What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-07 · 389 added, 146 removed, 550 unchanged (49% of the section changed)

75 unchanged sentences

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

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 months ended March 31, 2025 and 2024:

Adjusted Gross Margin

For the Three Months Ended March 31, 2025

For the Three Months Ended June 30, 2025

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

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Adjusted Gross Margin (Non-GAAP) $ 117.7 $ 25.0 $ 0.1 $ 142.8

For the Three Months Ended March 31, 2024

For the Three Months Ended June 30, 2024

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

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Adjusted Gross Margin (Non-GAAP) $ 103.3 $ 23.4 $ (0.1) $ 126.6

For the Six Months Ended June 30, 2025

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

Operating Revenues $ 351.4 $ 154.6 $ (14.5) $ 491.5

Cost of Sales:

Natural gas, propane and electric costs (105.6) (75.1) 14.4 (166.3)

Depreciation & amortization (34.4) (10.0) — (44.4)

Operations & maintenance expenses (1)

(27.9) (19.5) 0.7 (46.7)

Gross Margin (GAAP) 183.5 50.0 0.6 234.1

Operations & maintenance expenses (1)

27.9 19.5 (0.7) 46.7

Depreciation & amortization 34.4 10.0 — 44.4

Adjusted Gross Margin (Non-GAAP) $ 245.8 $ 79.5 $ (0.1) $ 325.2

For the Six Months Ended June 30, 2024

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

Operating Revenues $ 299.1 $ 124.5 $ (11.6) $ 412.0

Cost of Sales:

Natural gas, propane and electric costs (77.3) (55.1) 11.5 (120.9)

Depreciation & amortization (27.2) (7.7) — (34.9)

Operations & maintenance expenses (1)

(25.0) (16.3) — (41.3)

Gross Margin (GAAP) 169.6 45.4 (0.1) 214.9

Operations & maintenance expenses (1)

25.0 16.3 — 41.3

Depreciation & amortization 27.2 7.7 — 34.9

Adjusted Gross Margin (Non-GAAP) $ 221.8 $ 69.4 $ (0.1) $ 291.1

(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.

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

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.

Gross Margin (GAAP) for the Regulated Energy segment for the quarter ended June 30, 2025 was $86.3 million, an increase of $10.0 million, or 13.1 percent, compared to the same period in 2024.

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

Gross Margin (GAAP) for the Regulated Energy segment for the six months ended June 30, 2025 was $183.5 million, an increase of $13.9 million, or 8.2 percent, compared to the same period in 2024.

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

Gross Margin (GAAP) for the Unregulated Energy segment for the quarter ended June 30, 2025 was $10.1 million, a decrease of $2.2 million, or 17.9 percent, compared to the same period in 2024.

The decrease in gross margin was primarily attributable to a decreased level of customer consumption in our propane distribution business and lower propane margins and service fees, partially offset by higher CNG, RNG, and LNG services compared to the prior-year period.

Gross Margin (GAAP) for the Unregulated Energy segment for the six months ended June 30, 2025 was $50.0 million, an increase of $4.6 million, or 10.1 percent, compared to the same period in 2024.

The increase in gross margin was primarily attributable to greater demand for CNG, RNG and LNG services and an increased level of customer consumption in our propane distribution business earlier in the year primarily from colder year-over-year weather in our Delmarva service territory.

Adjusted Net Income and Adjusted EPS

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

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

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

0.4 1.1 0.6 1.7

Adjusted Net Income (Non-GAAP) $ 24.3 $ 19.3 $ 75.4 $ 66.1

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

0.02 0.04 0.03 0.07

Adjusted Earnings Per Share - Diluted (Non-GAAP) $ 1.04 $ 0.86 $ 3.25 $ 2.96

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2025 to 2024 Net Income (GAAP) Variance

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.

Net income (GAAP) for the quarter ended June 30, 2025 was $23.9 million, or $1.02 per share, compared to $18.2 million, or $ 0.82 per share, for the same quarter of 2024.

Net income for the three months ended June 30, 2025 and 2024, included $0.4 million and $1.1 million, respectively, of transaction and transition-related expenses in connection with the acquisition and integration of FCG.

Excluding these costs, net income increased by $5.0 million or 25.9 percent compared to the prior-year period.

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

Net income (GAAP) for the six months ended June 30, 2025 was $74.8 million, or $3.22 per share, compared to $64.4 million, or $2.89 per share, for the same quarter of 2024.

Net income for the six months ended June 30, 2025 and 2024, included $0.6 million and $1.7 million, respectively, of transaction and transition-related expenses in connection with the acquisition and integration of FCG.

Excluding these costs, net income increased by $9.3 million or 14.1 percent compared to the prior-year period.

Results of Operations for the Three and Six Months Ended June 30, 2025

Operational Highlights

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.

Our adjusted net income for the three months ended June 30, 2025 was $24.3 million, or $1.04 per share, compared to $19.3 million, or $0.86 per share, for the same quarter of 2024.

Operating income for the second quarter of 2025 was $50.3 million, an increase of $9.5 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 $8.6 million or 20.4 percent compared to the prior-year period.

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.

The increase in adjusted gross margin in the second quarter of 2025 was driven by incremental margin from regulatory initiatives and infrastructure programs, natural gas growth and transmission expansion projects, and increased demand for CNG, RNG, and LNG services.

The increase in operating expenses was driven largely by the absence of a RSAM adjustment from FCG (representing $2.3 million in the second quarter of 2024), higher depreciation attributable to growth projects and expenses associated with facilities, maintenance and outside services.

These increases were partially offset by reduced payroll, benefits and other employee-related expenses during the quarter.

Three Months Ended

March 31, Increase

June 30, Increase

2025 2024 (Decrease)

(in millions, except per share data)

(in millions, except shares (thousands) and per share data)

Adjusted Gross Margin

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(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:

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

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

Income Earnings

First Quarter of 2024 Adjusted Results (1)

Second Quarter of 2024 Adjusted Results (1)

$ 26.4 $ 19.3 $ 0.86

Increased Adjusted Gross Margins:

Changes in customer consumption 5.5 4.1 0.18

Increased demand for virtual pipeline services 3.6 2.6 0.11

Change in Adjusted Gross Margins:

Rate changes associated with recent rate case activities (2)

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

Contributions from regulated infrastructure programs (2)

Increased CNG/RNG/LNG services 3.5 2.5 0.11

Natural gas growth (excluding service expansions) 1.8 1.3 0.06

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

Decreased propane margins and service fees (1.0) (0.7) (0.03)

16.0 11.7 0.50

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

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

Depreciation, amortization and property tax costs (4.5) (3.3) (0.14)

Facilities expenses, maintenance costs and outside services (4.3) (3.1) (0.13)

Payroll, benefits and other employee-related expenses 1.3 1.0 0.04

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

(7.5) (5.4) (0.23)

Interest charges (1.0) (0.7) (0.03)

Increase in shares outstanding due to 2024 and 2025 equity offerings (3)

Net other changes (0.6) (0.6) (0.01)

(1.6) (1.3) (0.09)

Second Quarter of 2025 Adjusted Results (1)

$ 33.3 $ 24.3 $ 1.04

(1) 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.

(2) Refer to Major Projects and Initiatives table for additional information.

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

Our adjusted net income for the six months ended June 30, 2025 was $75.4 million, or $3.25 per share, compared to $66.1 million, or $2.96 per share, for the same period of 2024.

Operating income for the first half of 2025 was $137.1 million, an increase of $16.7 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 $15.2 million or 12.4 percent compared to the prior-year period.

The increase in adjusted gross margin in the f irst half of 2025 was driven by incremental margin from regulatory initiatives and infrastructure programs, natural gas organic growth, increased customer consumption resulting from year-over-year colder temperatures in our Mid-Atlantic and Ohio service territories, and increased CNG, RNG and LNG services.

These increases were partially offset by reduced margin per gallon and related fees in our propane distribution business and a reduced volume of off system sales and service fees.

Higher operating expenses were driven largely by the absence of a RSAM adjustment from FCG (representing $5.7 million during the first half of 2024), higher depreciation attributable to growth projects, increased facilities, maintenance and outside services, and increased payroll, benefits and other employee-related expenses.

Additional expenses associated with vehicle and insurance related costs also contributed to the increase compared to the prior-year period.

Six Months Ended

June 30, Increase

2025 2024 (Decrease)

(in millions, except shares (thousands) and per share data)

Adjusted Gross Margin

Regulated Energy segment $ 245.8 $ 221.8 $ 24.0

Unregulated Energy segment 79.5 69.4 10.1

Other Businesses and Eliminations (0.1) (0.1) —

Total Adjusted Gross Margin $ 325.2 $ 291.1 $ 34.1

Operating Income

Regulated Energy segment $ 112.3 $ 98.6 $ 13.7

Unregulated Energy segment 24.8 21.8 3.0

Other Businesses and Eliminations — — —

Total Operating Income 137.1 120.4 16.7

Other income, net 1.0 1.2 (0.2)

Interest charges 35.9 33.8 2.1

Income Before Income Taxes 102.2 87.8 14.4

Income taxes 27.4 23.4 4.0

Net Income $ 74.8 $ 64.4 $ 10.4

Weighted Average Common Shares Outstanding:

Basic 23,133 22,267 866

Diluted 23,223 22,320 903

Earnings Per Share of Common Stock

Basic $ 3.23 $ 2.89 $ 0.34

Diluted $ 3.22 $ 2.89 $ 0.33

Adjusted Net Income and Adjusted Earnings Per Share

Net Income (GAAP) $ 74.8 $ 64.4 $ 10.4

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

0.6 1.7 (1.1)

Adjusted Net Income (Non-GAAP) $ 75.4 $ 66.1 $ 9.3

Earnings Per Share - Diluted (GAAP) $ 3.22 $ 2.89 $ 0.33

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

0.03 0.07 (0.04)

Adjusted Earnings Per Share - Diluted (Non-GAAP) $ 3.25 $ 2.96 $ 0.29

Key variances between the six months ended June 30, 2024 and June 30, 2025 included:

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

Income Earnings

Six months ended June 30, 2024 Adjusted Results (1)

$ 90.1 $ 66.1 $ 2.96

Change in Adjusted Gross Margins:

Increased CNG/RNG/LNG services 7.1 5.2 0.22

Contributions from regulated infrastructure programs (2)

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

Changes in customer consumption 5.7 4.2 0.18

Rate changes associated with recent rate case activities (2)

Natural gas growth including conversions (excluding service expansions) 4.0 2.9 0.13

Decreased service fees and off system sales (0.7) (0.5) (0.02)

Decreased propane margins and service fees (0.6) (0.4) (0.02)

34.3 25.2 1.08

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

Depreciation, amortization and property taxes (9.7) (7.1) (0.30)

Facilities expenses, maintenance costs and outside services (4.8) (3.5) (0.15)

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

Payroll, benefits and other employee-related expenses (3.2) (2.3) (0.10)

Credit, collections and customer service (0.4) (0.3) (0.01)

(18.1) (13.2) (0.56)

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(3.3) (2.7) (0.23)

First Quarter of 2025 Adjusted Results (1)

Six months ended June 30, 2025 Adjusted Results (1)

$ 103.0 $ 75.4 $ 3.25

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

(2) See the Major Projects and Initiatives table.

(2) Refer to Major Projects and Initiatives table for additional information.

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

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Adjusted Gross Margin

Three Months Ended Year Ended Estimate for

March 31, December 31, Fiscal

Three Months Ended Six Months Ended Year Ended Estimate for

June 30, June 30, December 31, Fiscal

(in millions) 2025 2024 2025 2024 2024 2025 2026

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Miami Inner Loop — — — — — 2.8 7.6

Duncan Plains — — — — — — —

Total Pipeline Expansions 4.4 0.5 6.9 0.8 4.0 22.8 45.3

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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 consistent adjusted gross margin of $0.1 million for the three months ended March 31, 2025.

This project was placed into service during July 2023 and generated additional adjusted gross margin of $0.6 million

for the three and six months ended June 30, 2025.

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

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In August 2022, Peninsula Pipeline and FPU filed a joint petition with the Florida PSC for approval of its Transportation Service Agreement associated with the Wildlight planned community located in Nassau County, Florida.

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

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

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Phase two will consist of two additional pipeline extensions.

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

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.

The project generated additional adjusted gross margin of $0.3 million and $0.6 million for the three and six months ended June 30, 2025, respectively, and is expected to contribute adjusted gross margin of approximately $3.0 million in 2025 and $4.3 million annually thereafter.

Newberry Expansion

3 unchanged sentences

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 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.

The Florida PSC approved it in April 2024.

Conversions of the community gas systems commenced in the second quarter of 2024 and are projected to be complete in the third quarter of 2025.

The project generated additional adjusted gross margin of $0.5 million and $1.1 million for the three and six months ended June 30, 2025, respectively, and is expected to contribute adjusted gross margin of approximately $2.6 million in 2025 and annually thereafter.

Worcester Resiliency Upgrade

In August 2023, Eastern Shore filed an application with the FERC requesting authorization to construct the Worcester Resiliency Upgrade, which consists of a mixture of storage and transmission facilities in Sussex County, DE and Wicomico, Worcester, and Somerset Counties in Maryland.

In August 2023, Eastern Shore filed an application with the FERC requesting authorization to construct the Worcester Resiliency Upgrade, which consists of a mixture of storage and transmission facilities in Sussex County, Delaware and Wicomico, Worcester, and Somerset Counties in Maryland.

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

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.

In June 2025, Eastern Shore filed a limited amended application with the FERC requesting that it issue an order authorizing revised initial transportation rates for the project.

The revised rates were requested to address increased capital costs being incurred related to unanticipated changes in global markets and supply chains.

Eastern Shore requested expedited action by the FERC in relation to this matter and an approved order was issued in July 2025.

The project is expected to generate $10.2 million in adjusted gross margin in 2026 and $17.6 million in 2027 and thereafter.

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

3 unchanged sentences

The Florida PSC approved the projects in March 2024.

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.

New Smyrna Beach was placed into service during May 2025 and construction is projected to be complete for Boynton Beach in the fourth quarter of 2025.

The projects generated adjusted gross margin of $1.2 million and $1.7 million for the three and six months ended June 30, 2025, respectively, and are expected to contribute adjusted gross margin of approximately $4.6 million in 2025 and $6.0 million annually thereafter.

Central Florida Reinforcement Projects (Plant City and Lake Mattie)

3 unchanged sentences

The Florida PSC approved the projects in May 2024 .

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.

The Plant City project was completed in the fourth quarter of 2024, and the Lake Mattie project went into service in July 2025.

The project generated additional adjusted gross margin of $0.3 million and $0.6 million for the three and six months ended June 30, 2025, respectively, and both projects are expected to contribute total adjusted gross margin of approximately $2.6 million in 2025 and $4.3 million annually thereafter.

Warwick Pipeline Project

1 unchanged sentence

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.

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.

This project was placed into service during the fourth quarter of 2024, generated additional adjusted gross margin of $0.5 million and $1.0 million for the three and six months ended June 30, 2025, respectively, and is expected to contribute adjusted gross margin of approximately $1.9 million in 2025 and annually thereafter.

Renewable Natural Gas Supply Projects

3 unchanged sentences

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 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.

The Florida PSC approved the petition at its July 2024 meeting with the projects estimated to be completed in the first half of 2026.

These three renewable projects generated adjusted gross margin of $0.5 million for the three and six months ended June 30, 2025 and are projected to generate total adjusted gross margin of approximately $2.5 million in 2025 and $4.6 million annually thereafter.

Miami Inner Loop Pipeline Projects

1 unchanged sentence

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 was approved in February 2025 and the projects are expected to be in service in the third quarter of 2025.

The expansion is expected to contribute adjusted gross margin of approximately $2.8 million in 2025 and $7.6 million annually thereafter.

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

Duncan Plains Pipeline Project

In July 2025, Aspire Energy Express entered into an agreement with American Electric Power to construct and operate an intrastate natural gas pipeline in central Ohio to serve a new fuel-cell facility, which will provide on-site electric power to a data center.

This new transmission infrastructure is expected to be in service in the first half of 2027.

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

For t he three and six months ended June 30, 2025 , there was $0.8 million and $1.7 million, respectively, 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.

4 unchanged sentences

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

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

For t he three and six months ended June 30, 2025 , there was $1.5 million and $2.8 million, respectively, 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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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.

For t he three and six months ended June 30, 2025 , there was $0.6 million and $1.3 million, respectively, of incremental adjusted gross margin generated pursuant to the program.

Eastern Shore expects to generate 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.

Storm Protection Plan

3 unchanged sentences

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

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.

For the three and six months ended June 30, 2025, this initiative generated additional adjusted gross margin of $0.8 million and $1.3 million, respectively, 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.

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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.

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

For t he three and six months ended June 30, 2025 , there was $0.6 million of incremental adjusted gross margin generated and t he 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

7 unchanged sentences

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

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.

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

A settlement among the Company, PSC staff and the Delaware Division of the Public Advocate was reached and approved by the Delaware PSC in June 2025 providing an annual revenue increase of $6.1 million, as well as dividing the rate case into two phases.

Rates set to recover the approved components of the increase were effective in March 2025.

Phase II of the rate case which will address tariff-related changes including rate design began in July 2025.

For t he three and six months ended June 30, 2025 , there was $1.4 million and $2.2 million, respectively, of incremental adjusted gross margin generated and final rates are expected to generate approximately $4.0 million of adjusted gross margin in 2025 and $6.1 million in 2026.

FPU Electric Rate Case

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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.

This settlement which was approved by the Florida PSC in July 2025, provides for a total revenue increase of approximately $8.6 million on an annual basis, with $1.0 million of the increase deferred from the first year's base rate increase and recovered over three years.

A step-up rate increase was also approved for up to $0.7 million, upon completion of the purchase and refurbishment of certain substations, which is expected in December 2026.

The settlement was approved by the Florida PSC in July 2025.

For the three and six months ended June 30, 2025, there was $2.1 million and $2.8 million, respectively, 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

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

Weather was not a significant factor to adjusted gross margin in the second quarter of 2025 compared to the same period in 2024.

For the six months ended June 30, 2025, increased customer 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 $5.7 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 and six months ended June 30, 2025 and 2024.

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 Variance 2025 2024 Variance

Delmarva Peninsula

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Natural Gas Distribution Growth

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 average number of residential customers served on the Delmarva Peninsula increased by approximately 4.4 percent and 4.2 percent, for the three and six months ended June 30, 2025, respectively, while the Company's Florida natural gas distribution service territories increased by approximately 2.9 percent and 3.0 percent, for the three and six months ended June 30, 2025, respectively.

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

Three Months Ended

March 31, 2025

(in millions) Delmarva Peninsula Florida

Three Months Ended Six Months Ended

June 30, 2025 June 30, 2025

(in millions) Delmarva Peninsula Florida Delmarva Peninsula Florida

Customer Growth:

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Regulated Energy Segment

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

For the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024:

Three Months Ended

2025 2024 Increase (Decrease)

2025 2024 Change

(in millions)

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FCG transaction and transition-related expenses (2)

0.3 0.9 (0.6)

Total operating expenses 65.9 62.8 (3.1)

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(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.

Operating income for the Regulated Energy segment for the second quarter of 2025 was $51.8 million, an increase of $11.3 million, or 27.9 percent, over the same period in 2024.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $10.4 million, or 24.8 percent, compared to the same period in 2024.

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.

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

Excluding the transaction and transition-related expenses described above, the increase in total operating expenses of $4.0 million was largely attributable to the absence of a $2.3 million RSAM adjustment from FCG, expenses associated with facilities, maintenance and outside services and higher depreciation attributable to growth projects.

These increases were partially offset by reduced payroll, benefits and other employee-related expenses during the quarter.

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

(in millions)

Margin from regulated infrastructure programs $ 3.4

Natural gas growth including conversions (excluding service expansions) 2.2

Rate changes associated with recent rate case activities (1)

Natural gas transmission service expansions, including interim services 3.9

Interim rates from recent rate case activities 1.5

Contributions from regulated infrastructure programs 3.7

Natural gas growth including conversions (excluding service expansions) 1.8

Changes in customer consumption 1.1

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Quarter-over-quarter increase in adjusted gross margin $ 14.4

(1) Includes adjusted gross margin contributions from both interim and permanent base rates.

Refer to Major Projects discussion for additional information.

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 $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.

Rate Changes Associated with Recent Rate Case Activities

Rate changes associated with the Delaware and Maryland natural gas rate cases and Florida Electric base rate case contributed additional adjusted gross margin of $4.1 million for the three months ended June 30, 2025.

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 $2.2 million from natural gas customer growth.

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.

We generated increased adjusted gross margin of $3.9 million for the three months ended June 30, 2025 from natural gas transmission service expansions of Peninsula Pipeline and Eastern Shore.

Contributions from Regulated Infrastructure Programs

Regulated infrastructure programs generated incremental adjusted gross margin of $3.7 million in the second quarter of 2025.

The increase in adjusted gross margin was primarily related to FCG's SAFE program, Florida Natural Gas' 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 Distribution Customer Growth

We generated additional adjusted gross margin of $1.8 million from natural gas customer growth.

Adjusted gross margin increased by $1.4 million for our Florida natural gas distribution service territories and $0.4 million on the Delmarva Peninsula for the three months ended June 30, 2025, as compared to the same period in 2024, due to residential customer growth of 2.9 percent and 4.4 percent in Florida and on the Delmarva Peninsula, respectively, as well as growth attributable to commercial and industrial customers.

Changes in Customer Consumption

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.

Increased customer consumption, inclusive of weather-related consumption, contributed additional adjusted gross margin of $1.1 million for the three months ended June 30, 2025.

Operating Expenses

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(in millions)

Facilities expenses, maintenance costs and outside services $ (3.1)

Depreciation, amortization and property tax costs (2.7)

FCG transaction and transition-related expenses (1)

Payroll, benefits and other employee-related expenses 1.7

Insurance related costs 0.6

Credit, collections and customer service costs 0.5

Other variances 0.1

Quarter-over-quarter increase in operating expenses $ (3.1)

(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.

For the six months ended June 30, 2025 compared to the six months ended June 30, 2024:

Six Months Ended

2025 2024 Change

(in millions)

Revenue $ 351.4 $ 299.1 $ 52.3

Regulated natural gas and electric costs 105.6 77.3 28.3

Adjusted gross margin (1)

245.8 221.8 24.0

Operations & maintenance 78.1 73.9 (4.2)

Depreciation, amortization and property taxes 51.4 43.8 (7.6)

Other taxes 3.2 3.2 —

FCG transaction and transition-related expenses (2)

Total operating expenses 133.5 123.2 (10.3)

Operating income $ 112.3 $ 98.6 $ 13.7

(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 six months ended June 30, 2025 was $112.3 million, an increase of $13.7 million or 13.9 percent, over the same period in 2024.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $12.2 million, or 12.1 percent, compared to the same period in 2024.

Excluding the transaction and transition-related expenses described above, the increase in total operating expenses of $11.8 million was largely attributable to the absence of a $5.7 million RSAM adjustment from FCG, higher depreciation attributable to growth projects and expenses associated with facilities, maintenance and outside services.

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

(in millions)

Contributions from regulated infrastructure programs $ 7.1

Natural gas transmission service expansions, including interim services 6.1

Rate changes associated with recent rate case activities (1)

Natural gas growth including conversions (excluding service expansions) 4.0

Changes in customer consumption 1.8

Adjusted gross margin from off-system natural gas capacity sales (0.7)

Other variances 0.1

Period-over-period increase in adjusted gross margin $ 24.0

(1) Includes adjusted gross margin contributions from both interim and permanent base rates.

Refer to Major Projects discussion for additional information.

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

Contributions from Regulated Infrastructure Programs

Regulated infrastructure programs generated incremental adjusted gross margin of $7.1 million for the six months ended June 30, 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 $6.1 million for the six months ended June 30, 2025 from natural gas transmission service expansions of Peninsula Pipeline and Eastern Shore.

Rate Changes Associated with Recent Rate Case Activities

Rate changes associated with the Delaware and Maryland natural gas rate cases and Florida Electric base rate case contributed additional adjusted gross margin of $5.6 million for the six months ended June 30, 2025.

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 $4.0 million from natural gas customer growth.

Adjusted gross margin increased by $2.9 million for our Florida natural gas distribution service territories and $1.1 million on the Delmarva Peninsula for the six months ended June 30, 2025, as compared to the same period in 2024, due to residential customer growth of 3.0 percent and 4.2 percent in Florida and on the Delmarva Peninsula, respectively, as well as growth attributable to commercial and industrial customers.

Changes in Customer Consumption

Increased customer consumption, inclusive of weather-related consumption, contributed additional adjusted gross margin of $1.8 million for the six months ended June 30, 2025.

Adjusted Gross Margin from Off-system Natural Gas Capacity Sales

Fewer off-system natural gas capacity sales reduced adjusted gross margin by $0.7 million for the six months ended June 30, 2025.

Operating Expenses

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

(in millions)

Depreciation, amortization and property tax costs $ (7.6)

Facilities expenses, maintenance costs and outside services (2.4)

Insurance related costs (0.8)

Payroll, benefits and other employee-related expenses (0.8)

FCG transaction and transition-related expenses (1)

Quarter-over-quarter increase in operating expenses $ 7.2

Other variances (0.2)

Period-over-period increase in operating expenses $ (10.3)

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

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Unregulated Energy Segment

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

For the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024:

Three Months Ended

2025 2024 Increase

2025 2024 Change

(in millions)

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Total operating expenses 26.5 23.0 (3.5)

Operating income $ 26.3 $ 21.4 $ 4.9

Operating income/(loss) $ (1.5) $ 0.4 $ (1.9)

(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 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.

Operating results for the Unregulated Energy segment for the second quarter of 2025 reflect a $1.9 million decrease compared to the same period in 2024.

The increase in adjusted gross margin in the Unregulated Energy segment during the second quarter of 2025 was primarily driven by increased levels of CNG, RNG and LNG services and increased customer consumption at Aspire Energy.

These increases were partially offset by reduced customer consumption and margin per gallon and fees in our propane distribution business.

Operating expenses increased due to higher depreciation, amortization and property tax costs as well as increased facilities, maintenance and outside service costs compared to the prior-year period.

Higher payroll, benefits and employee-related expenses also contributed to the increase in operating expenses during the quarter.

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

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Propane Operations

Decreased propane customer consumption $ (1.3)

Decreased propane margins and service fees (1.0)

CNG/RNG/LNG Transportation and Infrastructure

Increased CNG/RNG/LNG services 3.5

Aspire Energy

Increased customer consumption 0.4

Quarter-over-quarter increase in adjusted gross margin $ 1.6

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 decreased by $1.3 million du e to decreased customer consumption resulting primarily due to the conversion of propane customers to our natural gas distribution service.

• Decreased propane margins and service fees - Adjusted g ross margin decreased by $1.0 million d uring the second quarter of 2025, mainly due to decreased 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 CNG, RNG and LNG services - Adjusted gross margin increased by $3.5 million during the second quarter of 2025 as compared to the same period in the prior year due to higher levels of CNG and RNG hold services and contributions from our Full Circle Dairy RNG facility.

Aspire Energy

• Increased customer consumption - Adjusted gross margin increased by $0.4 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 quarter-over-quarter increase in operating expenses are listed in the following table:

(in millions)

Depreciation, amortization and property tax costs $ (1.7)

Facilities expenses, maintenance costs and outside services (1.2)

Payroll, benefits and other employee-related expenses (0.4)

Other variances (0.2)

Quarter-over-quarter increase in operating expenses $ (3.5)

For the six months ended June 30, 2025 compared to the six months ended June 30, 2024:

Six Months Ended

2025 2024 Change

(in millions)

Revenue $ 154.6 $ 124.5 $ 30.1

Unregulated propane and natural gas costs 75.1 55.1 20.0

Adjusted gross margin (1)

79.5 69.4 10.1

Operations & maintenance 42.2 37.2 (5.0)

Depreciation, amortization and property tax costs 11.0 9.0 (2.0)

Other taxes 1.5 1.4 (0.1)

Total operating expenses 54.7 47.6 (7.1)

Operating income $ 24.8 $ 21.8 $ 3.0

(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 for the six months ended June 30, 2025 reflect a $3.0 million improvement compared to the same period in 2024.

The increase in adjusted gross margin in the Unregulated Energy segment during the first half of 2025 was primarily due to increased levels of CNG, RNG and LNG services as well as increased consumption in our propane distribution business and at Aspire Energy.

These improvements were partially offset by an increase in operating expenses which included higher payroll, benefits and other employee-related expenses and increased facilities, maintenance and outside service costs.

Higher depreciation, amortization and property tax costs compared to the prior-year period also contributed to the increase in operating expenses.

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

(in millions)

Propane Operations

Increased propane customer consumption $ 2.9

Increased propane margins and service fees 0.4

Decreased propane margins and service fees (0.6)

CNG/RNG/LNG Transportation and Infrastructure

Increased level of virtual pipeline services 3.6

Increased CNG/RNG/LNG services 7.1

Aspire Energy

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Other variances (0.3)

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

Period-over-period increase in adjusted gross margin $ 10.1

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

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• Propane customer consumption - Adjusted gross margin increased by $2.9 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.

• Decreased propane margins and service fees - Adjusted g ross margin decreased by $0.6 million for the six months ended June 30, 2025, mainly due to decreased margins and customer service fees.

CNG/RNG/LNG Transportation and Infrastructure

• 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.

• Increased level of CNG, RNG and LNG services - Adjusted gross margin increased by $7.1 million for the six months ended June 30, 2025 as compared to the same period in the prior year due to higher levels of CNG and RNG hold services and contributions from our Full Circle Dairy RNG facility.

Aspire Energy

• 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.

• Increased customer consumption - Adjusted gross margin increased by $1.0 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

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Other variances (0.3)

Quarter-over-quarter increase in operating expenses $ 3.6

Period-over-period increase in operating expenses $ (7.1)

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.

For the quarter ended June 30, 2025 compared to the quarter ended June 30, 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 $0.4 million in the second quarter of 2025 compared to $1.0 million during the prior-year period.

For the six months ended June 30, 2025 compared to the six months ended June 30, 2024

Other income, net, was $1.0 million for the six months ended June 30, 2025 compared to $1.2 million during the prior-year period.

I NTEREST C HARGES

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.

For the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024

Interest charges for the three months ended June 30, 2025 increased by $1.0 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.

The weighted-average interest rate on our Revolver borrowings was 5.1 percent for the three months ended June 30, 2025 compared to 5.9 percent during the prior-year period.

For the six months ended June 30, 2025 compared to the six months ended June 30, 2024

Interest charges for the six months ended June 30, 2025 increased by $2.1 million compared to the same period in 2024, attributable primarily to the Senior Notes issued in November 2024.

The weighted-average interest rate on our Revolver borrowings was 5.1 percent for the six months ended June 30, 2025 compared to 5.9 percent during the prior-year period.

I NCOME T AXES

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.

For the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024

Income tax expense was $9.0 million and $6.8 million for the quarters ended June 30, 2025 and June 30, 2024, respectively, resulting in an effective income tax rate of 27.3 percent and 27.2 percent, respectively, during the periods then ended.

For the six months ended June 30, 2025 compared to the six months ended June 30, 2024

Income tax expense was $27.4 million and $23.4 million for the six months ended June 30, 2025 and June 30, 2024, respectively, resulting in an effective income tax rate of 26.8 percent and 26.6 percent, respectively, during the periods then ended.

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

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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 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.

We maintain effective shelf registration statements with the SEC for the issuance of common stock in various types of equity offerings, including pursuant to our DRIP and ATM program.

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

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 $112.9 million for the three months ended March 31, 2025.

Our capital expenditures were $212.8 million for the six months ended June 30, 2025.

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

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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.

During the second quarter of 2025, the Company increased its projected guidance range for 2025 and now expects a range of between $375.0 million to $425.0 million given its investments to date and expected level of spending in the second half of 2025.

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

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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 March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

The following table presents our capitalization, excluding and including short-term borrowings, as of June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024

(in millions)

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Total capitalization, excluding short-term debt $ 2,748.7 100 % $ 2,651.9 100 %

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

(in millions)

4 unchanged sentences

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 March 31, 2025.

Our equity to total capitalization ratio, including short-term borrowings, was 50 percent as of June 30, 2025.

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

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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.

For the six months ended June 30, 2025 and 2024, we received net proceeds of $61.2 million and $2.5 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 March 31, 2025, a total of $255.0 million of borrowing capacity was available under these Shelf Agreements.

We have entered into Shelf Agreements with Prudential and MetLife with terms that extend through February 2026 and June 2030, respectively, however neither of such lenders have any obligation to purchase debt thereunder.

In June 2025, we amended our Shelf Agreement with MetLife to expand the total borrowing capacity and extend the term of the agreement for an additional five years.

At June 30, 2025, a total of $305.0 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 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.

As of June 30, 2025, we are authorized by our Board of Directors to borrow up to $450.0 million of short-term debt, as required.

At June 30, 2025 and December 31, 2024, we had $245.3 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 June 30, 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 and $200.0 million available under the five-year tranche which expires in August 2029.

In August 2025, we exercised an option under the Revolver to extend the 364-day tranche through August 2026.

All other terms and conditions of the agreement remain unchanged.

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.

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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.

As of June 30, 2025, we were in compliance with this covenant.

Our total available credit under the Revolver at June 30, 2025 was $197.1 million.

As of June 30, 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.

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Long-Term Debt

In August 2025, we entered into a Note Purchase Agreement, for the issuance of Senior Notes in the aggregate principal amount of $200.0 million with an initial funding of $150.0 million in August 2025 and an additional $50.0 million scheduled in September 2025.

These Senior Notes have an average interest rate of 5.04 percent consisting of $60.0 million of 4.88 percent notes due in August 2028, $90.0 million of 5.16 percent notes due in August 2031, and $50.0 million of 5.02 percent notes due in September 2030.

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

The outstanding principal balance of the notes will be due on their respective maturity dates with interest payments payable semiannually beginning in 2026 until the principal has been paid in full.

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

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

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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

The following table provides a summary of our operating, investing and financing cash flows for the six months ended June 30, 2025 and 2024:

Six Months Ended

(in millions) 2025 2024

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

During the six months ended June 30, 2025, net cash provided by operating activities was $139.2 million.

Operating cash flows were primarily impacted by the following:

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• An increased level of deferred taxes associated largely with incremental tax depreciation from growth investments resulted in a source of cash of $20.1 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.

• 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 $2.3 million use of cash;

• Other working capital changes resulted in a $7.8 million use of cash.

Cash Flows Used in Investing Activities

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.

Net cash used in investing activities totaled $212.7 million during the six months ended June 30, 2025, primarily attributable to $213.9 million related to new capital expenditures.

Cash Flows Provided by Financing Activities

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 cash provided by financing activities totaled $67.1 million during the six months ended June 30, 2025 and was largely impacted by the following:

• Net proceeds of $61.2 million from the issuance of stock;

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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.

The maximum authorized liability under such guarantees and letters of credit as of June 30, 2025 was $40.0 million.

The aggregate amount guaranteed related to our subsidiaries at June 30, 2025 was $30.7 million, with the guarantees expiring on various dates through June 2026.

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

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.

The amount of specific purpose guarantees outstanding at June 30, 2025 was $5.2 million.

As of June 30, 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 April 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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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