What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 221 added, 201 removed, 738 unchanged (36% of the section changed)

12 unchanged sentences

• the impact of climate change, including the impact of greenhouse gas emissions or other legislation or regulations intended to address climate change;

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

• the impact of significant changes to current tax regulations and rates, including the impact they may have on our financial positions, results of operations and/or cash flows;

• 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;

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

• customers' preferred energy sources;

• customers' preferred energy sources and our expectations regarding customer consumption;

• industrial, commercial and residential growth or contraction in our markets or service territories;

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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.

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

As stewards of long-term enterprise value, our BOD 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.

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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 and six months ended June 30, 2025 and 2024:

Adjusted Gross Margin

For the Three Months Ended June 30, 2025

For the Three Months Ended September 30, 2025

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

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Adjusted Gross Margin (Non-GAAP) $ 114.7 $ 22.4 $ 0.1 $ 137.2

For the Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

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

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Adjusted Gross Margin (Non-GAAP) $ 102.2 $ 19.8 $ — $ 122.0

For the Six Months Ended June 30, 2025

For the Nine Months Ended September 30, 2025

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

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Adjusted Gross Margin (Non-GAAP) $ 360.5 $ 101.9 $ — $ 462.4

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

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

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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 June 30, 2025 was $86.3 million, an increase of $10.0 million, or 13.1 percent, compared to the same period in 2024.

Gross Margin (GAAP) for the Regulated Energy segment for the quarter ended September 30, 2025 was $83.9 million, an increase of $4.7 million, or 5.9 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.

Gross Margin (GAAP) for the Regulated Energy segment for the nine months ended September 30, 2025 was $267.4 million, an increase of $18.6 million, or 7.5 percent, compared to the same period in 2024.

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

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.

Gross Margin (GAAP) for the Unregulated Energy segment for the quarter ended September 30, 2025 was $7.8 million, an increase of $0.6 million, or 8.3 percent, compared to the same period in 2024.

The increase in gross margin was primarily attributable to higher CNG, RNG, and LNG services compared to the prior-year period and increased performance from Aspire Energy, partially offset by lower results from our propane distribution business.

Gross Margin (GAAP) for the Unregulated Energy segment for the nine months ended September 30, 2025 was $57.8 million, an increase of $5.2 million, or 9.9 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, higher results from our propane distribution business largely attributable to increased customer consumption from colder year-over-year weather in our Delmarva service territory, and increased performance from Aspire Energy.

Adjusted Net Income and Adjusted EPS

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

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

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2025 to 2024 Net Income (GAAP) Variance

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.

Net income (GAAP) for the quarter ended September 30, 2025 was $ 19.4 million, or $0.82 per share, compared to $17.5 million, or $ 0.78 per share, for the same quarter of 2024.

Net income for the three months ended September 30, 2025 and 2024, included $0.1 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 $1.4 million or 7.7 percent compared to the prior-year period.

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.

Net income (GAAP) for the nine months ended September 30, 2025 was $94.2 million, or $4.03 per share, compared to $81.9 million, or $3.66 per share, for the same quarter of 2024.

Net income for the nine months ended September 30, 2025 and 2024, included $0.7 million and $2.3 million, respectively, of transaction and transition-related expenses in connection with the acquisition and integration of FCG.

Excluding these costs, net income increased by $10.7 million or 12.7 percent compared to the prior-year period.

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

Results of Operations for the Three and Nine Months Ended September 30, 2025

Operational Highlights

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.

Our adjusted net income for the three months ended September 30, 2025 was $19.5 million, or $0.82 per share, compared to $18.1 million, or $0.80 per share, for the same quarter of 2024.

Operating income for the third quarter of 2025 was $45.0 million, an increase of $4.1 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 $3.5 million or 8.4 percent 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.

The increase in adjusted gross margin in the third 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 higher depreciation attributable to growth projects and the absence of an RSAM adjustment from FCG (which represented a $3.2 million benefit in the third quarter of 2024).

Higher expenses associated with facilities, maintenance and outside services also contributed to the increase.

Three Months Ended

June 30, Increase

September 30, Increase

2025 2024 (Decrease)

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Total Adjusted Gross Margin $ 137.2 $ 122.0 $ 15.2

Operating Income

Operating Income (Loss)

Regulated Energy segment $ 48.9 $ 44.0 $ 4.9

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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 second quarter of 2024 and 2025 included:

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

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

Income Earnings

Second Quarter of 2024 Adjusted Results (1)

Third Quarter of 2024 Adjusted Results (1)

$ 25.1 $ 18.1 $ 0.80

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)

Rate changes associated with recent rate case activities (2)

Increased CNG/RNG/LNG services (2)

Natural gas growth (excluding service expansions) 1.5 1.1 0.05

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

Increased Aspire Energy performance - rate changes and gathering fees 0.4 0.3 0.01

Changes in customer consumption (0.9) (0.6) (0.03)

Change in propane margins and service fees (0.7) (0.5) (0.02)

16.5 11.9 0.50

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

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

Depreciation, amortization and property tax costs (7.7) (5.6) (0.24)

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Payroll, benefits and other employee-related expenses (0.6) (0.4) (0.01)

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

(12.1) (8.8) (0.36)

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(2.4) (1.7) (0.12)

Second Quarter of 2025 Adjusted Results (1)

Third Quarter of 2025 Adjusted Results (1)

$ 27.1 $ 19.5 $ 0.82

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(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.

Our adjusted net income for the nine months ended September 30, 2025 was $94.9 million, or $4.06 per share, compared to $84.2 million, or $3.76 per share, for the same period of 2024.

Operating income for the first nine months of 2025 was $182.1 million, an increase of $20.8 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 $18.7 million or 11.4 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.

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

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

Higher operating expenses were driven largely by the absence of an RSAM adjustment from FCG (which represented an $8.9 million benefit during the first nine months of 2024) and higher depreciation attributable to growth projects.

Higher facilities, maintenance and outside services, insurance, and payroll, benefits and other employee-related expenses compared to the prior-year period also contributed to the increase.

Nine Months Ended

September 30, Increase

2025 2024 (Decrease)

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

Key variances between the nine months ended September 30, 2024 and September 30, 2025 included:

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

Income Earnings

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

Nine months ended September 30, 2024 Adjusted Results (1)

$ 115.2 $ 84.2 $ 3.76

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

11.7 8.5 0.37

Contributions from regulated infrastructure programs (2)

11.0 8.0 0.34

Increased CNG/RNG/LNG services (2)

10.1 7.3 0.31

Rate changes associated with recent rate case activities (2)

Natural gas growth including conversions (excluding service expansions) 5.5 4.0 0.17

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)

Changes in customer consumption 4.8 3.5 0.15

Increased Aspire Energy performance - rate changes and gathering fees 0.2 0.2 0.01

Change in propane margins and service fees (1.3) (0.9) (0.04)

Change in service fees and off-system sales (0.7) (0.5) (0.02)

50.5 36.8 1.58

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Payroll, benefits and other employee-related expenses (3.8) (2.8) (0.12)

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

Insurance related costs (0.7) (0.5) (0.02)

(30.1) (22.0) (0.94)

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(5.5) (4.1) (0.34)

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

Nine months ended September 30, 2025 Adjusted Results (1)

$ 130.1 $ 94.9 $ 4.06

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Adjusted Gross Margin

Three Months Ended Six Months Ended Year Ended Estimate for

June 30, June 30, December 31, Fiscal

Three Months Ended Nine Months Ended Year Ended Estimate for

September 30, September 30, December 31, Fiscal

(in millions) 2025 2024 2025 2024 2024 2025 2026

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This project was placed into service during July 2023 and generated additional adjusted gross margin of $0.9 million

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

and $1.5 million for the three and nine months ended September 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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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 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.

The project generated gross margin of $0.5 million for the three months ended September 30, 2025 and additional adjusted gross margin of $0.5 million for the nine months ended September 30, 2025.

It 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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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.

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

The project generated gross margin of $0.6 million for the three months ended September 30, 2025 and additional adjusted gross margin of $1.1 million for the nine months ended September 30, 2025.

It 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.

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

In January 2025, the FERC approved the project.

Construction has commenced and the project is expected to be placed into service in mid-2026 dependent on final FERC approval.

In June 2025, Eastern Shore filed a limited amended application with the FERC requesting revised initial transportation rates for the project.

The revised rates reflected increased capital costs associated with unanticipated changes in global markets and supply chains, including the availability of skilled laborers with the requisite certifications to work on this project.

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

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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.

The projects are driven by the need for increased supply to coastal portions of the state that are experiencing significant population growth.

Peninsula Pipeline will construct several pipeline extensions which will support FPU’s distribution system in the areas of Boynton Beach and New Smyrna Beach with an additional 15,000 Dts/d and 3,400 Dts/d, respectively.

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 provide additional supply to coastal communities on the East Coast of Florida, which are experiencing significant population growth.

Peninsula Pipeline proposed several pipeline extensions to support FPU’s distribution system in the areas of Boynton Beach and New Smyrna Beach with an additional 15,000 Dts/d and 3,400 Dts/d, respectively.

The Florida PSC approved the projects in March 2024.

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.

The projects generated adjusted gross margin of $1.5 million and $3.2 million for the three and nine months ended September 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)

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.

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

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

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

The Florida PSC approved the projects in May 2024 .

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.

The project generated additional adjusted gross margin of $0.9 million and $1.5 million for the three and nine months ended September 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

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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.

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.

This project was placed into service during the fourth quarter of 2024, generated additional adjusted gross margin of $0.5 million and $1.5 million for the three and nine months ended September 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

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

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

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

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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.

In October 2025, the Florida PSC approved amendments to the Transportation Service Agreements that were filed to include Peninsula Pipeline as a party to the related interconnection agreements.

These three renewable projects generated adjusted gross margin of $1.0 million and $1.5 million for the three and nine months ended September 30, 2025, respectively, and are projected to generate total adjusted gross margin of approximately $2.5 million in 2025 and $5.4 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 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.

The proposed expansion consists of the development of several pipeline projects to support growth and FCG's distribution system in the area, as well as enhance FCG's access to gas from various points in the Miami-Dade County area.

The expansion was approved in February 2025 and interim services began in August 2025 with permanent facilities expected to be in service by the second quarter of 2026.

The project generated adjusted gross margin of $0.9 million for the three and nine months ended September 30, 2025 and is expected to contribute adjusted gross margin of approximately $2.8 million in 2025 and $7.6 million annually thereafter.

Pioneer Supply Header Pipeline Project

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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 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.

For t he three and nine months ended September 30, 2025 , there was $1.0 million and $2.7 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.

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

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.

For t he three and nine months ended September 30, 2025 , there was $1.2 million and $4.0 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 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.

For t he three and nine months ended September 30, 2025 , there was $0.6 million and $1.9 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.

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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 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.

For the three and nine months ended September 30, 2025, this initiative generated additional adjusted gross margin of $1.1 million and $2.4 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 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.

For t he three and nine months ended September 30, 2025 , there was $0.5 million and $1.1 million, respectively, of incremental adjusted gross margin generated and t he proceeding is expected to result in additional adjusted gross margin of approximately $1.5 million in 2025 and $3.5 million annually thereafter.

Maryland Natural Gas Depreciation Study

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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.

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.

In October 2025, a settlement among the Company, PSC staff and the Delaware Division of the Public Advocate was reached for Phase II of the rate case addressing tariff-related changes including rate design and approved by the Delaware Public Service Commission with rates effective as of October 15, 2025.

For t he three and nine months ended September 30, 2025 , there was $0.7 million and $2.9 million, respectively, of incremental adjusted gross margin generated and final rates are expected to generate approximately $4.5 million of adjusted gross margin in 2025 and $6.1 million in 2026.

FPU Electric Rate Case

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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.

For the three and nine months ended September 30, 2025, there was $2.4 million and $5.2 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

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,

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

For the nine months ended September 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 $4.8 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 nine months ended September 30, 2025 and 2024.

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 Variance 2025 2024 Variance

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Natural Gas Distribution Growth

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 average number of residential customers served on the Delmarva Peninsula increased by approximately 4.3 percent for both the three and nine months ended September 30, 2025.

The average number of residential customers served by Florida Public Utilities Company increased by approximately 3.5 percent and 3.9 percent for the three and nine months ended September 30, 2025, respectively, while the average number of residential customers served by Florida City Gas increased by approximately 2.2 percent and 2.1 percent for the three and nine months ended September 30, 2025, respectively.

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

Three Months Ended Six Months Ended

June 30, 2025 June 30, 2025

Three Months Ended Nine Months Ended

September 30, 2025 September 30, 2025

(in millions) Delmarva Peninsula Florida Delmarva Peninsula Florida

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Regulated Energy Segment

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

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

Three Months Ended

September 30,

2025 2024 Change

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Depreciation, amortization and property taxes (2)

26.9 19.8 (7.1)

Other taxes 1.2 1.4 0.2

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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.

(2) Includes the absence of an RSAM adjustment from FCG which represented a $3.2 million benefit in the third quarter of 2024.

(3) 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 second quarter of 2025 was $51.8 million, an increase of $11.3 million, or 27.9 percent, over the same period in 2024.

Operating income for the Regulated Energy segment for the third quarter of 2025 was $48.9 million, an increase of $4.9 million, or 11.1 percent, over the same period in 2024.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $4.3 million, or 9.6 percent, compared to the same period in 2024.

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.

Higher operating income reflects incremental margin from regulatory initiatives and infrastructure programs, 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 $8.2 million was largely attributable to higher depreciation attributable to growth projects and the absence of a $3.2 million RSAM adjustment from FCG during the prior-year period and higher 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.

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(in millions)

Rate changes associated with recent rate case activities (1)

Natural gas transmission service expansions, including interim services $ 5.6

Contributions from regulated infrastructure programs 3.9

Rate changes associated with recent rate case activities (1)

Natural gas growth including conversions (excluding service expansions) 1.5

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

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 Transmission Service Expansions, including interim services

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.

We generated increased adjusted gross margin of $5.6 million for the three months ended September 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.

Regulated infrastructure programs generated incremental adjusted gross margin of $3.9 million in the third 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.

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 $3.6 million for the three months ended September 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 $1.5 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.

Adjusted gross margin increased by $1.2 million for our Florida natural gas distribution service territories and $0.3 million on the Delmarva Peninsula for the three months ended September 30, 2025, as compared to the same period in 2024, due to residential customer growth 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 $1.1 million for the three months ended June 30, 2025.

Customer consumption, inclusive of weather-related consumption, reduced adjusted gross margin by $0.9 million for the three months ended September 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 (1)

Facilities expenses, maintenance costs and outside services (2.1)

FCG transaction and transition-related expenses (2)

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Quarter-over-quarter increase in operating expenses $ (7.6)

(1) Includes the absence of an RSAM adjustment from FCG which represented a $3.2 million benefit in the third quarter of 2024.

(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.

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

Six Months Ended

For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024:

Nine Months Ended

September 30,

2025 2024 Change

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Depreciation, amortization and property taxes (2)

78.3 63.6 (14.7)

Other taxes 4.4 4.6 0.2

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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.

(2) Includes the absence of an RSAM adjustment from FCG which represented an $8.9 million benefit during the nine months ended September 30, 2024.

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.

Operating income for the Regulated Energy segment for the nine months ended September 30, 2025 was $161.2 million, an increase of $18.6 million or 13.0 percent, over the same period in 2024.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $16.5 million, or 11.3 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.

Excluding the transaction and transition-related expenses described above, the increase in total operating expenses of $20.0 million was largely attributable to the absence of an $8.9 million RSAM adjustment from FCG during the prior-year period, higher depreciation attributable to growth projects and expenses associated with facilities, maintenance and outside services and insurance costs.

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 $ 11.7

Contributions from regulated infrastructure programs 11.0

Rate changes associated with recent rate case activities (1)

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

Natural Gas Transmission Service Expansions, including interim services

We generated increased adjusted gross margin of $11.7 million for the nine months ended September 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 $7.1 million for the six months ended June 30, 2025.

Regulated infrastructure programs generated incremental adjusted gross margin of $11.0 million for the nine months ended September 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.

Rate changes associated with the Delaware and Maryland natural gas rate cases and Florida Electric base rate case contributed additional adjusted gross margin of $9.2 million for the nine months ended September 30, 2025.

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

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We generated additional adjusted gross margin of $5.5 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.

Adjusted gross margin increased by $4.1 million for our Florida natural gas distribution service territories and $1.4 million on the Delmarva Peninsula for the nine months ended September 30, 2025, as compared to the same period in 2024, due to residential customer growth in Florida and on the Delmarva Peninsula, 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.

Customer consumption, inclusive of weather-related consumption, increased adjusted gross margin by $0.9 million for the nine months ended September 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.

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

Operating Expenses

4 unchanged sentences

Insurance related costs (1.1)

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

FCG transaction and transition-related expenses (2)

1 unchanged sentence

Period-over-period increase in operating expenses $ (17.9)

(1) Includes the absence of an RSAM adjustment from FCG which represented an $8.9 million benefit during the nine months ended September 30, 2024.

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

1 unchanged sentence

Unregulated Energy Segment

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

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

Three Months Ended

September 30,

2025 2024 Change

8 unchanged sentences

Total operating expenses 26.3 22.9 (3.4)

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

Operating loss $ (3.9) $ (3.1) $ (0.8)

(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 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.

Operating results for the Unregulated Energy segment for the third quarter of 2025 reflect a $0.8 million decrease compared to the same period in 2024.

The increase in adjusted gross margin in the Unregulated Energy segment during the third quarter of 2025 was primarily driven by increased levels of CNG, RNG and LNG services and increased performance at Aspire Energy, partially offset by reduced margin per gallon and fees in our propane distribution business.

Operating expenses increased due to higher payroll, benefits and employee-related expenses as well as increased facilities, maintenance and outside service costs compared to the prior-year period.

Higher depreciation, amortization and property tax costs 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)

Change in propane margins and service fees $ (0.7)

CNG/RNG/LNG Transportation and Infrastructure

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Aspire Energy

Increased customer consumption 0.4

Increased performance from Aspire Energy 0.4

Other variances (0.2)

Quarter-over-quarter increase in adjusted gross margin $ 2.6

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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.

• Change in propane margins and service fees - Adjusted g ross margin decreased by $0.7 million during the third quarter of 2025, mainly due to decreased margins and customer service fees.

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 and can impact our margins.

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.

• Increased level of CNG, RNG and LNG services - Adjusted gross margin increased by $3.1 million during the third 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.

• Increased performance from Aspire Energy - Adjusted gross margin increased by $0.4 million compared to the prior-

Operating Expenses

1 unchanged sentence

(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 $ (1.5)

Facilities expenses, maintenance costs and outside services (1.3)

Depreciation, amortization and property tax costs (0.7)

Other variances 0.1

Quarter-over-quarter increase in operating expenses $ (3.4)

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

Six Months Ended

For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024:

Nine Months Ended

September 30,

2025 2024 Change

11 unchanged sentences

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.

Operating results for the Unregulated Energy segment for the nine months ended September 30, 2025 reflect a $2.2 million increase compared to the same period in 2024.

The increase in adjusted gross margin in the Unregulated Energy segment during the first nine months 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 margin improvements were partially offset by lower margin per gallon and fees in our propane distribution business.

The increase in operating expenses included higher payroll, benefits and other employee-related expenses, increased facilities, maintenance and outside service costs, and higher depreciation, amortization and property tax 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:

2 unchanged sentences

Increased propane customer consumption $ 2.8

Decreased propane margins and service fees (0.6)

Change in propane margins and service fees (1.3)

CNG/RNG/LNG Transportation and Infrastructure

2 unchanged sentences

Increased customer consumption 1.1

Increased performance from Aspire Energy 0.2

Other variances (0.2)

3 unchanged sentences

• Propane customer consumption - Adjusted gross margin increased by $2.8 million due to increased customer consumption resulting primarily from colder year-over-year weather in our Delmarva service territory.

• 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.

• Change in propane margins and service fees - Adjusted g ross margin decreased by $1.3 million for the nine months ended September 30, 2025, mainly due to decreased margins and customer service fees.

CNG/RNG/LNG Transportation and Infrastructure

• 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.

• Increased level of CNG, RNG and LNG services - Adjusted gross margin increased by $10.1 million for the nine months ended September 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 $1.1 million due to increased customer consumption during the current year primarily related to year-over-year colder weather in our Ohio service area.

• Increased performance from Aspire Energy - Adjusted gross margin increased by $0.2 million compared to the prior-year period.

Operating Expenses

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

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

(in millions)

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O THER I NCOME , N ET

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 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 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 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.

For the quarter ended September 30, 2025 compared to the quarter ended September 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 $0.2 million in the third quarter of 2025 compared to $0.5 million during the prior-year period.

For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

Other income, net, was $1.2 million for the nine months ended September 30, 2025 compared to $1.7 million during the prior-year period.

I NTEREST CHARGES

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

Interest charges for the three months ended September 30, 2025 increased by $1.1 million compared to the same period in 2024, attributable primarily to the Senior Notes issued in November 2024 and in August and September 2025.

Increased interest expense was partially offset by lower average outstanding Revolver borrowings and weighted-average interest rate compared to the prior-year period.

The weighted-average interest rate on our Revolver borrowings was 5.0 percent for the three months ended September 30, 2025 compared to 5.8 percent during the prior-year period.

For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

Interest charges for the nine months ended September 30, 2025 increased by $3.2 million compared to the same period in 2024, attributable primarily to the Senior Notes issued in November 2024 and in August and September 2025.

Increased interest expense was partially offset by lower average outstanding Revolver borrowings and 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 nine months ended September 30, 2025 compared to 5.8 percent during the prior-year period.

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

Income tax expense was $7.6 million and $6.8 million for the quarters ended September 30, 2025 and September 30, 2024, respectively, resulting in an effective income tax rate of 28.1 percent and 27.9 percent, respectively, during the periods then ended.

For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

Income tax expense was $35.0 million and $30.2 million for the nine months ended September 30, 2025 and September 30, 2024, respectively, resulting in an effective income tax rate of 27.1 percent and 26.9 percent, respectively, during the periods then ended.

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

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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.

Depending on our capital needs and subject to market conditions, we may issue additional shares under 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 $212.8 million for the six months ended June 30, 2025.

Our capital expenditures were $335.6 million for the nine months ended September 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.

At September 30, 2025, the Company further increased and refined its 2025 capital guidance range to $425.0 million to $450.0 million given progress on its capital projects.

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 June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024

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

September 30, 2025 December 31, 2024

(in millions)

2 unchanged sentences

Total capitalization, excluding short-term debt $ 2,956.6 100 % $ 2,651.9 100 %

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

(in millions)

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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 50 percent as of June 30, 2025.

Our equity to total capitalization ratio, including short-term borrowings, was 49 percent as of September 30, 2025, as the Company continues to remain focused on moving back closer to this target ratio.

In the last twelve months, the Company has issued $92.0 million of new equity via the DRIP and ATM program, representing 729 thousand incremental shares.

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 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.

For the nine months ended September 30, 2025 and 2024, we received net proceeds of $76.3 million and $56.8 million, respectively, associated with shares issued under the DRIP as well as shares issued under our ATM program.

Shelf Agreements

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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.

At September 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 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.

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

At September 30, 2025 and December 31, 2024, we had $95.8 million and $196.5 million, respectively, of short-term borrowings outstanding at a weighted average interest rate of 4.96 percent and 5.06 percent, respectively.

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

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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 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.

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

Our total available credit under the Revolver at September 30, 2025 was $349.9 million .

As of September 30, 2025, we had issued $4.3 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.

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 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, $50.0 million of 5.02 percent notes due in September 2030, and $90.0 million of 5.16 percent notes due in August 2031.

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

The outstanding principal balance of the Senior 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.

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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 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 six months ended June 30, 2025 and 2024:

Six Months Ended

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 which began in 2025.

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

Nine Months Ended

September 30,

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

During the nine months ended September 30, 2025, net cash provided by operating activities was $198.3 million.

Operating cash flows were primarily impacted by the following:

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Cash Flows Used in Investing Activities

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.

Net cash used in investing activities totaled $318.2 million during the nine months ended September 30, 2025, attributable to $322.2 million related to new capital expenditures partially offset by proceeds from asset sales of $4.0 million.

Cash Flows Provided by Financing Activities

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 cash provided by financing activities totaled $113.8 million during the nine months ended September 30, 2025 and was largely impacted by the following:

• Net proceeds of $184.6 million from long-term debt issuances and repayments;

• Net proceeds of $76.1 million from the issuance of stock;

• Net borrowings under the Revolver of $46.6 million;

• Net repayments under the Revolver of $103.5 million;

• A $44.8 million use of cash for dividend payments in 2025.

• Long-term debt repayments of $12.6 million.

Off-Balance Sheet Arrangements

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 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 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.

Our BOD 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, 2025 was $40.0 million .

The aggregate amount guaranteed related to our subsidiaries at September 30, 2025 was $30.4 million, with the guarantees expiring on various dates through September 30, 2026.

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

The amount of specific purpose guarantees outstanding at September 30, 2025 was $4.0 million.

As of September 30, 2025, we have issued letters of credit totaling $4.3 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 throu gh 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