitigation of greenhouse gas emissions.

The third micro-report, planned for distribution in early 2025, will focus on community impact, reporting on Diversity, Equity and Inclusion ("DEI") initiatives and investments in people, communities and customers.

Transitioning from a single large sustainability report to these micro-reports will provide a steadier release of information throughout the year, including progress updates and new or expanded initiatives and programs.

In addition to the micro-reports, the Company will publish investor-focused tables later this year.

Beginning in 2024, we unveiled our first in a continuing series of sustainability micro-reports.

We encourage our investors to review the micro-reports, as well as prior sustainability reports, which can be accessed on our website, and welcome feedback as we continue to enhance our sustainability disclosures.

Acquisition of Florida City Gas

On November 30, 2023, we completed the acquisition of FCG for $ 922.8 million in cash, which included working capital adjustments as defined in the agreement that were settled during the first quarter of 2024, pursuant to the previously disclosed stock purchase agreement with Florida Power & Light Company.

Upon completion of the acquisition, FCG became a wholly-owned subsidiary of the Company and is included within our Regulated Energy segment.

FCG serves approximately 120,000 residential and commercial natural gas customers across eight counties in Florida, including Miami-Dade, Broward, Brevard, Palm Beach, Hendry, Martin, St.

Lucie and Indian River.

Its natural gas system includes approximately 3,800 miles of distribution main and 80 miles of transmission pipe.

In June 2023, FCG received approval from the Florida PSC for a $23.3 million total increase in base revenue in connection with its May 2022 rate case filing.

The new rates, which became effective as of May 1, 2023, included the transfer of its SAFE program provisions from a rider clause to base rates, an increase in rates associated with a liquefied natural gas facility, and approval of FCG's proposed RSAM with a $25.0 million reserve amount.

The RSAM is recorded as either an increase or decrease to accrued removal costs on the balance sheet, with a corresponding increase or decrease to depreciation and amortization expense.

The impact of FCG's results from the acquisition date and effects on our liquidity are discussed further below and throughout Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

Unless otherwise noted, EPS and Adjusted EPS information are presented on a diluted basis.

Non-GAAP Financial Measures

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Other companies may calculate these non-GAAP financial measures in a different manner.

The following tables reconcile Gross Margin, Net Income, and EPS, all as defined under GAAP, to our non-GAAP financial measures of Adjusted Gross Margin, Adjusted Net Income and Adjusted EPS for the three and nine months ended September 30, 2024 and 2023:

Unless otherwise noted, EPS and Adjusted EPS information are presented on a diluted basis.

Adjusted Gross Margin

For the Three Months Ended September 30, 2024

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

Operating Revenues $ 130,633 $ 35,567 $ (6,062) $ 160,138

Cost of Sales:

Natural gas, propane and electric costs (28,366) (15,868) 6,033 (38,201)

Depreciation & amortization (12,301) (4,553) 3 (16,851)

Operations & maintenance expenses (1)

(10,722) (8,058) — (18,780)

Gross Margin (GAAP) 79,244 7,088 (26) 86,306

Operations & maintenance expenses (1)

10,722 8,058 — 18,780

Depreciation & amortization 12,301 4,553 (3) 16,851

Adjusted Gross Margin (Non-GAAP) $ 102,267 $ 19,699 $ (29) $ 121,937

For the Three Months Ended September 30, 2023

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

Operating Revenues $ 102,411 $ 34,970 $ (5,834) $ 131,547

Cost of Sales:

Natural gas, propane and electric costs (26,518) (16,381) 5,805 (37,094)

Depreciation & amortization (13,192) (4,420) 2 (17,610)

Operations & maintenance expenses (1)

(4,819) (7,532) (382) (12,733)

Gross Margin (GAAP) 57,882 6,637 (409) 64,110

Operations & maintenance expenses (1)

4,819 7,532 382 12,733

Depreciation & amortization 13,192 4,420 (2) 17,610

Adjusted Gross Margin (Non-GAAP) $ 75,893 $ 18,589 $ (29) $ 94,453

For the Nine Months Ended September 30, 2024

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

For the Three Months Ended March 31, 2025

(in millions) Regulated Energy Unregulated Energy Other Businesses and Eliminations Total

Operating Revenues $ 199.6 $ 106.7 $ (7.6) $ 298.7

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Adjusted Gross Margin (Non-GAAP) $ 128.1 $ 54.5 $ (0.2) $ 182.4

For the Nine Months Ended September 30, 2023

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

For the Three Months Ended March 31, 2024

(in millions) Regulated Energy Unregulated Energy Other Businesses and Eliminations Total

Operating Revenues $ 168.4 $ 83.1 $ (5.8) $ 245.7

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(1) Operations & maintenance expenses within the condensed consolidated statements of income are presented in accordance with regulatory requirements and to provide comparability within the industry.

Operations & maintenance expenses which are deemed to be directly attributable to revenue producing activities have been separately presented above in order to calculate Gross Margin as defined under U.S.

2025 to 2024 Gross Margin (GAAP) Variance – Regulated Energy

Gross Margin (GAAP) for the Regulated Energy segment for the quarter ended September 30, 2024 was $79.2 million, an increase of $21.4 million, or 36.9 percent, compared to the same period in 2023.

The increase in gross margin reflects incremental margin attributable to FCG, incremental margin from regulatory initiatives, and organic growth in our natural gas distribution businesses and continued pipeline expansion projects.

Gross Margin (GAAP) for the Regulated Energy segment for the nine months ended September 30, 2024 was $248.8 million, an increase of $71.2 million, or 40.1 percent, compared to the same period in 2023.

The increase in gross margin for the nine-month period is primarily attributable to the factors impacting the third quarter discussed above.

Gross Margin (GAAP) for the Regulated Energy segment for the quarter ended March 31, 2025 was $97.2 million, an increase of $3.9 million, or 4.2 percent, compared to the same period in 2024.

The increase in gross margin largely reflects incremental margin from regulatory initiatives and infrastructure programs, organic growth in our natural gas distribution businesses, pipeline expansion projects, and increased customer consumption.

2025 to 2024 Gross Margin (GAAP) Variance – Unregulated Energy

Gross Margin (GAAP) for the Unregulated Energy segment for the quarter ended September 30, 2024 was $7.1 million, an increase of $0.5 million, or 6.8 percent, compared to the same period in 2023.

The increase in gross margin was primarily attributable to an increased level of virtual pipeline services.

Gross Margin (GAAP) for the Unregulated Energy segment for the nine months ended September 30, 2024 was $52.5 million, an increase of $5.2 million, or 10.9 percent, compared to the same period in 2023.

Higher gross margin reflects higher contributions from our propane operations, an increased level of virtual pipeline services, and improved performance at Aspire.

Gross Margin (GAAP) for the Unregulated Energy segment for the quarter ended March 31, 2025 was $39.9 million, an increase of $6.8 million, or 20.5 percent, compared to the same period in 2024.

The increase in gross margin was primarily attributable to an increased level of customer consumption in our propane distribution business and greater demand for virtual pipeline services.

Adjusted Net Income and Adjusted EPS

Three Months Ended Nine Months Ended

September 30, September 30,

(in thousands, except per share data) 2024 2023 2024 2023

Three Months Ended

(dollars in millions, shares in thousands (except per share data)) 2025 2024

Net Income (GAAP) $ 50.9 $ 46.2

FCG transaction and transition-related expenses, net (1)

593 2,804 2,276 2,898

Adjusted Net Income (Non-GAAP) $ 51.1 $ 46.8

Weighted average common shares outstanding - diluted 23,041 22,306

22,564 17,858 22,402 17,847

Earnings Per Share - Diluted (GAAP) $ 2.21 $ 2.07

FCG transaction and transition-related expenses, net (1)

0.02 0.16 0.10 0.16

Adjusted Earnings Per Share - Diluted (Non-GAAP) $ 2.22 $ 2.10

(1) Transaction and transition-related expenses represent non-recurring costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transaction costs, transition services, consulting, system integration, rebranding, and legal fees.

(2) Weighted average shares for the three and nine months ended September 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.

(1) Transaction and transition-related expenses represent non-recurring costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transition services, consulting, system integration, rebranding, and legal fees.

2025 to 2024 Net Income (GAAP) Variance

Net income (GAAP) for the quarter ended September 30, 2024 was $17.5 million, or $0.78 per share, compared to $9.4 million, or $0.53 per share, for the same quarter of 2023.

Net income for the three months ended September 30, 2024 included $0.6 million of transaction and transition-related expenses in connection with the acquisition and integration of FCG.

Excluding these costs, net income increased by $5.9 million or 48.2 percent compared to the same period in the prior year.

Net income (GAAP) for the nine months ended September 30, 2024 was $81.9 million, or $3.66 per share, compared to $61.9 million, or $3.47 per share, for the same period in 2023.

Net income for the nine months ended September 30, 2024 and 2023 included $2.3 million and $2.9 million, respectively, of transaction and transition-related expenses in connection with the acquisition and integration of FCG.

Excluding these costs, net income increased by $19.4 million or 30.0 percent compared to the same period in the prior year.

Results of Operations for the Three and Nine Months Ended September 30, 2024

Net income (GAAP) for the quarter ended March 31, 2025 was $50.9 million, or $2.21 per share, compared to $46.2 million, or $2.07 per share, for the same quarter of 2024.

Net income for the three months ended March 31, 2025 and 2024, included $0.2 million and $0.6 million, respectively, of transaction and transition-related expenses in connection with the acquisition and integration of FCG.

Excluding these costs, net income increased by $4.3 million or 9.2 percent compared to the prior-year period.

Results of Operations for the Three Months Ended March 31, 2025

Operational Highlights

Our adjusted net income for the three months ended September 30, 2024 was $18.1 million, or $0.80 per share, compared to $12.2 million, or $0.69 per share, for the same quarter of 2023.

The improvements in business unit operating results discussed below were partially offset by the effects of increased interest expense and common shares issued in connection with the acquisition of FCG.

Operating income for the third quarter of 2024 was $40.9 million, an increase of $20.7 million compared to the same period in 2023.

Our adjusted net income for the three months ended March 31, 2025 was $51.1 million, or $2.22 per share, compared to $46.8 million, or $2.10 per share, for the same quarter of 2024.

Operating income for the first quarter of 2025 was $86.8 million, an increase of $7.2 million compared to the same period in 2024.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $6.6 million or 8.2 percent compared to the prior-year period.

An increase in adjusted gross margin in the third quarter of 2024 was driven by contributions from the acquisition of FCG, incremental margin from regulatory initiatives, continued pipeline expansion projects, increased demand for virtual pipeline services and natural gas organic growth.

Higher operating expenses in the third quarter of 2024 were largely associated with the operating expenses of FCG and increased payroll, benefits and other employee-related expenses compared to the prior-year period.

Increases in depreciation, amortization and property taxes attributable to growth projects and FCG were partially offset by a $3.2 million RSAM adjustment from FCG and lower depreciation from our electric operations and Maryland natural gas division resulting from revised rates included in approved depreciation studies.

Adjusted gross margin in the first quarter of 2025 was primarily driven by increased customer consumption resulting from year-over-year colder temperatures in our Mid-Atlantic and Ohio service territories, incremental margin from regulatory initiatives and infrastructure programs, increased demand for virtual pipeline services, natural gas organic growth and pipeline expansion projects.

Higher operating expenses in the first quarter of 2025 were driven largely by the absence of a RSAM adjustment from FCG, increased payroll, benefits and other employee-related expenses, and higher depreciation attributable to growth projects.

Additional expenses associated with facilities, maintenance and outside services, and higher insurance costs also contributed to the increase in operating expenses compared to the prior-year period.

Three Months Ended

September 30, Increase

2024 2023 (Decrease)

(in thousands, except per share data)

Adjusted Gross Margin

Regulated Energy segment $ 102,267 $ 75,893 $ 26,374

Unregulated Energy segment 19,699 18,589 1,110

Other businesses and eliminations (29) (29) —

Total Adjusted Gross Margin $ 121,937 $ 94,453 $ 27,484

Operating Income (Loss)

Regulated Energy segment $ 43,935 $ 24,912 $ 19,023

Unregulated Energy segment (3,061) (4,723) 1,662

Other businesses and eliminations 44 39 5

Total Operating Income 40,918 20,228 20,690

Other income (expense), net 400 (72) 472

Interest charges 17,022 7,076 9,946

Income Before Income Taxes 24,296 13,080 11,216

Income taxes 6,789 3,673 3,116

Net Income $ 17,507 $ 9,407 $ 8,100

Weighted Average Common Shares Outstanding:

Basic 22,501 17,797 4,704

Diluted 22,564 17,858 4,706

Earnings Per Share of Common Stock

Basic $ 0.78 $ 0.53 $ 0.25

Diluted $ 0.78 $ 0.53 $ 0.25

Adjusted Net Income and Adjusted Earnings Per Share

Net Income (GAAP) $ 17,507 $ 9,407 $ 8,100

FCG transaction and transition-related expenses, net (2)

593 2,804 (2,211)

Adjusted Net Income (Non-GAAP) $ 18,100 $ 12,211 $ 5,889

Earnings Per Share - Diluted (GAAP) $ 0.78 $ 0.53 $ 0.25

FCG transaction and transition-related expenses, net (2)

0.02 0.16 (0.14)

Adjusted Earnings Per Share - Diluted (Non-GAAP) $ 0.80 $ 0.69 $ 0.11

(1) Weighted average shares for the quarter ended September 30, 2024 reflect the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG.

(2) Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transaction costs, transition services, consulting, system integration, rebranding and legal fees.

Key variances between the third quarter of 2023 and 2024 included:

(in thousands, except per share data) Pre-tax

Income Earnings

Third Quarter of 2023 Adjusted Results**

$ 16,979 $ 12,211 $ 0.69

Increased Adjusted Gross Margins:

Contributions from acquisitions 23,534 16,958 0.75

Margin from regulated infrastructure programs* 1,806 1,301 0.06

Natural gas transmission service expansions, including interim services* 1,548 1,115 0.05

Increased level of virtual pipeline services 1,098 791 0.04

Natural gas growth including conversions (excluding service expansions) 1,013 730 0.03

Changes in customer consumption (651) (469) (0.02)

28,348 20,426 0.91

Increased Operating Expenses (Excluding Natural Gas, Propane, and Electric Costs):

FCG operating expenses (8,680) (6,255) (0.28)

Payroll, benefits and other employee-related expenses (708) (510) (0.02)

(9,388) (6,765) (0.30)

Interest charges (9,946) (7,167) (0.32)

Increase in shares outstanding due to 2023 and 2024 equity offerings*** — — (0.14)

Net other changes (878) (605) (0.04)

(10,824) (7,772) (0.50)

Third Quarter of 2024 Adjusted Results**

$ 25,115 $ 18,100 $ 0.80

* See the Major Projects and Initiatives table.

** Transaction and transition-related expenses attributable to the acquisition and integration of FCG have been excluded from the Company’s non-GAAP

measures of adjusted net income and adjusted EPS.

See reconciliations above for a detailed comparison to the related GAAP measures.

*** Reflects the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG and shares also issued in 2024.

Our adjusted net income for the nine months ended September 30, 2024 was $84.2 million, or $3.76 per share, compared to $64.8 million, or $3.63 per share, for the same period of 2023.

Adjusted net income for the nine months ended September 30, 2023 included a non-recurring gain of $1.3 million related to a reduction in the Pennsylvania state tax rate.

The improvements in business unit operating results discussed below were partially offset by increased interest expense and common shares issued in connection with the acquisition of FCG.

Operating income for the nine months ended September 30, 2024 was $161.3 million, an increase of $57.8 million compared to the same period in 2023.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $57.0 million or 53.1 percent compared to the prior-year period.

An increase in adjusted gross margin during the first nine months of 2024 was driven by contributions from the acquisition of FCG, incremental margin from regulatory initiatives, natural gas organic growth and continued pipeline expansion projects, higher customer consumption, and improvements from our unregulated businesses.

Higher operating expenses during the first nine months of 2024 were largely associated with FCG, as well as higher insurance related costs compared to the prior-year period.

These increases were partially offset by lower payroll, benefits and other employee-related expenses.

Increases in depreciation and amortization expense attributable to growth projects and FCG were partially offset by an $8.9 million RSAM adjustment from FCG and lower depreciation from our electric operations and Maryland natural gas division due to revised rates resulting from approved depreciation studies.

Nine Months Ended

September 30, Increase

March 31, Increase

2025 2024 (Decrease)

(in thousands, except per share data)

(in millions, except per share data)

Adjusted Gross Margin

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Adjusted Earnings Per Share - Diluted (Non-GAAP) $ 2.22 $ 2.10 $ 0.12

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

Key variances between the nine months ended September 30, 2023 and September 30, 2024 included:

(in thousands, except per share data) Pre-tax

(1) Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transition services, consulting, system integration, rebranding and legal fees.

Key variances between the first quarter of 2024 and 2025 included:

(in millions, except per share data) Pre-tax

Income Earnings

Nine months ended September 30, 2023 Adjusted Results**

$ 87,151 $ 64,782 $ 3.63

Non-recurring Items:

Absence of benefit associated with a reduction in the PA state tax rate — (1,284) (0.06)

First Quarter of 2024 Adjusted Results (1)

$ 63.7 $ 46.8 $ 2.10

Increased Adjusted Gross Margins:

Contributions from acquisitions 72,458 52,952 2.36

Margin from regulated infrastructure programs* 4,424 3,233 0.14

Natural gas growth including conversions (excluding service expansions) 4,182 3,056 0.14

Natural gas transmission service expansions, including interim services* 3,702 2,706 0.12

Rate changes associated with the Florida natural gas base rate proceeding* 1,630 1,191 0.05

Increased level of virtual pipeline services 1,585 1,158 0.05

Improved Aspire Energy performance - rate changes and gathering fees 1,267 926 0.04

Changes in customer consumption 5.5 4.1 0.18

Increased demand for virtual pipeline services 3.6 2.6 0.11

Contributions from regulated infrastructure programs (2)

Natural gas growth (excluding service expansions) 2.2 1.6 0.07

Natural gas transmission service expansions, including interim services (2)

Interim rates from recent rate case activities (2)

Increased propane margins and fees 0.4 0.3 0.01

18.8 13.8 0.60

(Increased) Decreased Operating Expenses (Excluding Natural Gas, Propane, and Electric Costs):

FCG operating expenses (28,813) (21,057) (0.94)

Depreciation, amortization and property tax costs (includes FCG) (3,441) (2,515) (0.11)

Insurance related costs (1,107) (809) (0.04)

Increased Operating Expenses (Excluding Natural Gas, Propane, and Electric Costs):

Depreciation, amortization and property tax costs (5.2) (3.8) (0.17)

Payroll, benefits and other employee-related expenses (4.5) (3.3) (0.14)

Credit, collections and customer service expenses (0.7) (0.5) (0.02)

Facilities expenses, maintenance costs and outside services (0.5) (0.4) (0.02)

Insurance related costs (0.4) (0.3) (0.01)

(11.3) (8.3) (0.36)

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(1.6) (1.2) (0.12)

Nine months ended September 30, 2024 Adjusted Results**

First Quarter of 2025 Adjusted Results (1)

$ 69.6 $ 51.1 $ 2.22

* See the Major Projects and Initiatives table.

(1) Transaction and transition-related expenses attributable to the acquisition and integration of FCG have been excluded from the Company’s non-GAAP

1 unchanged sentence

See reconciliations above for a detailed comparison to the related GAAP measures.

*** Reflects the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG and shares also issued in 2024.

(2) See the Major Projects and Initiatives table.

(3) Reflects the impact of common shares issued under the DRIP and ATM program.

Summary of Key Factors

Recently Completed and Ongoing Major Projects and Initiatives

We continuously pursue and develop additional projects and initiatives to serve existing and new customers, further grow our businesses and earnings, and increase shareholder value.

We continuously pursue and develop additional projects and regulatory initiatives to serve existing and new customers, further grow our businesses and earnings, and increase shareholder value.

The following table includes all major projects and initiatives that are currently underway or recently completed.

Our practice is to add incremental margin associated with new projects and initiatives to this table once negotiations or details are substantially final and/or the associated earnings can be estimated.

Our practice is to add incremental margin associated with new projects and regulatory initiatives to this table once negotiations or details are substantially final and/or the associated earnings can be estimated.

Major projects and initiatives that have generated consistent year-over-year adjusted gross margin contributions are removed from the table at the beginning of the next calendar year.

Adjusted Gross Margin

Three Months Ended Nine Months ended Year Ended Estimate for

September 30, September 30, December 31, Fiscal

(in thousands) 2024 2023 2024 2023 2023 2024 2025

Three Months Ended Year Ended Estimate for

March 31, December 31, Fiscal

(in millions) 2025 2024 2024 2025 2026

Pipeline Expansions:

Southern Expansion $ 586 $ 100 $ 1,758 $ 586 $ 586 $ 2,344 $ 2,344

Beachside Pipeline Expansion 603 603 1,809 1,206 1,810 2,451 2,414

Cloud / Twin Lakes Expansion $ 0.1 $ 0.1 $ 0.6 $ 2.8 $ 3.8

Wildlight 0.5 0.2 1.5 3.0 4.3

Lake Wales 114 114 342 152 265 454 454

Newberry 0.6 — 1.4 2.6 2.6

Worcester Resiliency Upgrade — — — — 9.1

Boynton Beach 0.5 — — 3.0 3.4

3 unchanged sentences

Renewable Natural Gas Supply Projects — — — 4.5 6.7

Miami Inner Loop — — — 0.6 3.6

Total Pipeline Expansions 2.5 0.3 4.0 22.1 42.3

4 unchanged sentences

Capital Cost Surcharge Programs 1.5 0.8 3.2 5.7 7.1

Florida Rate Case Proceeding (1)

3,991 3,991 13,591 11,961 15,835 17,153 17,153

Electric Storm Protection Plan 1.1 0.6 3.2 5.9 8.8

Maryland Rate Case — — — 2.0 3.5

— — — — — TBD TBD

Delaware Rate Case (1)

— — — — — TBD TBD

0.8 — 0.6 4.7 6.1

Electric Rate Case (1)

— — — — — TBD TBD

Electric Storm Protection Plan 717 298 2,024 940 1,326 3,133 5,581

0.7 — 0.3 7.1 8.6

Total Regulatory Initiatives 7.3 2.4 14.7 40.8 56.0

Total $ 16.8 $ 6.1 $ 35.1 $ 82.9 $ 119.0

(1) Includes adjusted gross margin during 2023 comprised of both interim rates and permanent base rates which became effective in March 2023.

(2) Rate case application and depreciation study filed with the Maryland PSC in January 2024.

See additional information provided below.

(3) Rate case application and depreciation study filed with the Delaware PSC in August 2024.

See additional information provided below.

(4) Rate case application filed with the Florida PSC in June 2024.

(1) Includes adjusted gross margin attributable to interim rates during 2024 and 2025.

See additional information provided below.

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Pipeline Expansions

Southern Expansion

Eastern Shore installed a new natural gas driven compressor skid unit at its existing Bridgeville, Delaware compressor station that provides 7,300 Dts of incremental firm transportation pipeline capacity.

The project was placed in service in the fourth quarter of 2023.

The project generated additional adjusted gross margin of $0.5 million and $1.2 million, respectively, for the three and nine months ended September 30, 2024, and is expected to produce adjusted gross margin of $2.3 million in 2024 and thereafter.

Beachside Pipeline Expansion

In June 2021, Peninsula Pipeline and FCG entered into a Transportation Service Agreement for an incremental 10,176 Dts/d of firm service in Indian River County, Florida, to support FCG's growth along the Indian River's barrier island.

As part of this agreement, Peninsula Pipeline constructed approximately 11.3 miles of pipeline from its existing pipeline in Sebastian, Florida.

The project went into service in April 2023.

Subsequent to the acquisition of FCG, the agreement is now an affiliate agreement.

The project generated additional adjusted gross margin of $0.6 million for the nine months ended September 30, 2024, and is expected to produce adjusted gross margin of approximately $2.4 million in 2024 and thereafter.

Cloud / Twin Lakes Expansion

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The expansion also improves reliability and provides operational benefits to FPU’s existing distribution system in the area, supporting future growth.

This project was placed into service during July 2023 and generated additional adjusted gross margin of $0.3 million for the nine months ended September 30, 2024.

We expect this extension to generate annual adjusted gross margin of $0.6 million in 2024 and thereafter.

This project was placed into service during July 2023 and generated consistent adjusted gross margin of $0.1 million for the three months ended March 31, 2025.

We expect this extension to generate annual adjusted gross margin of approximately $0.6 million in 2025 and annually thereafter.

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

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

We expect this expansion to generate approximately $2.2 million of adjusted gross margin in 2025.

We expect this expansion to generate annual adjusted gross margin of approximately $2.2 million in 2025 and $3.2 million annually thereafter.

Wildlight Expansion

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Phase two will consist of two additional pipeline extensions.

The various phases of the project commenced in the first quarter of 2023, with construction on the overall project continuing through 2025.

The petition was approved by the Florida PSC in November 2022.

The project generated additional adjusted gross margin of $0.4 million and $0.7 million for the three and nine months ended September 30, 2024, respectively, and is expected to contribute adjusted gross margin of approximately $1.4 million in 2024 and $3.0 million thereafter.

Lake Wales Expansion

In February 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreement with FPU for an additional 9,000 Dts/d of firm service in the Lake Wales, Florida area.

The PSC approved the petition in April 2023 and Peninsula Pipeline completed the acquisition of an existing pipeline in May 2023 that is being utilized to serve both current and new natural gas customers.

The project generated additional adjusted gross margin of $0.2 million for the nine months ended September 30, 2024, and is expected to contribute adjusted gross margin of approximately $0.5 million in 2024 and beyond.

The various phases of the project commenced in the first quarter of 2023, with construction on the overall project continuing through 2025.

The project generated additional adjusted gross margin of $0.3 million for the three months ended March 31, 2025 and is expected to contribute adjusted gross margin of approximately $3.0 million in 2025 and $4.3 million annually thereafter.

Newberry Expansion

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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, and conversions of the community gas systems began in the second quarter of 2024.

The project generated additional adjusted gross margin of $0.6 million and $0.7 million for the three and nine months ended September 30, 2024, and is expected to contribute adjusted gross margin of approximately $1.4 million in 2024 and $2.6 million thereafter.

The Florida PSC approved it in April 2024, and conversions of the community gas systems commenced in the second quarter of 2024.

The project generated additional adjusted gross margin of $0.6 million for the three months ended March 31, 2025, and is expected to contribute adjusted gross margin of approximately $2.6 million in 2025 and annually thereafter.

Worcester Resiliency Upgrade

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The project will provide long-term incremental supply necessary to support the growing demand of the participating shippers.

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

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

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

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

East Coast Reinforcement Projects

In January 2025, the FERC approved the project, and construction is expected to be complete in the second quarter of 2026.

The project is expected to contribute adjusted gross margin of approximately $9.1 million in 2026.

East Coast Reinforcement Projects (Boynton Beach and New Smyrna Beach)

In December 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities on the East Coast of Florida.

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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.

The projects are expected to contribute adjusted gross margin of approximately $5.1 million in 2025 and $6.3 million in 2026 and beyond.

Central Florida Reinforcement Projects

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

The projects generated additional adjusted gross margin of $0.5 million for the three months ended March 31, 2025 and are expected to contribute adjusted gross margin of approximately $4.7 million in 2025 and $6.0 million annually thereafter.

Central Florida Reinforcement Projects (Plant City and Lake Mattie)

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities located in Central Florida.

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The Florida PSC approved the projects in May 2024.

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

The projects are expected to contribute adjusted gross margin of approximately $0.1 million in 2024 and $2.0 million in 2025 and beyond.

The Plant City project was completed in the fourth quarter of 2024, and the Lake Mattie project is projected to be completed during the fourth quarter of 2025.

The completed project generated additional adjusted

gross margin of $0.3 million for the three months ended March 31, 2025 and both projects are expected to contribute total adjusted gross margin of approximately $2.0 million in 2025 and $4.3 million annually thereafter.

Warwick Pipeline Project

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The project will reinforce the supply and growth for our Delaware division distribution system and expand natural gas service further into Maryland for anticipated future growth.

The project is estimated to be in service during the fourth quarter of 2024.

The project is expected to contribute adjusted gross margin of approximately $0.3 million in 2024 and $1.9 million in 2025 and beyond.

Pioneer Supply Header Pipeline Project

In March 2024, Peninsula Pipeline filed a petition with the Florida PSC for its approval of Firm Transportation Service Agreements with both FCG and FPU for a project that will support greater supply growth of natural gas service in southeast Florida.

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 supports continued customer growth and system reinforcement of these distribution systems.

The Florida PSC approved the petition in July 2024.

This project was placed into service during the fourth quarter of 2024, generated additional adjusted gross margin of $0.5 million for the three months ended March 31, 2025, and is expected to contribute adjusted gross margin of approximately $1.9 million in 2025 and annually thereafter.

Renewable Natural Gas Supply Projects

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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 its July 2024 meeting with the projects estimated to be completed in the first half of 2025.

These three renewable projects cumulatively are projected to generate adjusted gross margin of approximately $5.5 million in 2025.

The Florida PSC approved the petition at its July 2024 meeting with the projects estimated to be completed throughout 2025.

These three renewable projects are projected to generate total adjusted gross margin of approximately $4.5 million in 2025 and $6.7 million annually thereafter.

Miami Inner Loop Pipeline Projects

In September 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of the Transportation Service Agreement with FCG for a series of projects that will enhance the infrastructure in Miami-Dade county.

The proposed expansion consists of the development of several pipeline projects to support growth and support FCG's distribution system in the area and also enhance FCG's ability to obtain gas from various access points in the Miami-Dade county area.

The expansion was approved in February 2025 and construction is expected to be complete in the second half of 2025.

The expansion is expected to contribute adjusted gross margin of approximately $0.6 million in 2025 and $3.6 million annually thereafter.

Pioneer Supply Header Pipeline Project

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

The Florida PSC approved the petition in July 2024 and the project was completed in September 2024.

CNG/RNG/LNG Transportation and Infrastructure

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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.

For t he three and nine months ended September 30, 2024 , there was $0.9 million and $2.3 million, respectively, of incremental adjusted gross margin generated pursuant to the program.

For t he three months ended March 31, 2025 , there was $0.9 million of incremental adjusted gross margin generated pursuant to the program.

The program is expected to generate $6.9 million of adjusted gross margin in 2025 and $9.9 million in 2026.

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The program includes projected capital expenditures of $205.0 million over a 10-year period.

For t he three and nine months ended September 30, 2024 , there was $1.1 million and $2.2 million, respectively, of incremental adjusted gross margin generated pursuant to the program.

For t he three months ended March 31, 2025 , there was $1.3 million of incremental adjusted gross margin generated pursuant to the program.

The program is expected to generate $8.5 million of adjusted gross margin in 2025 and $12.0 million in 2026.

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Capital Cost Surcharge Programs

In December 2019, the FERC approved Eastern Shore’s capital cost surcharge to become effective January 1, 2020.

The surcharge, an approved item in the settlement of Eastern Shore’s last general rate case, allows Eastern Shore to recover capital costs associated with mandated highway or railroad relocation projects that required the replacement of existing Eastern Shore facilities.

For t he three and nine months ended September 30, 2024 , there was $0.1 million and $0.3 million , respectively, of incremental adjusted gross margin generated pursuant to the program.

In December 2024, Eastern Shore submitted a filing with the FERC regarding a capital cost surcharge to recover capital costs associated with the replacement of existing Eastern Shore facilities because of mandated highway relocation projects as well as compliance with PHMSA regulation.

The capital cost surcharge mechanism was approved in Eastern Shore's last rate case.

In conjunction with the filing of this surcharge, a cumulative adjustment to the existing surcharge to reflect additional depreciation was included.

The FERC issued an order approving the surcharge as filed in December 2024.

The combined revised surcharge became effective January 1, 2025.

In March 2025, Eastern Shore submitted an annual true-up filing with the FERC regarding a capital cost surcharge to recover capital costs associated with the replacement of existing Eastern Shore facilities because of mandated highway relocation projects as well as compliance with a PHMSA regulation.

There was no impact to the currently effective surcharge as a result of this filing.

The FERC issued an order approving the surcharge as filed effective April 1, 2025.

For t he three months ended March 31, 2025 , there was $0.7 million of incremental adjusted gross margin generated pursuant to the program.

Eastern Shore expects to produce adjusted gross margin of approximately $5.7 million in 2025 and $7.1 million in 2026 from relocation projects, which is ultimately dependent upon the timing of filings and the completion of construction.

Florida Natural Gas Base Rate Proceeding

In May 2022, our legacy natural gas distribution businesses in Florida filed a consolidated natural gas rate case with the Florida PSC.

The application included a request for the following:

(i) permanent rate relief of approximately $24.1 million, effective January 1, 2023, (ii) a depreciation study also submitted with the filing;

(iii) authorization to make certain changes to tariffs to include the consolidation of rates and rate structure across the businesses and to unify the Florida Natural Gas distribution business under FPU;

(iv) authorization to retain the acquisition adjustment recorded at the time of the FPU merger in our revenue requirement;

and (v) authorization to establish an environmental remediation surcharge for the purposes of addressing future expected remediation costs for FPU MGP sites.

In August 2022, interim rates were approved by the Florida PSC in the amount of approximately $7.7 million on an annualized basis, effective for all meter readings in September 2022.

The discovery process and related hearings were concluded during the fourth quarter of 2022 and briefs were submitted in the same quarter of 2022.

In January 2023, the Florida PSC approved the application for consolidation and permanent rate relief of approximately $17.2 million on an annual basis.

Actual rates in connection with the rate relief were approved by the Florida PSC in February 2023 with an effective date of March 1, 2023.

The proceeding is expected to generate $17.2 million of total adjusted gross margin in 2024 and thereafter.

Maryland Natural Gas Rate Case

In January 2024, our natural gas distribution businesses in Maryland, CUC-Maryland Division, Sandpiper Energy, Inc., and Elkton Gas Company (collectively, “Maryland natural gas distribution businesses”) filed a joint application for a natural gas rate case with the Maryland PSC.

In connection with the application, we are seeking approval of the following:

(i) permanent rate relief of approximately $6.9 million with an ROE of 11.5 percent;

(ii) authorization to make certain changes to tariffs to include a unified rate structure and to consolidate the Maryland natural gas distribution businesses which we anticipate will be called Chesapeake Utilities of Maryland, Inc.;

and (iii) authorization to establish a rider for recovery of the costs associated with our new technology systems.

In August 2024, the Maryland natural gas distribution businesses, the Maryland Office of Peoples' Counsel ("OPC") and PSC Staff reached a settlement agreement which provided for, among other things, an increase in annual base rates of $2.6 million.

In September 2024, the Maryland Public Utility Judge issued an order approving the settlement agreement in part.

The $2.6 million increase in annual base rates was approved and we will file a Phase II filing to determine rate design across the Maryland natural gas distribution businesses, consolidation of the applicable tariffs and recovery of technology costs.

The outcome of the application is subject to review and approval by the Maryland PSC.

Maryland Natural Gas Depreciation Study

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.

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, with new depreciation rates effective as of January 1, 2023.

The approved depreciation rates will result in an annual reduction in depreciation expense of approximately $1.2 million.

Storm Protection Plan

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In October 2024, the Florida PSC approved the Company's projected 2025 SPP costs for both capital and operating expenses.

For the three and nine months ended September 30, 2024, this initiative generated additional adjusted gross margin of $0.4 million and $1.1 million, respectively, and is expected to generate $3.1 million of adjusted gross margin in 2024 and $5.6 million in 2025.

For the three months ended March 31, 2025, this initiative generated additional adjusted gross margin of $0.5 million and is expected to generate $5.9 million of adjusted gross margin in 2025 and $8.8 million in 2026.

We expect continued investment under the SPP going forward.

Maryland Natural Gas Rate Case

In January 2024, our natural gas distribution businesses in Maryland, CUC-Maryland Division, Sandpiper Energy, Inc., and Elkton Gas Company (collectively, the “Maryland natural gas distribution businesses”) filed a joint application for a natural gas rate case with the Maryland PSC.

In connection with the application, we sought approval of the following:

(i) permanent rate relief of approximately $6.9 million with a ROE of 11.5 percent;

(ii) authorization to make certain changes to tariffs to include a unified rate structure and to consolidate the Maryland natural gas distribution businesses;

and (iii) authorization to establish a rider for recovery of the costs associated with our new technology systems.

In August 2024, the Maryland natural gas distribution businesses, the Maryland OPC and PSC staff reached a settlement which provided for, among other things, an increase in annual base rates of $2.6 million.

In September 2024, the Maryland Public Utility Judge issued an order approving the related settlement agreement in part.

The $2.6 million increase in annual base rates was approved and the Company filed a Phase II filing in November 2024 to determine rate design across the Maryland natural gas distribution businesses, consolidation of the applicable tariffs and recovery of technology costs.

The hearing was held in March 2025, during which Phase II was approved, including an additional $0.9 million in revenue requirement for a total cumulative increase of $3.5 million.

A final order was issued in April 2025 and included approval of the consolidation of the operations of CUC-Maryland Division, Sandpiper Energy, and Elkton Gas into one entity which was renamed and will operate as Chesapeake Utilities of Maryland, Inc.

The proceeding is expected to result in additional adjusted gross margin of approximately $2.0 million in 2025 and $3.5 million annually thereafter.

Maryland Natural Gas Depreciation Study

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

A settlement among the Company, PSC staff and the Maryland OPC was reached and the final order approving the related settlement agreement went into effect in July 2024, with new depreciation rates effective as of January 1, 2023.

The approved depreciation rates resulted in an annual reduction in depreciation expense of approximately $1.2 million.

Delaware Natural Gas Rate Case

In August 2024, our Delaware natural gas division filed an application for a natural gas rate case with the Delaware PSC.

In connection with the application, we are seeking approval of the following:

In August 2024, our Delaware natural gas division filed an application for a natural gas rate case with the Delaware PSC seeking approval of the following:

(i) permanent rate relief of approximately $12.1 million with a ROE of 11.5 percent;

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and (iii) authorization to make certain changes to tariffs.

In September 2024, interim rates were approved by the Delaware PSC in the amount of $2.5 million on an annualized basis effective October 2024.

The discovery process has commenced and hearing for the proceeding has been scheduled for May 2025.

The outcome of the application is subject to review and approval by the Delaware PSC.

Annualized interim rates were approved by the Delaware PSC in the amount of $2.5 million and became effective October 2024.

A settlement among the Company, PSC staff and the Delaware Division of the Public Advocate was reached providing an annual revenue increase of $6.1 million, dividing the rate case into two phases and suspending the procedural schedule.

The related, fully executed settlement agreement has been filed in the docket and awaits Delaware PSC approval, with a hearing scheduled in May 2025.

Interim rates, set to recover the $6.1 million increase, went into effect in March 2025.

A procedural schedule is pending in Phase II which will address tariff-related changes including rate design.

For t he three months ended March 31, 2025 , there was $0.8 million of incremental adjusted gross margin generated and final rates are expected to generate approximately $4.7 million of adjusted gross margin in 2025 and $6.1 million in 2026.

FPU Electric Rate Case

In August 2024, our Florida Electric division filed a petition with the Florida PSC seeking a general base rate increase of $12.6 million with a ROE of 11.3 percent based on a 2025 projected test year.

The outcome of the application will be subject to review and approval by the Florida PSC.

In October 2024, annualized interim rates of approximately $1.8 million were approved with an effective date of November 1, 2024.

Annualized interim rates of approximately $1.8 million were approved with an effective date of November 1, 2024.

In March 2025, the Florida PSC approved the permanent rate increase, but the order was subsequently protested.

In May 2025, the Company reached a settlement agreement with the interested parties to resolve all outstanding issues in its current base rate case, which was filed as a joint motion for approval with the Florida PSC.

This settlement allows for a total revenue increase of approximately $8.6 million on an annual basis.

The Company anticipates this agreement to be on the Florida PSC hearing agenda for review and approval in June 2025.

For the three months ended March 31, 2025, there was $0.7 million of incremental adjusted gross margin generated and final rates are expected to generate approximately $7.1 million of adjusted gross margin in 2025 and $8.6 million in 2026.

Other Major Factors Influencing Adjusted Gross Margin

Weather Impact

Weather was not a significant factor to adjusted gross margin in the third quarter of 2024 compared to the same period in 2023.

For the nine months ended September 30, 2024, higher consumption which includes the effects of colder weather conditions compared to the prior-year period resulted in a $1.2 million increase in adjusted gross margin.

While temperatures through September 30, 2024 were colder than the prior-year period, they were approximately 13.2 percent and 13.1 percent warmer, respectively, compared to normal temperatures in our Delmarva and Ohio service territories.

The following table summarizes HDD and CDD variances from the 10-year average HDD/CDD ("Normal") for the three and nine months ended September 30, 2024 and 2023.

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 Variance 2024 2023 Variance

For the three months ended March 31, 2025, higher consumption which includes the effects of colder weather conditions, largely in our Ohio and Delmarva service areas, compared to the prior-year period resulted in a $5.5 million increase in adjusted gross margin.

The following table summarizes HDD and CDD variances from the 10-year average HDD/CDD ("Normal") for the three months ended March 31, 2025 and 2024.

Three Months Ended

2025 2024 Variance

Delmarva Peninsula

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Variance from Normal 97 —

Florida City Gas

Actual HDD 300 214 86

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Variance from Normal 79 (13)

Actual HDD 3,087 2,659 428

10-Year Average HDD ("Normal") 2,801 2,965 (164)

Variance from Normal 286 (306)

Actual CDD 189 181 8

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Natural Gas Distribution Growth

The average number of residential customers served on the Delmarva Peninsula increased by approximately 3.9 percent, for the three and nine months ended September 30, 2024 while our legacy Florida Natural Gas distribution business increased by approximately 3.9 percent and 3.7 percent, respectively, during the same periods.

The average number of residential customers served on the Delmarva Peninsula and at our Florida natural gas distribution business increased by approximately 4.0 percent and 3.0 percent, respectively, for the three months ended March 31, 2025.

The details of the adjusted gross margin increase are provided in the following table:

Three Months Ended Nine Months Ended

September 30, 2024 September 30, 2024

(in thousands) Delmarva Peninsula Florida Delmarva Peninsula Florida

Three Months Ended

March 31, 2025

(in millions) Delmarva Peninsula Florida

Customer Growth:

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Total Customer Growth $ 0.7 $ 1.5

$ 448 $ 565 $ 1,570 $ 2,612

(1) Customer growth amounts for our legacy Florida operations include the effects of revised rates associated with the Company's natural gas base rate proceeding, but exclude the effects of FCG.

Regulated Energy Segment

For the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023:

For the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024:

Three Months Ended

September 30,

2024 2023 Increase

(in thousands)

2025 2024 Increase (Decrease)

(in millions)

Revenue $ 199.6 $ 168.4 $ 31.2

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Operations & maintenance 39.4 36.7 2.7

Depreciation & amortization 12,301 13,192 (891)

Depreciation, amortization and property taxes 25.9 21.0 4.9

Other taxes 2.0 1.8 0.2

FCG transaction and transition-related expenses (2)

0.3 0.9 (0.6)

Other taxes 7,543 5,290 2,253

Total operating expenses 67.6 60.4 7.2

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For a more detailed discussion on the differences between Gross Margin (GAAP) and Adjusted Gross Margin, see the Reconciliation of GAAP to Non-GAAP Measures presented above.

Operating income for the Regulated Energy segment for the third quarter of 2024 was $43.9 million, an increase of $19.0 million or 76.4 percent, over the same period in 2023.

(2) Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transition services, consulting, system integration, rebranding and legal fees.

Operating income for the Regulated Energy segment for the first quarter of 2025 was $60.5 million, an increase of $2.4 million or 4.1 percent, over the same period in 2024.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $1.8 million or 3.1 percent compared to the same period in 2024.

Higher operating income reflects incremental contributions from the acquisition of FCG, incremental margin from regulatory initiatives, continued pipeline expansion projects and organic growth in our natural gas distribution businesses.

Excluding the transaction and transition-related expenses described above, the increase in total operating expenses of $10.4 million was largely attributable to FCG's operating expenses and increased payroll, benefits and other employee-related expenses.

Increases in depreciation and amortization expense attributable to growth projects and FCG were offset by reductions related to revised rates from approved depreciation studies in our electric operations and Maryland natural gas division and a $3.2 million RSAM adjustment from FCG.

Higher operating income reflects incremental margin from regulatory initiatives and infrastructure programs, organic growth in our natural gas distribution businesses, and pipeline expansion projects.

Excluding the transaction and transition-related expenses described above, the increase in total operating expenses of $7.8 million was largely attributable to the absence of a RSAM adjustment from FCG, increased payroll, benefits and other employee-related expenses, and higher depreciation attributable to growth projects.

Items contributing to the quarter-over-quarter increase in adjusted gross margin are listed in the following table:

(in thousands)

Contribution from FCG $ 23,399

(in millions)

Margin from regulated infrastructure programs $ 3.4

Natural gas transmission service expansions, including interim services 1,548

Natural gas growth including conversions (excluding service expansions) 2.2

Natural gas transmission service expansions, including interim services 2.2

Interim rates from recent rate case activities 1.5

Changes in customer consumption 0.7

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Quarter-over-quarter increase in adjusted gross margin $ 9.6

The following narrative discussion provides further detail and analysis of the significant items in the foregoing table.

Contribution from Acquisition of FCG

FCG contributed adjusted gross margin of $23.4 million for the three months ended September 30, 2024.

The following narrative discussion provides further detail and analysis of the significant items in the table above:

Margin from Regulated Infrastructure Programs

Regulated infrastructure programs generated incremental adjusted gross margin of $1.8 million in the third quarter of 2024.

The increase in adjusted gross margin was primarily related to Florida's GUARD program and FPU Electric's SPP.

Regulated infrastructure programs generated incremental adjusted gross margin of $3.4 million in the first quarter of 2025.

The increase in adjusted gross margin was primarily related to FCG's SAFE program, Florida's GUARD program, Eastern Shore's Capital Cost Surcharge program, and FPU Electric's SPP.

Refer to Note 5, Rates and Other Regulatory Activities , in the condensed consolidated financial statements for additional information.

Natural Gas Transmission Service Expansions, including interim services

We generated increased adjusted gross margin of $1.5 million for the three months ended September 30, 2024 from natural gas transmission service expansions of Peninsula Pipeline and Eastern Shore.

Natural Gas Distribution Customer Growth

We generated additional adjusted gross margin of $2.2 million from natural gas customer growth.

Adjusted gross margin increased by $0.6 million for our Florida Natural Gas distribution business and $0.4 million on the Delmarva Peninsula for the three months ended September 30, 2024, as compared to the same period in 2023, due primarily to residential customer growth of 3.9 percent both in Florida and on the Delmarva Peninsula.

Adjusted gross margin increased by $1.5 million for our Florida natural gas distribution service territories and $0.7 million on the Delmarva Peninsula for the three months ended March 31, 2025, as compared to the same period in 2024, due primarily to residential customer growth of 3.0 percent and 4.0 percent in Florida and on the Delmarva Peninsula, respectively.

Natural Gas Transmission Service Expansions, including interim services

We generated increased adjusted gross margin of $2.2 million for the three months ended March 31, 2025 from natural gas transmission service expansions of Peninsula Pipeline and Eastern Shore.

Interim Rates from Recent Rate Case Activities

Interim rates associated with the Delaware natural gas rate case and Florida Electric base rate case contributed additional adjusted gross margin of $1.5 million for the three months ended March 31, 2025.

Refer to Note 5, Rates and Other Regulatory Activities , in the condensed consolidated financial statements for additional information.

Changes in Customer Consumption

We experienced reduced customer consumption in the third quarter of 2024 resulting in reduced adjusted gross margin of $0.4 million.

Increased customer consumption, inclusive of weather-related consumption, contributed additional adjusted gross margin of $0.7 million for the three months ended March 31, 2025.

Operating Expenses

Items contributing to the quarter-over-quarter increase in operating expenses are listed in the following table:

(in thousands)

FCG operating expenses $ 8,680

(in millions)

Depreciation, amortization and property tax costs $ 4.9

Payroll, benefits and other employee-related expenses 2.5

Insurance related costs 0.6

Depreciation, amortization and property tax costs (243)

Credit, collections and customer service costs 0.5

Facilities expenses, maintenance costs and outside services (0.7)

FCG transaction and transition-related expenses (1)

Other variances 549

Quarter-over-quarter increase in operating expenses $ 7.2

(1) Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to, transaction costs, transition services, consulting, system integration, rebranding and legal fees.

For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023:

Nine Months Ended

September 30, Increase

2024 2023 (Decrease)

(in thousands)

Revenue $ 429,684 $ 345,822 $ 83,862

Regulated natural gas and electric costs 105,662 105,692 (30)

Adjusted gross margin (1)

324,022 240,130 83,892

Operations & maintenance 115,942 88,298 27,644

Depreciation & amortization 39,495 39,179 316

FCG transaction and transition-related expenses (2)

3,114 3,899 (785)

Other taxes 22,922 16,926 5,996

Total operating expenses 181,473 148,302 33,171

Operating income $ 142,549 $ 91,828 $ 50,721

(1) Adjusted Gross Margin is a non-GAAP measure utilized by Management to review business unit performance.

For a more detailed discussion on the differences between Gross Margin (GAAP) and Adjusted Gross Margin, see the Reconciliation of GAAP to Non-GAAP Measures presented above.

Operating income for the Regulated Energy segment for the nine months ended September 30, 2024 was $142.5 million, an increase of $50.7 million or 55.2 percent, over the same period in 2023.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $49.9 million or 52.2 percent compared to the same period in 2023.

Higher operating income reflects incremental contributions from the acquisition of FCG, incremental margin from regulatory initiatives, organic growth in our natural gas distribution businesses and continued pipeline expansion projects.

Excluding the transaction and transition-related expenses described above, the increase in total operating expenses of $34.0 million was largely attributable to FCG's operating expenses and higher insurance costs compared to the prior-year period.

Increases in depreciation and amortization expense attributable to growth projects and FCG were largely offset by reductions related to revised rates resulting from approved depreciation studies in our electric operations and Maryland natural gas division and an $8.9 million RSAM adjustment from FCG.

Items contributing to the period-over-period increase in adjusted gross margin are listed in the following table:

(in thousands)

Contribution from FCG $ 71,725

Margin from regulated infrastructure programs 4,424

Natural gas growth including conversions (excluding service expansions) 4,182

Natural gas transmission service expansions, including interim services 3,702

Rate changes associated with the Florida natural gas base rate proceeding (1)

Eastern Shore contracted rate adjustments (238)

Other variances (1,533)

Period-over-period increase in adjusted gross margin $ 83,892

(1) Includes adjusted gross margin contributions from permanent base rates that became effective in March 2023.

The following narrative discussion provides further detail and analysis of the significant items in the foregoing table.

Contribution from Acquisition of FCG

FCG contributed adjusted gross margin of $71.7 million for the nine months ended September 30, 2024.

Margin from Regulated Infrastructure Programs

Regulated infrastructure programs generated incremental adjusted gross margin of $4.4 million for the nine months ended September 30, 2024.

The increase in adjusted gross margin was primarily related to Florida's GUARD program and FPU Electric's SPP.

Refer to Note 5, Rates and Other Regulatory Activities , in the condensed consolidated financial statements for additional information.

Natural Gas Distribution Customer Growth

We generated additional adjusted gross margin of $4.2 million from natural gas customer growth.

Adjusted gross margin increased by $2.6 million for our Florida Natural Gas distribution business and $1.6 million on the Delmarva Peninsula for the nine months ended September 30, 2024, as compared to the same period in 2023, due primarily to residential customer growth of 3.7 percent and 3.9 percent in Florida and on the Delmarva Peninsula, respectively.

Natural Gas Transmission Service Expansions, including interim services

We generated increased adjusted gross margin of $3.7 million for the nine months ended September 30, 2024 from natural gas transmission service expansions of Peninsula Pipeline and Eastern Shore.

Rate Changes Associated with the Florida Natural Gas Base Rate Proceeding

Permanent rates associated with the Florida Natural Gas base rate proceeding, effective on March 1, 2023, contributed additional adjusted gross margin of $1.6 million for the nine months ended September 30, 2024.

Refer to Note 5, Rates and Other Regulatory Activities , in the condensed consolidated financial statements for additional information.

Eastern Shore Contracted Rate Adjustments

Adjustments to contracted rates charged to various Eastern Shore customers resulted in reduced adjusted gross margin of $0.2 million for the nine months ended September 30, 2024.

Operating Expenses

Items contributing to the period-over-period increase in operating expenses are listed in the following table:

(in thousands)

FCG operating expenses $ 28,813

Depreciation, amortization and property taxes 3,805

Facilities, maintenance costs and outside services 677

Insurance related costs 651

FCG transaction and transition-related expenses (1)

Other variances 10

Period-over-period increase in operating expenses $ 33,171

(1) Transaction and transition-related expenses represent costs incurred attributable to the acquisition and integration of FCG including, but not limited to,

transition services, consulting, system integration, rebranding and legal fees.

Unregulated Energy Segment

For the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023:

For the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024:

Three Months Ended

September 30, Increase

2024 2023 (Decrease)

(in thousands)

2025 2024 Increase

(in millions)

Revenue $ 106.7 $ 83.1 $ 23.6

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Operations & maintenance 21.9 18.6 3.3

Depreciation & amortization 4,553 4,420 133

Other taxes 1,221 1,075 146

Total operating expenses 22,760 23,312 (552)

Operating loss $ (3,061) $ (4,723) $ 1,662

(1) Adjusted Gross Margin is a non-GAAP measure utilized by Management to review business unit performance.

For a more detailed discussion on the differences between Gross Margin (GAAP) and Adjusted Gross Margin, see the Reconciliation of GAAP to Non-GAAP Measures presented above.

Operating results for the Unregulated Energy segment for the third quarter of 2024 reflects a $1.7 million improvement compared to the same period in 2023.

Operating results for the second and third quarters historically have been lower due to reduced customer demand during the warmer periods of the year.

The impact to operating income may not align with the seasonal variations in adjusted gross margin as many of the operating expenses are recognized ratably over the course of the year.

Items contributing to the quarter-over-quarter increase in adjusted gross margin are listed in the following table:

(in thousands)

Propane Operations

Contributions from acquisition $ 135

CNG/RNG/LNG Transportation and Infrastructure

Increased level of virtual pipeline services 1,098

Other variances (123)

Quarter-over-quarter increase in adjusted gross margin $ 1,110

The following narrative discussion provides further detail and analysis of the significant items in the foregoing table.

Propane Operations

• Contributions from acquisition - Adjusted gross margin increased by $0.1 million resulting from the acquisition of J.T.

Lee and Son's that was completed in December 2023.

CNG/RNG/LNG Transportation and Infrastructure

• Increased level of virtual pipeline services - Adjusted gross margin increased by $1.1 million during the third quarter of 2024 as compared to the same period in the prior year due to higher levels of CNG hold services.

Operating Expenses

Items contributing to the quarter-over-quarter decrease in operating expenses are listed in the following table:

(in thousands)

Depreciation & amortization and property tax costs 5.5 5.2 0.3

Payroll, benefits and other employee-related expenses (515)

Other variances (279)

Quarter-over-quarter decrease in operating expenses $ (552)

For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023:

Nine Months Ended

September 30, Increase

2024 2023 (Decrease)

(in thousands)

Revenue $ 160,089 $ 158,886 $ 1,203

Unregulated propane and natural gas costs 70,928 75,068 (4,140)

Adjusted gross margin (1)

89,161 83,818 5,343

Operations & maintenance 54,225 55,627 (1,402)

Depreciation & amortization 12,257 12,923 (666)

Other taxes 0.8 0.8 —

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For a more detailed discussion on the differences between Gross Margin (GAAP) and Adjusted Gross Margin, see the Reconciliation of GAAP to Non-GAAP Measures presented above.

Operating results for the Unregulated Energy segment for the nine months ended September 30, 2024 reflect a $7.1 million improvement compared to the same period in 2023.

Adjusted gross margin in the Unregulated Energy segment increased during the first nine months of 2024 primarily due to improved contributions from propane, increased levels of virtual pipeline services, and higher rates and gathering fees at Aspire.

Additionally, decreased operating expenses associated with lower employee costs were partially offset by higher insurance and vehicle costs compared to the prior-year period.

Items contributing to the period-over-period increase in adjusted gross margin are listed in the following table:

(in thousands)

Operating results for the Unregulated Energy segment for the first quarter of 2025 reflect a $4.9 million improvement compared to the same period in 2024.

The increase in adjusted gross margin in the Unregulated Energy segment during the first quarter of 2025 was primarily due to increased consumption in our propane distribution business as well as increased levels of virtual pipeline services.

These improvements were partially offset by an increase in operating expenses which included higher payroll, benefits and other employee-related expenses as well as increased facilities and maintenance costs compared to the prior-year period.

Items contributing to the quarter-over-quarter increase in adjusted gross margin are listed in the following table:

(in millions)

Propane Operations

Increased propane customer consumption $ 4.2

Contributions from acquisition 733

Increased propane margins and service fees 0.4

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Aspire Energy

Increased margins - rate changes and gathering fees 1,267

Increased customer consumption 0.6

Other variances (0.3)

Period-over-period increase in adjusted gross margin $ 5,343

The following narrative discussion provides further detail and analysis of the significant items in the foregoing table.

Quarter-over-quarter increase in adjusted gross margin $ 8.5

The following narrative discussion provides further detail and analysis of the significant items in the table above.

Propane Operations

• Propane customer consumption - Adjusted gross margin increased by $1.3 million due to increased customer consumption including the impact of colder weather during the first half of the year compared to 2023.

• Contributions from acquisition - Adjusted gross margin increased by $0.7 million from the acquisition of J.T.

Lee and Son's that was completed in December 2023.

• Increased propane margins and service fees - Adjusted g ross margin increased by $0.5 million for the nine months ended September 30, 2024 due to increased margins and customer service fees.

• Propane customer consumption - Adjusted gross margin increased by $4.2 million due to increased customer consumption resulting primarily from colder year-over-year weather in our Delmarva service territory.

• Increased propane margins and service fees - Adjusted g ross margin increased by $0.4 million for the three months ended March 31, 2025, mainly due to increased margins and customer service fees.

These market conditions, which include market pricing and competition with other propane suppliers, as well as the availability and price of alternative energy sources, may fluctuate based on changes in demand, supply and other energy commodity prices.

CNG/RNG/LNG Transportation and Infrastructure

• Increased level of virtual pipeline services - Adjusted gross margin increased by $1.6 million during the first nine

months of 2024 as compared to the same period in the prior year largely due to increased levels of CNG hold services.

• Increased level of virtual pipeline services - Adjusted gross margin increased by $3.6 million during the first quarter of 2025 as compared to the same period in the prior year due to higher levels of CNG and RNG hold services.

Aspire Energy

• Increased margins - Adjusted gross margin increased by $1.3 million primarily due to favorable rate changes and increased gathering charges associated with a large commercial customer.

• Increased customer consumption - Adjusted gross margin increased by $0.6 million due to increased customer

consumption during the current year primarily related to year-over-year colder weather in our Ohio service area.

Operating Expenses

Items contributing to the period-over-period decrease in operating expenses are listed in the following table:

(in thousands)

Vehicle expenses $ 575

Insurance related costs 456

Items contributing to the quarter-over-quarter increase in operating expenses are listed in the following table:

(in millions)

Payroll, benefits and other employee-related expenses $ 2.0

Facilities, maintenance costs, and outside services (631)

Facilities expenses, maintenance costs and outside services 1.2

Depreciation, amortization and property tax costs 0.3

Other variances 0.1

Period-over-period decrease in operating expenses $ (1,734)

O THER I NCOME (E XPENSE ), N ET

For the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023

Other income (expense), net, which includes non-operating investment income, interest income, late fees charged to customers, gains or losses from the sale of assets and pension and other benefits expense, amounted to $0.4 million of income in the third quarter of 2024 compared to expense of $0.1 million during the prior-year period.

For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

Other income, net, was $1.7 million for the nine months ended September 30, 2024 compared to $1.0 million during the prior-year period.

Quarter-over-quarter increase in operating expenses $ 3.6

O THER I NCOME , N ET

For the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024

Other income, net, which includes non-operating investment income, interest income, late fees charged to customers, gains or losses from the sale of assets and pension and other benefits expense, amounted to $0.6 million in the first quarter of 2025 compared to $0.2 million during the prior-year period.

I NTEREST C HARGES

For the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023

Interest charges for the three months ended September 30, 2024 increased by $9.9 million compared to the same period in 2023, attributable primarily to the Senior Notes issued in November 2023 in connection with the FCG acquisition.

Higher interest expense on Revolver borrowings driven by higher average outstanding borrowings and interest rates compared to the prior year also contributed to the increase.

The weighted-average interest rate on our Revolver borrowings was 5.8 percent for the three months ended September 30, 2024 compared to 5.5 percent during the prior-year period as a result of the Federal Reserve raising interest rates throughout 2023.

These factors were partially offset by higher capitalized interest during the current period of $0.7 million associated with capital projects.

For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

Interest charges for the nine months ended September 30, 2024 increased by $29.6 million compared to the same period in 2023, attributable primarily to the Senior Notes issued in November 2023 in connection with the FCG acquisition.

Higher interest expense on Revolver borrowings of driven by higher average outstanding borrowings and interest rates compared to the prior year also contributed to the increase.

The weighted-average interest rate on our Revolver borrowings was 5.8 percent for the nine months ended September 30, 2024 compared to 5.3 percent during the prior-year period as a result of the Federal Reserve raising interest rates throughout 2023.

These factors were partially offset by higher capitalized interest during the current period of $1.9 million associated with capital projects.

For the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024

Interest charges for the three months ended March 31, 2025 increased by $1.1 million compared to the same period in 2024, attributable primarily to the Senior Notes issued in November 2024.

Increased interest expense on higher average outstanding Revolver borrowings also contributed to the increase, partially offset by a lower weighted-average interest rate compared to the prior-year period.

The weighted-average interest rate on our Revolver borrowings was 5.1 percent for the three months ended March 31, 2025 compared to 5.8 percent during the prior-year period.

I NCOME T AXES

For the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023

Income tax expense was $6.8 million and $3.7 million for the quarters ended September 30, 2024 and September 30, 2023, respectively, resulting in an effective income tax rate of 27.9 percent and 28.1 percent, respectively, during the periods then ended.

For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

Income tax expense was $30.2 million and $21.4 million for the nine months ended September 30, 2024 and 2023, respectively, resulting in an effective income tax rate of 26.9 percent and 25.7 percent, respectively, during the periods then ended.

Income tax expense for the nine months ended September 30, 2023 included a $1.3 million benefit in deferred tax expense resulting

from a reduction in the Pennsylvania state income tax rate.

Excluding this change, our effective income tax rate was 27.2 percent for the nine months ended September 30, 2023.

For the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024

Income tax expense was $18.4 million and $16.6 million for the quarters ended March 31, 2025 and March 31, 2024, respectively, resulting in an effective income tax rate of 26.6 percent and 26.4 percent, respectively, during the periods then ended.

F INANCIAL P OSITION , L IQUIDITY AND C APITAL R ESOURCES

Our capital requirements reflect the capital-intensive and seasonal nature of our business and are principally attributable to investment in new plant and equipment, retirement of outstanding debt and seasonal variability in working capital.

We rely on cash generated from operations, short-term borrowings, and other sources to meet normal working capital requirements and to temporarily finance capital expenditures.

We rely on cash generated from operations, short-term borrowings, and other sources to meet normal working capital requirements and to temporarily finance capital expenditures, which we believe will provide sufficient liquidity to fund our current obligations, debt service requirements and capital expenditures over the next twelve months.

We may also issue long-term debt and equity to fund capital expenditures and to maintain our capital structure within our target capital structure range.

We maintain an effective shelf registration statement with the SEC for the issuance of shares of common stock in various types of equity offerings, including the DRIP and previously, shares of common stock under an ATM equity program.

Depending on our capital needs and subject to market conditions, in addition to other possible debt and equity offerings, we may consider issuing additional shares under the direct share purchase component of the DRIP and/or under an ATM equity program.

We maintain an effective shelf registration statement with the SEC for the issuance of shares of common stock in various types of equity offerings, including the DRIP and under an ATM equity program.

Depending on our capital needs and subject to market conditions, in addition to other possible debt and equity offerings, we may consider issuing additional shares under the direct share purchase and waiver components of the DRIP and/or under our ATM equity program.

Our energy businesses are weather-sensitive and seasonal.

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Capital expenditures for investments in new or acquired plant and equipment are our largest capital requirements.

Our capital expenditures were $256.8 million for the nine months ended September 30, 2024.

Our capital expenditures were $112.9 million for the three months ended March 31, 2025.

In the table below, we have provided the range of our forecasted capital expenditures for 2025:

(in thousands) Low High

(in millions) Low High

Regulated Energy:

2 unchanged sentences

Natural gas transmission

75,000 90,000

Electric distribution

30,000 38,000

Total Regulated Energy

265,000 318,000

Unregulated Energy:

Propane distribution

13,000 15,000

Energy transmission

Other unregulated energy

13,000 15,000

Total Unregulated Energy

31,000 36,000

Corporate and other businesses

2 unchanged sentences

Actual capital requirements may vary from the above estimates due to a number of factors, including changing political and economic conditions, supply chain disruptions, capital delays that are greater than currently anticipated, customer growth in existing areas, regulation, new growth or acquisition opportunities and availability of capital and other factors discussed in Item 1A., Risk Factors, in our 2024 Annual Report on Form 10-K.

Historically, actual capital expenditures have typically lagged behind the budgeted amounts.

The timing of capital expenditures can vary based on delays in regulatory approvals, securing environmental approvals and other permits.

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This commitment, along with adequate and timely rate relief for our regulated energy operations, is intended to ensure our ability to attract capital from outside sources at a reasonable cost, which will benefit our customers, creditors, employees and stockholders.

The following table presents our capitalization, excluding and including short-term borrowings, as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

(in thousands)

The following table presents our capitalization, excluding and including short-term borrowings, as of March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

(in millions)

Long-term debt, net of current maturities $ 1,260.0 47 % $ 1,261.7 48 %

1 unchanged sentence

Total capitalization, excluding short-term debt $ 2,707.3 100 % $ 2,651.9 100 %

September 30, 2024 December 31, 2023

(in thousands)

March 31, 2025 December 31, 2024

(in millions)

Short-term debt $ 215.4 7 % $ 196.5 7 %

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Our target ratio of equity to total capitalization, including short-term borrowings, is between 50 and 60 percent.

Our equity to total capitalization ratio, including short-term borrowings, was 49 percent as of September 30, 2024.

Our equity to total capitalization ratio, including short-term borrowings, was 49 percent as of March 31, 2025.

We seek to align permanent financing with the in-service dates of our capital projects.

We may utilize more temporary short-term debt when the financing cost is attractive as a bridge to the permanent long-term financing or if the equity markets are volatile.

In November 2023, in connection with our acquisition of FCG, we completed an equity offering resulting in the issuance of approximately 4.4 million shares of our common stock at a price per share of $82.72 (net of underwriter discounts and commissions).

We received net proceeds of $366.4 million which were used to partially finance the acquisition.

During the first nine months of 2024, we received net proceeds of $56.8 million under the DRIP.

There were no issuances under the DRIP in 2023.

In November 2024, we established a new ATM program under which we may sell shares of our common stock up to an aggregate offering price of $100.0 million.

This current ATM program is active through November 2027.

For the three months ended March 31, 2025 and 2024, we received net proceeds of $19.8 million and $0.1 million, respectively, associated with

shares issued under the direct stock purchase and waiver components of the DRIP as well as shares issued under our ATM program.

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

The Uncollateralized Senior Notes set forth certain business covenants to which we are subject when any note is outstanding, including covenants that limit or restrict our ability, and the ability of our subsidiaries, to incur indebtedness, or place or permit liens and encumbrances on any of our property or the property of our subsidiaries.

At March 31, 2025, a total of $255.0 million of borrowing capacity was available under these Shelf Agreements.

All of our outstanding Senior Notes set forth certain business covenants to which we are subject when any note is outstanding, including covenants that limit or restrict our ability, and the ability of our subsidiaries, to incur indebtedness, or place or permit liens and encumbrances on any of our property or the property of our subsidiaries.

Short-term Borrowings

As of September 30, 2024, we are authorized by our Board of Directors to borrow up to $450.0 million of short-term debt, as required.

At September 30, 2024 and December 31, 2023, we had $214.8 million and $179.9 million, respectively, of short-term borrowings outstanding at a weighted average interest rate of 5.35 percent and 5.83 percent, respectively.

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

As of March 31, 2025, we are authorized by our Board of Directors to borrow up to $450.0 million of short-term debt, as required.

At March 31, 2025 and December 31, 2024, we had $215.4 million and $196.5 million, respectively, of short-term borrowings outstanding at a weighted average interest rate of 5.08 percent and 5.06 percent, respectively.

There were no borrowings outstanding under the sustainable investment sublimit of the 364-day tranche at March 31, 2025.

In August 2024, we amended and restated our revolving credit agreement, which increased the total borrowing capacity under the Revolver 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.

We may also request increases under the Revolver of up to $50.0 million under the 364-day tranche and up to $100.0 million under the five-year tranche, with the lenders having sole discretion of whether to approve each requested increase.

Borrowings under both tranches of the 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.

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These conditions include our compliance with financial covenants and the continued accuracy of representations and warranties contained in the Revolver's loan documents.

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 September 30, 2024, we were in compliance with this covenant.

Our total available credit under the Revolver at September 30, 2024 was $232.2 million.

As of September 30, 2024, we had issued $6.3 million in letters of credit to various counterparties under the Revolver.

We are required by the financial covenants in the Revolver to maintain, at the end of each fiscal year, a funded indebtedness ratio of no greater than 65 percent.

As of March 31, 2025, we were in compliance with this covenant.

Our total available credit under the Revolver at March 31, 2025 was $227.0 million.

As of March 31, 2025, we had issued $7.6 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.

The letters of credit reduce the available borrowings under the Revolver.

In connection with our acquisition of FCG, we entered into a 364-day Bridge Facility commitment with Barclays Bank PLC and other lending parties for up to $965.0 million.

Upon closing of the FCG acquisition in November 2023, and with the completion of other financing activities as defined in the lending agreement, this facility was terminated with no funds drawn to finance the transaction.

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

Long-Term Debt

On November 1, 2024, we issued 5.20 percent Senior Notes due in October 2029 in the aggregate principal amount of $100.0 million.

On November 1, 2024, we issued 5.20 percent Senior Notes due in November 2029 in the aggregate principal amount of $100.0 million.

The proceeds received were used to reduce short-term borrowings under our Revolver and to fund capital expenditures.

These Senior Notes have similar covenants and default provisions as our other Senior Notes, and have semi-annual principal payments due on May 1 and November 1 of each year beginning in 2025.

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 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 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.

The following table provides a summary of our operating, investing and financing cash flows for the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

(in thousands) 2024 2023

These Senior Notes have similar covenants and default provisions as our other Senior Notes, and have semi-annual interest payments due on May 1 and November 1 of each year beginning in 2025.

The following table provides a summary of our operating, investing and financing cash flows for the three months ended March 31, 2025 and 2024:

Three Months Ended

(in millions) 2025 2024

Net cash provided by (used in):

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Working capital requirements are determined by a variety of factors, including weather, the prices of natural gas, electricity and propane, the timing of customer collections, payments for purchases of natural gas, electricity and propane, and deferred fuel cost recoveries.

During the nine months ended September 30, 2024, net cash provided by operating activities was $217.7 million.

During the three months ended March 31, 2025, net cash provided by operating activities was $85.0 million.

Operating cash flows were primarily impacted by the following:

• Net income, adjusted for non-cash adjustments, provided a $79.0 million source of cash;

• Other working capital changes, impacted largely by a reduction in net receivables, resulted in a $36.0 million source of cash;

• An increased level of deferred taxes associated largely with incremental tax depreciation from growth investments resulted in a source of cash of $16.5 million;

• Changes in net regulatory assets and liabilities due primarily to the change in fuel costs collected through the various cost recovery mechanisms resulted in a $3.6 million source of cash;

• Other working capital changes, impacted largely by an increase in net receivables and accrued compensation, resulted in a $14.1 million use of cash.

Cash Flows Used in Investing Activities

Net cash used in investing activities totaled $256.0 million during the nine months ended September 30, 2024, largely driven by $259.6 million for new capital expenditures.

Net cash used in investing activities totaled $113.1 million during the three months ended March 31, 2025, primarily attributable to $113.8 million related to new capital expenditures.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities totaled $35.0 million during the nine months ended September 30, 2024 and included the following:

• Net proceeds of $89.6 million from the issuance of stock under the DRIP and net borrowings under the Revolver;

partially offset by

Net cash provided by financing activities totaled $20.9 million during the three months ended March 31, 2025 and was largely impacted by the following:

• Net proceeds of $19.8 million from the issuance of stock;

• Net borrowings under the Revolver of $20.3 million;

• A $14.5 million use of cash for dividend payments in 2025;

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Off-Balance Sheet Arrangements

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 September 30, 2024 was $35.0 million.

The aggregate amount guaranteed related to our subsidiaries at September 30, 2024 was $27.5 million, with the guarantees expiring on various dates through September 2025.

Our 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, 2025 was $38.0 million.

The aggregate amount guaranteed related to our subsidiaries at March 31, 2025 was $28.6 million, with the guarantees expiring on various dates through March 2026.

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

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

As of September 30, 2024, we have issued letters of credit totaling $6.3 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 September 2025 and to date, none have been used.

The amount of specific purpose guarantees outstanding at March 31, 2025 was $5.2 million.

As of March 31, 2025, we have issued letters of credit totaling $7.6 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 2026 and to date, none have been used.

We do not anticipate that the counterparties will draw upon these letters of credit and we expect that they will be renewed to the extent necessary in the future.

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Recent accounting developments, applicable to us, and their expected impact on our financial position, results of operations and cash flows, are described in Note 1 , Summary of Accounting Policies , to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Recent International Trade Developments

Recently, significant trade tariffs were enacted and proposed to be enacted through presidential executive orders affecting products exported by a number of U.S.

trading partners.

While some tariffs scheduled to take effect were temporarily suspended, broad tariffs remain in effect with the possibility of additional tariffs being imposed.

Trade tariffs are likely to increase the cost of imported materials and equipment, disrupt supply chains, drive economic volatility, and create adverse capital and credit market conditions.

For example, the cost of pipes, meters, transformers, and specialized equipment we use in our capital projects may materially increase thus increasing our overall investment in and cost of these projects.

We are currently unable to predict the effects of the recently imposed and possible future tariffs on our business.

Additionally, the current presidential administration has directed various federal agencies to further evaluate key aspects of U.S.

trade policy and there has been ongoing discussion, commentary and actions regarding potential significant changes to U.S.

trade policies, treaties and tariffs.

In 2025, the President indicated that the United States would impose retaliatory measures with respect to jurisdictions that have or are likely to put in place tax rules that are extraterritorial or disproportionately affect U.S.

The likelihood of these changes being enacted or implemented is unclear.

We are currently unable to predict whether such changes will occur and, if so, their ultimate impact on our businesses.

We are also unable to reasonably estimate the effects of the rapidly evolving trade tariff landscape, which could include project delays, cost increases, and obstacles to the Company’s strategic plan execution.

We are closely monitoring the impacts of trade tariffs and the potential effect they may have on the Company’s financial position, results of operations, or cash flows.

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 2. Management’s Discussion and Analysis