What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-06 · 397 added, 136 removed, 540 unchanged (50% of the section changed)

56 unchanged sentences

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

Recent Developments

In July 2026, the Company announced the Florida Energy Pathway ("FEP"), an intrastate natural gas transportation project to be developed, constructed and operated by Peninsula Pipeline.

The project is currently contemplated as a 24-inch pipeline extending from Palm Beach County to Miami-Dade County and is intended to increase natural gas transportation capacity, enhance system reliability and support continued residential and commercial growth in south Florida.

The Company has secured firm transportation commitments totaling approximately 250,000 Dts/d from multiple investment-grade shippers and continues to solicit additional binding commitments.

Total project investment is currently estimated at approximately $1.2

billion, subject to final engineering, design, permitting, regulatory approvals, and other development activities.

Subject to the satisfaction of these conditions and final commissioning, the project is anticipated to be in service in 2030.

The Company is evaluating financing alternatives, including the potential participation of one or more third parties that may collectively own up to 49 percent of the project.

Sustainability Across the Company

17 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, 2026 and 2025:

Adjusted Gross Margin

For the Three Months Ended March 31, 2026

Three Months Ended June 30, 2026

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

10 unchanged sentences

Adjusted Gross Margin (Non-GAAP) $ 124.7 $ 25.4 $ 0.1 $ 150.2

For the Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

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

10 unchanged sentences

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

For the Six Months Ended June 30, 2026

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

Operating Revenues $ 413.6 $ 158.9 $ (17.5) $ 555.0

Cost of Sales:

Natural gas, propane and electric costs (141.2) (74.9) 17.5 (198.6)

Depreciation & amortization (33.4) (11.0) — (44.4)

Operations & maintenance expenses (1)

(32.2) (21.3) 0.1 (53.4)

Gross Margin (GAAP) 206.8 51.7 0.1 258.6

Operations & maintenance expenses (1)

32.2 21.3 (0.1) 53.4

Depreciation & amortization 33.4 11.0 — 44.4

Adjusted Gross Margin (Non-GAAP) $ 272.4 $ 84.0 $ — $ 356.4

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

(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.

1 unchanged sentence

2026 to 2025 Gross Margin (GAAP) Variance – Regulated Energy

Gross Margin (GAAP) for the Regulated Energy segment for the three months ended March 31, 2026 was $114.9 million, an increase of $17.7 million, or 18.2 percent, compared to the same period in 2025.

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 quarter ended June 30, 2026 was $91.9 million, an increase of $5.6 million, or 6.5 percent, compared to the same period in 2025.

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

Gross Margin (GAAP) for the Regulated Energy segment for the six months ended June 30, 2026 was $206.8 million, an increase of $23.3 million, or 12.7 percent, compared to the same period in 2025.

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

2026 to 2025 Gross Margin (GAAP) Variance – Unregulated Energy

Gross Margin (GAAP) for the Unregulated Energy segment for the three months ended March 31, 2026 was $42.3 million, an increase of $2.4 million, or 6.0 percent, compared to the same period in 2025.

The increase in gross margin was primarily attributable to higher results from our propane distribution business largely attributable to increased customer consumption from colder year-over-year weather in our Delmarva service areas, and increased performance from Aspire Energy.

Gross Margin (GAAP) for the Unregulated Energy segment for the quarter ended June 30, 2026 was $9.4 million, a slight decrease compared to the same period in 2025.

The decrease in gross margin was primarily attributable to lower volumes associated with our CNG, RNG and LNG transportation and hold services partially offset by improved margins from our propane distribution business.

Gross Margin (GAAP) for the Unregulated Energy segment for the six months ended June 30, 2026 was $51.7 million, an increase of $1.7 million, or 3.4 percent, compared to the same period in 2025.

The increase in gross margin was primarily attributable to improved margins from our propane distribution business and increased performance from Aspire Energy, partially offset by lower total margins associated with our CNG, RNG and LNG transportation and hold services.

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)) 2026 2025 2026 2025

5 unchanged sentences

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

— 0.02 — 0.03

Adjusted Earnings Per Share - Diluted (Non-GAAP) $ 1.05 $ 1.04 $ 3.51 $ 3.25

1 unchanged sentence

2026 to 2025 Net Income (GAAP) Variance

Net income (GAAP) for the three months ended March 31, 2026 was $59.3 million, or $ 2.47 per share, compared to $50.9 million, or $2.21 per share, for the same quarter of 2025.

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

Net income (GAAP) for the quarter ended June 30, 2026 was $25.4 million, or $1.05 per share, compared to $23.9 million, or $1.02 per share, for the same quarter of 2025.

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

Excluding these costs, net income increased by $1.1 million or 4.5 percent compared to the prior-year period.

Results of Operations for the Three Months Ended March 31, 2026

Operational Highlights

Our adjusted net income for the three months ended March 31, 2026 was $59.3 million, or $2.47 per share, compared to $51.1 million, or $2.22 per share, for the same period in 2025.

Operating income for the first three months of 2026 was $99.4 million, an increase of $12.6 million compared to the same period in 2025.

Net income (GAAP) for the six months ended June 30, 2026 was $84.7 million, or $3.51 per share, compared to $74.8 million, or $3.22 per share, for the same period of 2025.

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

Excluding these costs, net income increased by $9.3 million or 12.3 percent compared to the prior-year period.

Results of Operations for the Three and Six Months Ended June 30, 2026

Our adjusted net income for the three months ended June 30, 2026 was $25.4 million, or $1.05 per share, compared to $24.3 million, or $1.04 per share, for the same quarter in 2025.

Operating income for the second quarter of 2026 was $52.9 million, an increase of $2.6 million compared to the same period in 2025.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $2.1 million or 4.1 percent compared to the prior-year period.

The increase in adjusted gross margin in the first quarter of 2026 was primarily driven by incremental margin from regulatory initiatives and infrastructure programs, pipeline expansion projects and natural gas organic growth, increased customer consumption resulting from year-over-year colder temperatures largely in the Company's Delmarva service areas, and improved performance at Aspire Energy.

Higher operating expenses were driven largely by increased payroll, benefits and other employee-related expenses and higher facilities, maintenance costs and outside services compared to the prior-year period.

Depreciation and amortization expense for the current period includes decreases related to certain regulatory items including the absence of recovered costs associated with Hurricane Michael and the impact of the FCG depreciation study.

These amounts were largely offset by additional depreciation, amortization and property taxes associated with growth.

The increase in adjusted gross margin in the second quarter of 2026 was primarily driven by incremental margin from pipeline expansion projects, regulatory infrastructure programs, natural gas organic growth, and improved margins from our propane distribution business.

These factors were partially offset by decreased customer consumption, lower total margins associated with our CNG, RNG and LNG transportation and hold services, and increased operating expenses compared to the prior-year period.

Higher operating expenses were largely driven by increased depreciation, amortization and property taxes, payroll, benefits and other employee-related expenses, credit, collections and customer service costs, and higher facilities, maintenance costs and outside services compared to the prior-year period.

Depreciation, amortization and property taxes increased during the current period attributable to growth partially offset by the impact of the FCG depreciation study and the absence of a regulatory item compared to the prior-year period.

Current period margin and expenses include offsetting reductions in both adjusted gross margin and depreciation and amortization expense related to the absence of recovered costs associated with Hurricane Michael.

Three Months Ended

March 31, Increase

June 30, Increase

2026 2025 (Decrease)

5 unchanged sentences

Total Adjusted Gross Margin $ 150.2 $ 142.8 $ 7.4

Operating Income

Operating Income (Loss)

Regulated Energy segment $ 55.2 $ 51.8 $ 3.4

22 unchanged sentences

(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 three months ended March 31, 2025 and March 31, 2026 included:

Key variances between the second quarter of 2025 and 2026 included:

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

Income Earnings

Three Months Ended March 31, 2025 Adjusted Results (1)

Three Months Ended June 30, 2025 Adjusted Results (1)

$ 33.3 $ 24.3 $ 1.04

2 unchanged sentences

Contributions from regulated infrastructure programs (2)

Natural gas growth including conversions (excluding service expansions) 2.0 1.4 0.06

Increased propane margins and service fees 1.5 1.1 0.05

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

Change in off-system natural gas capacity sales 0.3 0.2 —

Decreased CNG/RNG/LNG services (1.0) (1.0) (0.04)

Absence of recovered costs associated with Hurricane Michael (3)

(1.9) (1.4) (0.06)

Changes in customer consumption (2.7) (2.0) (0.08)

Rate changes associated with recent rate case activities (2)

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

Depreciation, amortization and property taxes (3.5) (2.6) (0.11)

Credit, collections and customer service costs (1.3) (0.9) (0.04)

Payroll, benefits and other employee-related expenses (1.2) (0.8) (0.03)

Facilities expenses, maintenance costs and outside services (0.6) (0.5) (0.02)

Vehicle expenses (0.5) (0.3) (0.02)

Insurance-related costs (0.4) (0.2) (0.01)

Absence of amortization of costs associated with Hurricane Michael recovery (3)

(5.6) (4.0) (0.17)

Interest charges (0.6) (0.4) (0.02)

Increase in shares outstanding due to 2025 and 2026 equity offerings (4)

Net other changes 1.2 0.9 0.04

0.6 0.5 (0.01)

Three Months Ended June 30, 2026 Adjusted Results (1)

$ 35.0 $ 25.4 $ 1.05

(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 the Major Projects and Initiatives table for additional information.

(3) The current period includes offsetting reductions in both adjusted gross margin and depreciation and amortization expense related to the absence of

recovered costs associated with Hurricane Michael.

(4) Reflects the impact of approximately 0.6 million common shares issued under the DRIP/DSPP and ATM program.

Operational Highlights

Our adjusted net income for the six months ended June 30, 2026 was $84.7 million, or $3.51 per share, compared to $75.4 million, or $3.25 per share, for the same period in 2025.

Operating income for the first six months of 2026 was $152.3 million, an increase of $15.2 million compared to the same period in 2025.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $14.4 million or 10.4 percent compared to the prior-year period.

The increase in adjusted gross margin in the first half of 2026 was primarily driven by incremental margin from regulatory initiatives and infrastructure programs, pipeline expansion projects and natural gas organic growth, improved performance from Aspire Energy and our propane distribution business, and increased customer consumption compared to the prior-year period.

These factors were partially offset by lower total margins associated with our CNG, RNG and LNG transportation and hold services and higher operating expenses compared to the prior-year period.

The increase in operating expenses was primarily attributable to higher payroll, benefits and other employee-related expenses, depreciation, amortization and property taxes, facilities, maintenance costs and outside services, and increased credit, collections and customer service costs compared to the prior-year period.

Six Months Ended

June 30, Increase

2026 2025 (Decrease)

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

Adjusted Gross Margin

Regulated Energy segment $ 272.4 $ 245.8 $ 26.6

Unregulated Energy segment 84.0 79.5 4.5

Other Businesses and Eliminations — (0.1) 0.1

Total Adjusted Gross Margin $ 356.4 $ 325.2 $ 31.2

Operating Income

Regulated Energy segment $ 126.4 $ 112.3 $ 14.1

Unregulated Energy segment 25.7 24.8 0.9

Other Businesses and Eliminations 0.2 — 0.2

Total Operating Income 152.3 137.1 15.2

Other income, net 0.5 1.0 (0.5)

Interest charges 37.1 35.9 1.2

Income Before Income Taxes 115.7 102.2 13.5

Income taxes 31.0 27.4 3.6

Net Income $ 84.7 $ 74.8 $ 9.9

Weighted Average Common Shares Outstanding:

Basic 23,997 23,133 864

Diluted 24,115 23,223 892

Earnings Per Share of Common Stock

Basic $ 3.53 $ 3.23 $ 0.30

Diluted $ 3.51 $ 3.22 $ 0.29

Adjusted Net Income and Adjusted Earnings Per Share

Net Income (GAAP) $ 84.7 $ 74.8 $ 9.9

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

Adjusted Net Income (Non-GAAP) $ 84.7 $ 75.4 $ 9.3

Earnings Per Share - Diluted (GAAP) $ 3.51 $ 3.22 $ 0.29

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

— 0.03 (0.03)

Adjusted Earnings Per Share - Diluted (Non-GAAP) $ 3.51 $ 3.25 $ 0.26

Key variances between the six months ended June 30, 2025 and June 30, 2026 included:

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

Income Earnings

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

$ 103.0 $ 75.4 $ 3.25

Change in Adjusted Gross Margins:

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

11.8 8.7 0.36

Contributions from regulated infrastructure programs (2)

Natural gas growth including conversions (excluding service expansions) 4.0 2.9 0.12

Rate changes associated with recent rate case activities (2)

Increased propane margins and service fees 1.8 1.3 0.05

Increased Aspire Energy performance - rate changes and gathering fees 1.8 1.3 0.05

Changes in customer consumption 1.8 1.3 0.06

Change in off-system natural gas capacity sales 1.4 1.0 0.04

Decreased CNG/RNG/LNG services (1.2) (0.9) (0.04)

Absence of recovered costs associated with Hurricane Michael (3)

1 unchanged sentence

30.3 22.2 0.92

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

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

Payroll, benefits and other employee-related expenses (7.8) (5.7) (0.24)

Facilities expenses, maintenance costs and outside services (3.1) (2.2) (0.09)

Depreciation, amortization and property taxes (5.0) (3.7) (0.15)

Facilities expenses, maintenance costs and outside services (3.7) (2.7) (0.11)

Credit, collections and customer service costs (2.7) (2.0) (0.08)

Insurance-related costs (0.6) (0.4) (0.02)

Vehicle expenses (0.6) (0.4) (0.02)

Absence of amortization of costs associated with Hurricane Michael recovery (3)

4 unchanged sentences

(1.1) (0.8) (0.16)

Three Months Ended March 31, 2026 Adjusted Results (1)

Six months ended June 30, 2026 Adjusted Results (1)

$ 115.7 $ 84.7 $ 3.51

2 unchanged sentences

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

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

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

(3) The current period includes offsetting reductions in both adjusted gross margin and depreciation and amortization expense related to the absence of

recovered costs associated with Hurricane Michael.

(4) Reflects the impact of approximately 0.8 million common shares issued under the DRIP/DSSP and ATM program.

(4) Reflects the impact of approximately 0.6 million common shares issued under the DRIP/DSPP and ATM program.

Summary of Key Factors

Recently Completed and Ongoing Major Projects and Initiatives

Major Projects and Initiatives (ongoing and recently completed)

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

3 unchanged sentences

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) 2026 2025 2026 2025 2025 2026 2027

16 unchanged sentences

Florida Mandatory Relocates 0.4 — 0.9 — — 1.5 1.5

Total Infrastructure 10.0 6.8 21.3 12.6 27.6 43.8 51.4

Maryland Rate Case (1)

5 unchanged sentences

Florida City Gas Rate Case — — — — — TBD TBD

Total Rate Case 4.1 4.1 9.7 5.6 13.5 18.2 18.7

Total Regulatory Initiatives 14.1 10.9 31.0 18.2 41.1 62.0 70.1

9 unchanged sentences

The extension supports new incremental load due to growth in the area, including providing service, most immediately, to the residential development, Twin Lakes.

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

The expansion also

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

We expect this extension to generate annual adjusted gross margin of approximately $0.6 million in 2026 and annually thereafter.

1 unchanged sentence

Cloud, Florida area.

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

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

Peninsula Pipeline will construct pipeline expansions that will allow FPU to serve the expected new growth.

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

The Florida PSC approved the project in May 2024, and it is expected to be complete in the second quarter of 2026.

For the three months ended March 31, 2026, these projects generated incremental adjusted gross margin of $0.9 million.

The Florida PSC approved the project in May 2024, and it is expected to be complete in the third quarter of 2026.

For the three and six months ended June 30, 2026, these projects generated incremental adjusted gross margin of $0.2 million and $1.1 million, respectively.

We expect this expansion to generate approximately $3.2 million in 2026 and annually thereafter.

8 unchanged sentences

The various phases of the project commenced in the first quarter of 2023, and construction was completed in 2025.

The project generated incremental adjusted gross margin of $0.6 million for the three months ended March 31, 2026, and is expected to contribute adjusted gross margin of approximately $4.3 million in 2026 and annually thereafter.

The project generated incremental adjusted gross margin of $0.6 million and $1.2 million, respectively, for the three and six months ended June 30, 2026 and is expected to contribute adjusted gross margin of approximately $4.3 million in 2026 and annually thereafter.

Worcester Resiliency Upgrade

6 unchanged sentences

Construction commenced shortly after approval and is well underway.

The weather during the first quarter resulted in several brief slowdowns which had a cumulative impact on the overall timeline.

The weather during the first quarter of 2026 resulted in several brief slowdowns which had a cumulative impact on the overall timeline.

Project construction and commissioning are expected to be complete in the latter part of the year with the FERC approval process to immediately follow.

The Company expects to receive full approval for in-service of the facility by the beginning of 2027.

The project generated adjusted gross margin of $0.4 million for the three months ended March 31, 2026.

The project generated adjusted gross margin of $0.4 million and $0.8 million, respectively, for the three and six months ended June 30, 2026.

The project is expected to contribute adjusted gross margin of approximately $1.5 million in 2026 and $17.1 million in 2027 and annually thereafter.

4 unchanged sentences

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 second quarter of 2026.

The projects generated incremental adjusted gross margin of $1.0 million for the three months ended March 31, 2026, and are expected to contribute adjusted gross margin of approximately $6.0 million in 2026 and annually thereafter.

New Smyrna Beach was placed into service during May 2025 and construction is projected to be complete for Boynton Beach in the third quarter of 2026.

The projects generated incremental adjusted gross margin of $0.3 million and $1.3 million, respectively, for the three and six months ended June 30, 2026, and are expected to contribute adjusted gross margin of approximately $6.0 million in 2026 and annually thereafter.

Central Florida Reinforcement Projects (Plant City and Lake Mattie)

4 unchanged sentences

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

The projects generated incremental adjusted gross margin of $0.8 million for the three months ended March 31, 2026, and both projects are expected to contribute total adjusted gross margin of approximately $4.3 million in 2026 and annually thereafter.

These projects generated incremental adjusted gross margin of $0.8 million and $1.6 million, respectively, for the three and six months ended June 30, 2026, and are expected to contribute total adjusted gross margin of approximately $4.3 million in 2026 and annually thereafter.

Renewable Natural Gas Supply Projects

6 unchanged sentences

The projects are underway and are estimated to be completed in the second half of 2026.

These three renewable projects generated adjusted gross margin of $1.3 million for the three months ended March 31, 2026, and are projected to generate total adjusted gross margin of approximately $5.4 million in 2026 and $6.4 million annually thereafter.

These three renewable projects generated incremental adjusted gross margin of $0.7 million and $2.0 million, respectively, for the three and six months ended June 30, 2026, and are projected to generate total adjusted gross margin of approximately $5.4 million in 2026 and $6.4 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 FCG's distribution system, 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 $1.9 million for the three months ended March 31, 2026 and is expected to contribute adjusted gross margin of approximately $7.6 million in 2026 and annually thereafter.

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 half of 2026.

The project generated adjusted gross margin of $1.9 million and $3.8 million, respectively, for the three and six months ended June 30, 2026, and is expected to contribute adjusted gross margin of approximately $7.6 million in 2026 and annually thereafter.

Duncan Plains Pipeline Project

7 unchanged sentences

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

For t he three months ended March 31, 2026 , 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, 2026 , there was $0.9 million and $1.8 million, respectively, of incremental adjusted gross margin generated pursuant to the program.

The program is expected to generate $10.9 million of adjusted gross margin in 2026 and $13.0 million in 2027.

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, 2026 , there was $1.1 million of incremental adjusted gross margin generated pursuant to the program.

For t he three and six months ended June 30, 2026 , there was $0.7 million and $1.8 million, respectively, of incremental adjusted gross margin generated pursuant to the program.

The program is expected to generate $12.7 million of adjusted gross margin in 2026 and $16.4 million in 2027.

7 unchanged sentences

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

The FERC issued an order approving the surcharge as filed in December 2025.

The FERC approved the surcharge as filed in December 2025.

The combined revised surcharge became effective January 1, 2026.

2 unchanged sentences

There was a slight decrease to the revenue requirement of the currently effective surcharge as a result of the true-up.

The FERC issued an order approving the surcharge as filed effective April 1, 2026.

For t he three months ended March 31, 2026 , there was $0.8 million of incremental adjusted gross margin generated pursuant to the program.

The FERC approved the surcharge as filed effective April 1, 2026.

For t he three and six months ended June 30, 2026 , there was $0.9 million and $1.7 million, respectively, of incremental adjusted gross margin generated pursuant to the program.

Eastern Shore expects to generate adjusted gross margin of approximately $9.0 million in 2026 and $10.1 million in 2027 from relocation projects, which is ultimately dependent upon the timing of filings and the completion of construction.

6 unchanged sentences

Our Florida electric distribution operations filed an updated SPP plan in January 2025 which was approved in June 2025, with modifications by the Florida PSC.

For the three months ended March 31, 2026, this initiative generated additional adjusted gross margin of $2.2 million and is expected to generate $10.7 million of adjusted gross margin in 2026 and $11.0 million in 2027.

For the three and six months ended June 30, 2026, this initiative generated additional adjusted gross margin of $0.3 million and $2.5 million, respectively, and is expected to generate $9.7 million of adjusted gross margin in 2026 and $10.4 million in 2027.

We expect continued investment under the SPP going forward.

2 unchanged sentences

The Florida PSC approved the petition in February 2026, with the surcharge effective in March 2026.

For the three months ended March 31, 2026, there was $0.5 million of adjusted gross margin generated.

For the three and six months ended June 30, 2026, there was $0.4 million and $0.9 million, respectively, of adjusted gross margin generated.

The projected total revenue for both 2026 and 2027 is $0.5 million for FPU and $1.0 million for FCG.

2 unchanged sentences

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

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

(i) permanent rate

relief of approximately $6.9 million with a ROE of 11.5 percent;

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

3 unchanged sentences

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 operates as Chesapeake Utilities of Maryland, Inc.

For the three months ended March 31, 2026, there was $1.3 million of incremental adjusted gross margin generated and the proceeding is expected to result in additional adjusted gross margin of approximately $3.5 million in 2026 and 2027.

For the three and six months ended June 30, 2026, there was $0.1 million and $1.4 million, respectively, of incremental adjusted gross margin generated and the proceeding is expected to result in additional adjusted gross margin of approximately $3.5 million in 2026 and 2027.

Delaware Natural Gas Rate Case

2 unchanged sentences

(ii) proposed changes to depreciation rates which were part of a depreciation study also submitted with the filing;

authorization to make certain changes to tariffs.

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 in October 2024.

1 unchanged sentence

Rates set to recover the approved components of the increase were effective in March 2025 and approved tariff-related changes including rate design were effective as of October 15, 2025.

For the three months ended March 31, 2026, there was $1.3 million of incremental adjusted gross margin generated and final rates are expected to generate approximately $6.1 million of adjusted gross margin in 2026 and 2027.

For the six months ended June 30, 2026, there was $1.2 million of incremental adjusted gross margin generated and final rates are expected to generate approximately $6.1 million of adjusted gross margin in 2026 and 2027.

FPU Electric Rate Case

5 unchanged sentences

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 to be completed in December 2026.

For the three months ended March 31, 2026, there was $1.5 million of incremental adjusted gross margin generated and final rates are expected to generate approximately $8.6 million of adjusted gross margin in 2026 and $9.1 million in 2027.

For the six months ended June 30, 2026, there was $1.5 million of incremental adjusted gross margin generated and final rates are expected to generate approximately $8.6 million of adjusted gross margin in 2026 and $9.1 million in 2027.

FCG Rate Case

6 unchanged sentences

and (v) further implementation of the advanced metering infrastructure (“AMI”).

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

In July 2026, interim rates of $16.2 million on an annualized basis were approved by the Florida PSC with rates effective July 20, 2026, subject to refund pending the final outcome of the rate case proceeding.

The discovery process has commenced, and the hearing for the proceeding is scheduled for late September 2026.

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

FCG Depreciation Study

4 unchanged sentences

Weather Impact

For the three months ended March 31, 2026, increased customer consumption, which includes the effects of colder weather conditions, largely in our Delmarva service areas, compared to the prior-year period resulted in a $4.5 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, 2026 and 2025.

Three Months Ended

2026 2025 Variance

For the six months ended June 30, 2026, increased customer consumption, which includes the effects of colder weather conditions, largely in our Delmarva service areas, compared to the prior-year period resulted in a $1.8 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 six months ended June 30, 2026 and 2025.

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 Variance 2026 2025 Variance

Delmarva Peninsula

16 unchanged sentences

Natural Gas Distribution Growth

The average number of residential customers served on the Delmarva Peninsula, by FPU and by FCG increased by approximately 3.3 percent, 2.2 percent, and 2.0 percent, respectively, for the three months ended March 31, 2026.

The average number of residential customers served on the Delmarva Peninsula increased by approximately 2.8 percent and 3.0 percent, respectively, for the three and six months ended June 30, 2026, while the average number of residential customers served by the Company's Florida natural gas distribution service territories increased by approximately 1.8 percent and 1.9 percent, respectively, for the three and six months ended June 30, 2026.

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

Three Months Ended

March 31, 2026

(in millions) Delmarva Peninsula Florida

Three Months Ended Six Months Ended

June 30, 2026 June 30, 2026

(in millions) Delmarva Peninsula Florida Delmarva Peninsula Florida

Customer Growth:

3 unchanged sentences

Regulated Energy Segment

For the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025:

For the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025:

Three Months Ended

17 unchanged sentences

(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 first quarter of 2026 was $71.1 million, an increase of $10.6 million, over the same period in 2025.

Operating income for the Regulated Energy segment for the second quarter of 2025 was $55.2 million, an increase of $3.4 million over the same period in 2025.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $2.9 million, or 5.5 percent, compared to the same period in 2025.

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 $9.3 million was largely attributable to higher expenses associated with payroll, benefits and other employee related expenses, higher facilities, maintenance costs and outside services, and increased costs related to credit, collections and customer service.

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

These factors were partially offset by decreased customer consumption compared to the prior-year period.

Excluding the transaction and transition-related expenses described above, the increase in total operating expenses of $4.1 million was largely attributable to additional depreciation, amortization and property taxes associated with growth, higher expenses associated with payroll, benefits and other employee related expenses, and increased costs related to credit, collections and customer service.

These amounts were largely offset by additional depreciation, amortization and property taxes associated with growth.

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

2 unchanged sentences

Contributions from regulated infrastructure programs 3.2

Rate changes associated with recent rate case activities (1)

Natural gas growth including conversions (excluding service expansions) 2.0

Changes in customer consumption (2.0)

Adjusted gross margin from off-system natural gas capacity sales 1.1

Absence of recovered costs associated with Hurricane Michael (1)

1 unchanged sentence

Quarter-over-quarter increase in adjusted gross margin $ 7.0

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

Refer to Major Projects discussion for additional information.

(1) The current period includes offsetting reductions in both adjusted gross margin and depreciation and amortization expense related to the absence of recovered costs associated with Hurricane Michael.

1 unchanged sentence

Natural Gas Transmission Service Expansions, including interim services

We generated increased adjusted gross margin of $6.9 million for the three months ended March 31, 2026 from natural gas transmission service expansions of Peninsula Pipeline and Eastern Shore.

We generated increased adjusted gross margin of $4.9 million for the three months ended June 30, 2026 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 $5.5 million for the three months ended March 31, 2026.

Regulated infrastructure programs generated incremental adjusted gross margin of $3.2 million in the second quarter of 2026.

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 $2.0 million from natural gas customer growth.

Adjusted gross margin increased by $1.6 million for our Florida natural gas distribution service territories and $0.4 million on the Delmarva Peninsula for the three months ended June 30, 2026, as compared to the same period in 2025, due to residential customer growth of 1.8 percent and 2.8 percent in Florida and on the Delmarva Peninsula, respectively, as well as growth attributable to commercial and industrial customers.

Changes in Customer Consumption

Decreased customer consumption, inclusive of weather-related consumption, reduced adjusted gross margin by $2.0 million for the three months ended June 30, 2026.

Absence of Recovered Costs Associated with Hurricane Michael

There is no impact to earnings as this $1.9 million decrease in adjusted gross margin for the three months ended June 30, 2026, is offset by a corresponding decrease in depreciation and amortization expense for the period.

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 $ (3.0)

Credit, collections and customer service costs (1.3)

Payroll, benefits and other employee-related expenses (1.4)

Absence of recovered costs associated with Hurricane Michael (1)

Other variances 0.2

Quarter-over-quarter increase in operating expenses $ (3.6)

For the six months ended June 30, 2026 compared to the six months ended June 30, 2025:

Six Months Ended

2026 2025 Change

(in millions)

Revenue $ 413.6 $ 351.4 $ 62.2

Regulated natural gas and electric costs 141.2 105.6 35.6

Adjusted gross margin (1) (2)

272.4 245.8 26.6

Operations & maintenance 90.6 78.1 (12.5)

Depreciation, amortization and property taxes (2)

51.6 51.4 (0.2)

Other taxes 3.8 3.2 (0.6)

FCG transaction and transition-related expenses (3)

Total operating expenses 146.0 133.5 (12.5)

Operating income $ 126.4 $ 112.3 $ 14.1

(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.

(2) The current period includes offsetting reductions in both adjusted gross margin and depreciation and amortization expense related to the absence of recovered costs associated with Hurricane Michael.

See Key variances table above for additional information.

Operating income for the Regulated Energy segment for the six months ended June 30, 2026 was $126.4 million, an increase of $14.1 million, over the same period in 2025.

Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $13.3 million, or 11.8 percent, compared to the same period in 2025.

Higher operating income is largely attributable to incremental margin from pipeline expansion projects, regulatory initiatives and infrastructure programs, and organic growth in our natural gas distribution businesses compared to the prior-year period.

Excluding the transaction and transition-related expenses described above, the increase in total operating expenses of $13.3 million was largely attributable to higher expenses associated with payroll, benefits and other employee related expenses, additional depreciation, amortization and property taxes associated with growth, higher facilities, maintenance costs and outside services, and increased costs related to credit, collections and customer service.

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

(in millions)

Natural gas transmission service expansions, including interim services $ 11.8

Contributions from regulated infrastructure programs 8.7

Natural gas growth including conversions (excluding service expansions) 4.0

Rate changes associated with recent rate case activities (1)

Adjusted gross margin from off-system natural gas capacity sales 1.4

Absence of recovered costs associated with Hurricane Michael (2)

Changes in customer consumption (0.3)

Other variances 0.8

Period-over-period increase in adjusted gross margin $ 26.6

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

Refer to the Major Projects and Initiatives discussion for additional information.

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 $11.8 million for the six months ended June 30, 2026 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 $8.7 million for the six months ended June 30, 2026.

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.

1 unchanged sentence

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 March 31, 2026.

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

1 unchanged sentence

We generated additional adjusted gross margin of $4.0 million from natural gas customer growth.

Adjusted gross margin increased by $1.5 million for our Florida natural gas distribution service territories and $0.5 million on the Delmarva Peninsula for the three months ended March 31, 2026, as compared to the same period in 2025, due to residential customer growth in these service areas, as well as growth attributable to commercial and industrial customers.

Changes in Customer Consumption

Customer consumption, inclusive of weather-related consumption, increased adjusted gross margin by $1.7 million for the three months ended March 31, 2026.

Adjusted gross margin increased by $3.1 million for our Florida natural gas distribution service territories and $0.9 million on the Delmarva Peninsula for the six months ended June 30, 2026, as compared to the same period in 2025, due to residential customer growth in these service areas, as well as growth attributable to commercial and industrial customers.

Adjusted Gross Margin from Off-system Natural Gas Capacity Sales

Off-system natural gas capacity sales increased adjusted gross margin by $1.1 million for the three months ended March 31, 2026.

Off-system natural gas capacity sales increased adjusted gross margin by $1.4 million for the six months ended June 30, 2026.

Absence of Recovered Costs Associated with Hurricane Michael

There is no impact to earnings as this $2.0 million decrease in adjusted gross margin for the three months ended March 31, 2026, is offset by a corresponding decrease in depreciation and amortization expense for the period.

There is no impact to earnings as this $3.9 million decrease in adjusted gross margin for the six months ended June 30, 2026, is offset by a corresponding decrease in depreciation and amortization expense for the period.

Changes in Customer Consumption

Customer consumption, inclusive of weather-related consumption, decreased adjusted gross margin by $0.3 million for the six months ended June 30, 2026.

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)

Payroll, benefits and other employee-related expenses $ (6.4)

Facilities expenses, maintenance costs and outside services (2.7)

Credit, collections and customer service costs (1.4)

Depreciation, amortization and property tax costs (4.1)

Credit, collections and customer service costs (2.7)

Facilities expenses, maintenance costs and outside services (2.5)

Vehicle expenses (0.3)

Insurance related costs (0.2)

Absence of amortization of costs associated with Hurricane Michael recovery (1)

Other variances (0.2)

Quarter-over-quarter increase in operating expenses $ (9.0)

Period-over-period increase in operating expenses $ (12.5)

Unregulated Energy Segment

For the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025:

For the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025:

Three Months Ended

9 unchanged sentences

Total operating expenses 27.9 26.5 (1.4)

Operating income $ 28.3 $ 26.3 $ 2.0

Operating income (loss) $ (2.5) $ (1.5) $ (1.0)

(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 three months ended March 31, 2026 reflect a $2.0 million increase compared to the same period in 2025.

The increase in adjusted gross margin in the Unregulated Energy segment during the first quarter of 2026 was primarily due to increased consumption in our propane distribution business which was impacted by colder weather in the Delmarva service areas as well as improved performance from Aspire Energy.

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.

Operating results for the Unregulated Energy segment second quarter of 2026 reflect a $1.0 million decrease compared to the same period in 2025.

The increase in adjusted gross margin in the Unregulated Energy segment during the second quarter of 2026 was primarily due to higher margins from our propane distribution business and improved performance from Aspire Energy.

These factors were primarily offset by lower levels of CNG, RNG and LNG services and lower consumption levels from Aspire Energy and our propane distribution business compared to the prior-year period.

The increase in operating expenses included higher facilities, maintenance and outside service costs, and higher depreciation, amortization and property tax costs compared to the prior-year period.

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

1 unchanged sentence

Propane Operations

Increased propane customer consumption $ 2.4

Increased propane margins and service fees $ 1.5

Changes in propane customer consumption (0.3)

CNG/RNG/LNG Transportation and Infrastructure

Decreased CNG/RNG/LNG services (1.0)

Aspire Energy

Increased performance from Aspire Energy - rate changes and gathering fees 0.4

Increased customer consumption 0.4

Changes in customer consumption (0.4)

Other variances 0.2

2 unchanged sentences

Propane Operations

• Propane customer consumption - Adjusted gross margin increased by $2.4 million due to increased customer consumption resulting primarily from colder year-over-year weather in our Delmarva service areas.

• Propane margins and service fees - Adjusted gross margin increased by $1.5 million due to increased margins which are impacted by market pricing, competition and the availability and price of alternative energy sources.

• Propane customer consumption - Adjusted gross margin decreased by $0.3 million due to lower customer consumption compared to the prior-year period.

CNG/RNG/LNG Transportation and Infrastructure

• CNG, RNG and LNG services - Adjusted gross margin decreased by $1.0 million during the second quarter of 2026 due to lower levels of CNG and RNG hold services.

Aspire Energy

• Increased performance from Aspire Energy - Adjusted gross margin increased by $1.4 million compared to the prior-year period due to negotiated rate changes and increased gathering fees.

• 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 during the second quarter of 2026 compared to the prior quarter due to negotiated rate changes and increased gathering fees.

• Customer consumption - Adjusted gross margin decreased by $0.4 million attributable to lower customer consumption compared to the prior-year.

Operating Expenses

1 unchanged sentence

(in millions)

Payroll, benefits and other employee-related expenses $ (1.6)

Facilities expenses, maintenance costs and outside services $ (0.9)

Depreciation, amortization and property tax costs (0.5)

Other variances —

Quarter-over-quarter increase in operating expenses $ (1.4)

For the six months ended June 30, 2026 compared to the six months ended June 30, 2025:

Six Months Ended

2026 2025 Change

(in millions)

Revenue $ 158.9 154.6 $ 4.3

Unregulated propane and natural gas costs 74.9 75.1 (0.2)

Adjusted gross margin (1)

84.0 79.5 4.5

Operations & maintenance 44.7 42.2 (2.5)

Depreciation, amortization and property tax costs 12.0 11.0 (1.0)

Other taxes 1.5 1.5 —

Total operating expenses 58.2 54.7 (3.5)

Operating income $ 25.8 $ 24.8 $ 1.0

(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 six months ended June 30, 2026 reflect a $1.0 million increase compared to the same period in 2025.

The increase in adjusted gross margin in the Unregulated Energy segment during the first half of 2026 was primarily due to increased consumption in our propane distribution business which was impacted by colder weather in the Delmarva service areas during the fist quarter of 2026, higher propane margins, and improved performance from Aspire Energy.

These factors were partially offset by lower levels of CNG, RNG and LNG services compared to the prior-year period.

The increase in operating expenses were largely attributable to 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:

(in millions)

Propane Operations

Increased propane margins and service fees $ 1.8

Increased propane customer consumption 2.1

Aspire Energy

Increased performance from Aspire Energy - rate changes and gathering fees 1.8

CNG/RNG/LNG Transportation and Infrastructure

Decreased CNG/RNG/LNG services (1.2)

Other variances —

Period-over-period increase in adjusted gross margin $ 4.5

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

Propane Operations

• Propane margins and service fees - Adjusted gross margin increased by $1.8 million due primarily to increased margins which are impacted by market pricing, competition and the availability and price of alternative energy sources.

• Propane customer consumption - Adjusted gross margin increased by $2.1 million due to increased customer consumption which was impacted by colder year-over-year weather in our Delmarva service areas.

Aspire Energy

• Increased performance from Aspire Energy - Adjusted gross margin increased by $1.8 million compared to the prior-year period due primarily to negotiated rate changes and increased gathering fees.

CNG/RNG/LNG Transportation and Infrastructure

• CNG, RNG and LNG services - Adjusted gross margin decreased by $1.2 million compared to the prior-year period due to lower levels of CNG and RNG hold services.

Operating Expenses

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

(in millions)

Payroll, benefits and other employee-related expenses $ (1.4)

Facilities expenses, maintenance costs and outside services (1.2)

Depreciation, amortization and property tax costs (1.0)

Other variances 0.1

Period-over-period increase in operating expenses $ (3.5)

OTHER INCOME, NET

For the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025

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, was not material in the first quarter of 2026 compared to $0.6 million during the prior-year period.

For the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025

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 $0.5 million in the second quarter of 2026 compared to $0.4 million during the prior-year period.

For the six months ended June 30, 2026 compared to the six months ended June 30, 2025

Other income, net, was $0.5 million for the six months ended June 30, 2026 compared to $1.0 million during the prior-year period.

INTEREST CHARGES

For the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025

Interest charges for the quarter ended March 31, 2026 increased by $0.6 million compared to the same period in 2025, attributable primarily to the Senior Notes issued in August and September 2025.

Interest expense on Revolver borrowings slightly offset the interest charges increase due to lower average outstanding borrowings and a steady weighted-average interest rate of 5.1 percent for the quarters ended March 31, 2026 and 2025.

Increased interest charges were also offset by higher capitalized interest during the current period of $1.4 million associated with capital projects.

For the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025

Income tax expense was $21.4 million and $18.4 million for the quarters ended March 31, 2026 and March 31, 2025, respectively, resulting in an effective income tax rate of 26.5 percent and 26.6 percent, respectively, during the periods then ended.

For the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025

Interest charges for the quarter ended June 30, 2026 increased by $0.6 million compared to the same period in 2025, attributable primarily to the incremental interest expense associated with the Senior Notes issued in August and September 2025.

The increase was partially offset by lower interest expense resulting from reduced average outstanding Revolver borrowings, scheduled debt repayments, and higher capitalized interest compared to the prior-year period.

For the six months ended June 30, 2026 compared to the six months ended June 30, 2025

Interest charges for the six months ended June 30, 2026 increased by $1.2 million compared to the same period in 2025, attributable primarily to the full-period impact of the Senior Notes issued in August and September 2025.

For the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025

Income tax expense was $9.6 million and $9.0 million for the quarters ended June 30, 2026 and June 30, 2025, respectively, resulting in an effective income tax rate of 27.4 percent and 27.3 percent, respectively, during the periods then ended.

For the six months ended June 30, 2026 compared to the six months ended June 30, 2025

Income tax expense was $31.0 million and $27.4 million for the six ended June 30, 2026 and June 30, 2025, respectively, resulting in an effective income tax rate of 26.8 percent during both of the periods then ended.

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

8 unchanged sentences

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

Our capital expenditures were $121.9 million for the three months ended March 31, 2026.

In the table below, we have provided the range of our forecasted capital expenditures for 2026:

Our capital expenditures were $261.6 million for the six months ended June 30, 2026.

In the table below, we have provided the range of our forecasted capital expenditures for 2026, which has been increased to reflect a guidance range of $550.0 million to $600.0 million.

The revised outlook reflects expansion of the Company's capital program across its transmission (including initial investments in FEP), distribution and infrastructure investments.

(in millions) Low High

12 unchanged sentences

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, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

The following table presents our capitalization, excluding and including short-term borrowings, as of June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

(in millions)

2 unchanged sentences

Total capitalization, excluding short-term debt $ 2,991.3 100 % $ 2,925.6 100 %

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

(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 50 percent as of March 31, 2026.

Our equity to total capitalization ratio, including short-term borrowings, was 50 percent as of June 30, 2026.

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

2 unchanged sentences

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

For the three months ended March 31, 2026 and 2025, we received net proceeds of $5.1 million and $19.8 million, respectively, associated with shares issued under the DRIP/DSPP as well as shares issued under our ATM program.

For the six months ended June

30, 2026 and 2025, we received net proceeds of $16.8 million and $61.2 million, respectively, associated with shares issued under the DRIP/DSPP 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 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 March 31, 2026, a total of $343.3 million of borrowing capacity was available under these Shelf Agreements.

We have entered into Shelf Agreements with Prudential and MetLife, however neither of such lenders have any obligation to purchase debt thereunder.

We amended these agreements with Prudential and MetLife in February 2026 and June 2025, respectively, to expand the total borrowing capacity and extend the term of the agreements.

At June 30, 2026, a total of $347.5 million of borrowing capacity was available under these agreements with terms that extend through February 2029 and June 2030, respectively.

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, 2026, we are authorized by our BOD to borrow up to $450.0 million of short-term debt, as required.

At March 31, 2026 and December 31, 2025, we had $199.6 million and $158.0 million, respectively, of short-term borrowings outstanding at a weighted average interest rate of 4.66 percent and 4.73 percent, respectively.

There were no borrowings outstanding under the sustainable investment sublimit of the 364-day tranche at March 31, 2026.

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.

As of June 30, 2026, we are authorized by our BOD to borrow up to $450.0 million of short-term debt, as required.

At June 30, 2026 and December 31, 2025, we had $238.1 million and $158.0 million, respectively, of short-term borrowings outstanding at a weighted average interest rate of 4.61 percent and 4.73 percent, respectively.

There were no borrowings outstanding under the sustainable investment sublimit of the 364-day tranche at June 30, 2026.

In August 2026, we amended and restated our revolving credit agreement, which increased the total borrowing capacity under the Revolver to $650.0 million, including $250.0 million available under a 364-day tranche and $400.0 million available under a five-year tranche which expires in August 2031.

Both tranches include three one-year extension options which would extend the 364-day tranche through August 2030 and the five-year tranche through August 2034 if exercised consecutively.

All other key terms and conditions of the agreement remain substantially the same.

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

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

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

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

The 364-day tranche continues to bear interest (i) based upon the SOFR plus an applicable margin of 1.10 percent or less, with such margin based on total indebtedness as a percentage of total capitalization or (ii) the base rate, solely at our discretion.

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

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

3 unchanged sentences

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, 2026, we were in compliance with this covenant.

Our total available credit under the Revolver at March 31, 2026 was $245.6 million.

As of March 31, 2026, we had issued $4.8 million in letters of credit to various counterparties under the Revolver.

As of June 30, 2026, we were in compliance with this covenant.

Our total available credit under the Revolver at June 30, 2026 was $207.1 million.

As of June 30, 2026, we had issued $4.8 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.

6 unchanged sentences

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

The following table provides a summary of our operating, investing and financing cash flows for the three months ended March 31, 2026 and 2025:

Three Months Ended

The following table provides a summary of our operating, investing and financing cash flows for the six months ended June 30, 2026 and 2025:

Six Months Ended

(in millions) 2026 2025

9 unchanged sentences

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, 2026, net cash provided by operating activities was $118.0 million.

During the six months ended June 30, 2026, net cash provided by operating activities was $213.6 million.

Operating cash flows were primarily impacted by the following:

3 unchanged sentences

Cash Flows Used in Investing Activities

Net cash used in investing activities totaled $141.7 million during the three months ended March 31, 2026, primarily attributable to $141.9 million related to new capital expenditures.

Net cash used in investing activities totaled $264.9 million during the six months ended June 30, 2026, primarily attributable to $266.9 million related to new capital expenditures.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities totaled $26.6 million during the three months ended March 31, 2026 and was largely impacted by the following:

Net cash provided by financing activities totaled $49.9 million during the six months ended June 30, 2026 and was largely impacted by the following:

• Net borrowings under the Revolver of $81.0 million;

• Proceeds from the issuance of common stock of $16.8 million;

• A $32.4 million use of cash for dividend payments in 2026;

• $12.6 million of net repayments related to long-term debt and lease obligations.

Off-Balance Sheet Arrangements

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 March 31, 2026 was $81.0 million.

The aggregate amount guaranteed related to our subsidiaries at March 31, 2026 was $52.4 million , with the guarantees expiring on various dates through March 2027 .

The maximum authorized liability under such guarantees and letters of credit as of

June 30, 2026 was $67.0 million.

The aggregate amount guaranteed related to our subsidiaries at June 30, 2026 was $45.2 million, with the guarantees expiring on various dates through May 2027.

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

The amount of specific purpose guarantees outstanding at March 31, 2026 was $4.0 million.

As of March 31, 2026, we have issued letters of credit totaling $4.8 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 October 2026 and to date, none have been used.

The amount of specific purpose guarantees outstanding at June 30, 2026 was $19.1 million.

As of June 30, 2026, we have issued letters of credit totaling $4.8 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 2027 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.

11 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis