Chesapeake Utilities CorporationCPKNYSE
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Operator: Welcome to Chesapeake Utilities Corporation's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Lucia Dempsey, Head of Investor Relations.
Lucia Dempsey: Thank you, and good morning, everyone. Today's presentation can be accessed on our website under the Investors page and Events and Presentations subsection. After our prepared remarks, we will open up the call for questions. On Slide 2, we show our typical disclaimers, while I remind you that matters discussed on this conference call may include forward-looking statements that involve risks and uncertainties. Forward-looking statements and projections could differ materially from our actual results. The safe harbor for forward-looking statements section of our 2024 annual report on Form 10-K and in our third quarter Form 10-Q provide further information on the factors that could cause such statements to differ from our actual results. Additionally, the company evaluates its performance based on certain non-GAAP measures, including adjusted gross margin, adjusted net income and adjusted earnings per share, and the information presented today includes the appropriate disclosures in accordance with the SEC's Regulation G. A reconciliation of these non-GAAP measures to the related GAAP measures has been provided in the appendix of this presentation, our earnings release and our third quarter Form 10-Q. Here at Chesapeake Utilities, safety is our first priority. We start all meetings with a safety moment, and we'll do so here with a moment on kitchen and fire safety as highlighted on Slide 3. The holidays are coming up, which often means more time gathering together and cooking with friends and family. This makes it a great time to remember safe kitchen practices, particularly as Thanksgiving is the leading day for home cooking fires. Be extra vigilant and aware to keep kids, pets and flammable materials away from heat and open flames, ensure any burned food or materials are completely saturated with water before throwing away and remember to use a metal lid, sheet pan, baking soda, salt or a fire blanket to extinguish grease fires. I'll now introduce our presenters today. Jeff Householder, Chair of the Board, President and Chief Executive Officer, will provide an update on this quarter's key accomplishments and highlights, our full year guidance metrics and our capital growth program. Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Policy and Risk Officer, will provide updates on our regulatory activity, our ongoing business transformation efforts and our stakeholder engagement. And Beth Cooper, Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary, will discuss our financial results, financing updates and investment highlights. With that, it's my pleasure to turn the call over to Jeff.
Jeffrey Householder: Thank you, Lucia, and good morning. We appreciate you joining our discussion today. The highlights on Slide 5 demonstrate how we've continued to deliver with purpose over the last few months. Our growth trajectory continues, and we've expanded our capital investment program. A number of our 2025 projects are already in service and producing significant margin. We've finalized multiple positive regulatory filings and strengthened our balance sheet in support of future growth. As shown on Slide 6, we reported adjusted earnings per share of $0.82 for the third quarter of 2025 and $4.06 year-to-date, an 8% increase over the same period last year. As you know, the third quarter always contributes the smallest percentage of our full year earnings, so my remarks will focus on our performance in the first 9 months of 2025. Year-to-date, we've achieved double-digit growth in adjusted gross margin, operating income and adjusted net income relative to the same period in 2024. That performance is a testament to our focus on driving growth, effectively working with our regulators and operating efficiently to meet our customers' needs. Our results continue to align with our expectations. So we are reaffirming our full year 2025 EPS guidance of $6.15 to $6.35 per share, as shown on Slide 7. As we've previously indicated, this EPS range does assume we reach a successful outcome for 2025 in the FCG depreciation study proceeding, which Jim will discuss further on today's call. On the capital investment side, we continue to invest capital at a run rate of over $1 million a day with $336 million already invested in the first 9 months of this year, including $123 million invested in the third quarter. Given this pace, we are again increasing our 2025 full year capital expenditure guidance to $425 million to $450 million, a $25 million increase over the top end of our prior range. I'll now shift to Slide 8 to discuss the increase in customer demand for natural gas that's driving our strategic investment in some of the fastest-growing regions of the country. Both of our core service areas generated another quarter of above-average residential customer growth, 4.3% in Delmarva, 3.9% for Florida Public Utilities and 2.1% for Florida City Gas. I'll mention just a couple of examples to illustrate the demand for natural gas across our service areas. We're in the early stages of building out natural gas distribution for an underserved area in Southern Delaware that includes 2,000 new homes in Ellendale, Delaware. We also recently became the natural gas provider for a new community development in Port St. Lucie, Florida, which has begun to construct the first of 6 phases of what will ultimately be a community with hundreds of new homes. Last month, we also expanded propane distribution to a fleet of Greensboro school district buses, which confirms our broader propane growth strategy in North Carolina. We also see additional growth opportunities in Ohio, which has become fifth in the nation for data center potential as ranked by Ohio's Economic Development Corporation. The Ohio opportunity is supported by significant natural gas production in the state and constructive governmental and regulatory frameworks. The opportunities we have to serve increasing customer demand, improve system reliability and operate efficiently are the basis for our overall growth strategy, which in turn drives sustainable earnings. We remain committed to increasing shareholder value by focusing on the 3 pillars of our growth strategy, as shown on Slide 9, prudently deploying capital, proactively managing our regulatory agenda and continually transforming our business operations to enhance safety and customer service and support future growth. Successful execution of these 3 pillars will enable us to maintain top quartile growth and total shareholder return. Slide 10 provides some highlights of our 2025 capital program. Construction projects overall remain on track and on budget and more than 400 gas distribution projects have been placed in service through the first 9 months of this year. Most importantly, this capital investment is generating significant gross margin, $14 million in the third quarter, nearly $34 million in the first 9 months of this year and $50 million expected for full year 2025. Given our pace of investment thus far and our additional opportunities ahead, we are again increasing our full year 2025 capital expenditure guidance, adding $25 million to the top end of our prior range for an updated range of $425 million to $450 million. Approximately $15 million of the increase is related to initial spending on our multiyear enterprise resource planning process and about $10 million is related to recently approved Eastern Shore natural gas system improvements. This updated range reflects capital investment of approximately $800 million between last year and this year, a significant increase that reflects the many growth opportunities across all our businesses. I'll now provide an update on WRU, our LNG storage facility in Bishopville, Maryland, as shown on Slide 11. Construction is well underway. Tanks are in place. We've been pouring a lot of concrete. The system control building has been erected and the majority of the equipment needed to complete the facility is now on site. Last month, we also successfully completed our first PHMSA inspection. This project remains the lowest cost infrastructure option to deliver affordable energy and protect against weather-related disruptions in the southernmost portion of our Delmarva service area. We continue to target bringing the project online in mid-2026, dependent on construction completion and final FERC approval. As shown in detail on Slide 12, all of our major transmission capital projects are advancing as expected with more than half now in service. We forecast these projects to contribute approximately $23 million of gross margin in 2025 and double that amount or $46 million in 2026. Shifting to Slide 13. The capital projects included on this slide support our 5-year capital investment plan of $1.5 billion to $1.8 billion through 2028. At this point, we've identified at least $1.4 billion of the capital plan with a number of projects already in service or under construction. Most importantly, approximately 70% of that investment requires no additional regulatory approval or support. Not yet included in this forecast is the investment in our full ERP project as well as a number of projects that are still under exploration and development, as shown on Slide 14. We continue to explore a number of additional potential expansion opportunities, including serving the space industries in Virginia and Florida, expanding our systems in the southern part of Delmarva and Florida and meeting incremental demand for our Marlin virtual pipeline services to transport RNG, CNG and LNG. In just the last 2 weeks, I met with Florida Governor DeSantis and members of our leadership and external affairs teams have met with the Maryland and Delaware governors and their teams. We continue to partner with local state and federal electric representatives to advance the design and construction of much needed energy infrastructure in those states. Maintaining strong relationships with all stakeholders and actively participating in energy coalitions advocating for a resilient and affordable energy future is key to driving these expansion projects forward to meet growing energy demand for years to come. With that, I'll turn to Jim to discuss our regulatory strategy and business transformation initiatives.
James Moriarty: Thank you, Jeff, and good to be with you all this morning. I'll start with Slide 15 as I provide some updates on our regulatory activity. After a great deal of effort, we now have permanent rates in effect for our Delaware, Maryland and Florida electric jurisdictions following successful conclusion of the 3 rate cases that we filed last year. Last month, we also reached settlement on the rate design and tariff-related elements of the Delaware rate case. And on October 15, the Delaware Commission approved that settlement. Altogether, updated rates are driving $13.1 million of margin this year and $18.2 million of margin in 2026, a testament to our proactive strategy, constructive relationships with regulators and our highly diligent and dedicated internal regulatory team. Slide 16 provides an update on the one remaining regulatory filing still outstanding, our traditional depreciation study filing for Florida City Gas. Following unexpected regulatory delays, we agreed to amend the filing from a proposed agency action or PAA proceeding to a standard hearing process. This transition provides for a more structured and traditional process for consideration of the filing and an updated schedule. Under the new schedule, the company submitted testimony in early October, restating our request for a 2-year amortization of the excess depreciation reserve retroactive to January 1, 2025. Per the filing we made earlier this week alongside updated testimony, the excess reserve is now $19 million, primarily reflecting updates to expected useful lives for certain asset classes. On Wednesday, the State of Florida Office of Public Counsel filed testimony objecting to the company's proposal and recommending that the existing depreciation rates remain in effect until the company files a new depreciation study as part of a rate case at a future date. The company will be filing rebuttal testimony later this month to address these arguments. Staff testimony will follow next week, and the hearing is scheduled for December 11. The process is expected to conclude no later than February 2026, but could be completed earlier if all parties are able to reach a settlement. We are focused on securing successful recovery of the excess depreciation to support our 2025 full year results and will provide future updates as available. I'll now turn to Slide 17 to provide an update on our business transformation efforts, which is the third pillar in our growth strategy for a reason. Transformation is the engine that enables technology, systems and processes to evolve in order to maintain our track record of growth as we become a much larger organization. In the last few months, we've continued to make strides with upskilling our team, including attracting additional talent in finance, strategic planning, information technology, change management and human resources. We are completing the final preparation stages of our enterprise resource critical project that will have significant transformational impacts across the organization as we implement improvements in asset management, supply chain, human resources, accounting and finance. We expect to invest approximately $15 million in this project this year, and we'll provide total capital spend for this multiyear project on our next call. Slide 18 provides a couple of updates on our engagement with stakeholders. In September, we were pleased to welcome Lisa Eden as our newest member of the Board of Directors. Lisa brings extensive experience in finance, strategic planning, talent management and information technology, having recently retired as Senior Vice President and Chief Financial Officer at TXNM Energy, Inc. We look forward to Lisa's valuable insights and contributions in the years to come. We were also honored to receive several recognitions in the last few months. First, our Delmarva natural gas distribution business and our Sharp Energy propane distribution business were recognized as Stars of Delaware as voted by the Delaware Daily State News readers. Second, Chesapeake Utilities was also named a 2025 Champion of Board Diversity for the third consecutive year by the Forum of Executive Women. And finally, we were named Employer Champion of the Year for Kent County by the Delaware Department of Labor State Rehabilitation Council. These awards reflect our unbroken commitment to excellence and inclusion of all members of our communities as we provide reliable and affordable energy solutions that enable families, businesses and the communities we serve the opportunity to flourish. Our colleagues also continue to support the communities in which they live and work through the contribution of their time and resources. Through September, our teammates have volunteered over 1,500 hours and have contributed over $488,000 in charitable donations and corporate sponsorships, supporting organizations that align with our 4 focus areas of giving: safety and health, community development, education and environmental stewardship. With that, I will turn the call to Beth for a more detailed discussion of our financial results.
Beth Cooper: Thanks, Jim, and good morning, everyone. As shown on Slide 19, our financial results for the third quarter of 2025 continue to demonstrate steady growth that supports our full year growth targets. Adjusted gross margin was approximately $137 million, up 12% and adjusted net income was approximately $20 million, up 8% from the third quarter of 2024. We also sustained growth in adjusted earnings per share of $0.82, a 3% increase over the third quarter of last year, which includes an increase of 1 million more shares outstanding compared with a year ago. I'll now provide some additional detail on the key drivers of our third quarter performance as shown on the adjusted EPS bridge on Slide 20. Continued demand for natural gas drove $0.22 of incremental adjusted EPS, including $0.17 related to transmission capital projects and $0.05 of distribution growth across our service areas. Margin from our infrastructure program investments contributed an additional $0.12 per share this quarter and permanent rates from our 3 rate cases added $0.11 in third quarter 2025 adjusted EPS. Our unregulated businesses generated net incremental earnings of $0.09 per share, largely driven by continued growth in our Marlin Virtual Pipeline transportation business. These gains were partially offset by a few factors, including $0.14 per share of increased depreciation and amortization expense, driven by growth in total assets as we actively deploy capital and $0.10 again from the absence of an RSAM benefit recorded in the third quarter of 2024. We also incurred additional operating expenses of $0.12 per share this quarter, driven by incremental facilities, maintenance, insurance and employee-related expenses. However, we continue to drive operational efficiencies, leading to operational expenses at only 34% of adjusted gross margin in the third quarter of 2025 relative to 37% in the same period last year. Our results were also impacted by 15% fewer cooling degree days this quarter relative to the third quarter a year ago, which drove slightly lower consumption in our Florida electric business. Financing activity, including our debt and equity issuances over the last 12 months, reduced adjusted EPS by $0.07 per share. And finally, some changes in our billing accruals also impacted the third quarter of this year from a timing perspective, but will not impact full year results. Shifting to Slide 21. Adjusted gross margin for our Regulated segment was approximately $115 million this quarter, up 12% from the third quarter of last year. This growth continues to be driven by strength in our core business operations, organic natural gas transmission expansions, which are a direct result of distribution growth as well as increased rates following the conclusion of our 3 rate cases. Our focus on cost management enabled similar growth in our regulated operating income, up 11% to approximately $49 million in the third quarter of 2025. Our unregulated Energy segment also demonstrated strong growth relative to the third quarter of last year, as shown on Slide 22, with adjusted gross margin up 13% to approximately $22.5 million. Our Marlin Gas Services business continues to meet the rapid growth in demand for virtual pipeline transportation, driving $3.1 million of additional gross margin when combined with the incremental contribution from Full Circle Dairy in the third quarter of this year. This growth was supported by increased performance from Aspire Energy, but tempered by changes in margins and service fees within our propane operations for the third quarter, leading to an overall gross margin increase of $2.6 million. While higher than the same period a year ago, margins did not fully cover the normal operating costs in the quarter as is typical during the least weather-sensitive quarter of the year. I'll now move to Slide 23 to review our capital structure and financing activities. At September 30, our equity capitalization was 49% with $83.1 million of equity issued through the first 9 months of the year. In the third quarter alone, we issued approximately 126,000 shares with an additional 105,000 shares issued in October 2025. We also completed the previously announced $200 million issuance of new long-term unsecured senior notes in the private placement debt market with $150 million funded in August and $50 million funded in September of this year at a blended 5.04% coupon. These capital raises support our overall financing strategy, which ensures we are committed to superior balance sheet strength. We also continue to maintain strong liquidity and sufficient capacity to support growth with availability of 87% of our total capacity of $755 million between our revolving credit facility and private placement shelf facilities at the end of September 2025. Moving to Slide 24. Alongside our equity and debt plans, our dividend policy continues to be a key component of our capital allocation strategy as we fund growth capital investment to drive earnings growth and overall total shareholder return. Our Board has approved a dividend payout target range of 45% to 50%, allowing us to retain 50% to 55% of earnings, which has been a meaningful part of our financing plan. We also remain committed to consistent dividend growth. Our annualized dividend per share of $2.74 reflects a 7% annual increase from 2024 and supports a long-term dividend CAGR of 9% while still facilitating significant earnings reinvestment. We will continue to support long-term dividend growth while reinvesting significant earnings back into the company, enabling our investors to benefit from both long-term top quartile earnings and strong dividend growth. As we've discussed many times, we are committed to a long-term earnings per share compounded annual growth rate of 8% through 2028 to drive top quartile shareholder returns, as shown on Slide 25. Our third quarter results align with our full year 2025 adjusted EPS guidance range of $6.15 to $6.35 per share, inclusive of a successful outcome on the Florida City Gas depreciation study as both Jeff and Jim have previously discussed. This range represents an EPS growth rate of 14% to 16% over 2024 or on average, approximately 8% to 10% annually over the last 2 years. Before we shift to Q&A, let's review the unique differentiators as shown on Slide 26, that enable us to drive significant shareholder value in 2025 and for years to come. We remain committed to delivering on our promises. We recognize that our consistent track record has driven expectations for continued strong growth, both in terms of performance and valuation. We will continue to execute on our 3 pillars of growth, enabled by continued infrastructure reliability improvements and growing demand for natural gas throughout our service areas and supported by our increased 2025 capital guidance range of $425 million to $450 million. Our disciplined approach to financing, including ensuring balance sheet strength, upholding investment-grade credit metrics and sustaining our target capital structure keep us well positioned to address market volatility as we fund our growth plan. All of these elements drive our ability to reach new heights, both in 2025 and beyond. We look forward to delivering with purpose and driving long-term value for all stakeholders. We sincerely appreciate your continued interest, support and investment in the company. Thank you for joining our call today. With that, we'll take your questions. Operator?
Operator: [Operator Instructions] We'll take our first question from Barclays.
Nicholas Campanella: This is Nick Campanella. So I wanted to ask on the depreciation study. Just you kind of show in slides that the decision could be anywhere from December to February. I think you're very clear that this is included in guidance. Just ability to kind of overcome that if you do get a decision, let's say, in January or February? Are you still able to kind of hit the range? Or is it fully predicated on that outcome? And then how would you kind of quantify what's in fiscal '25?
Beth Cooper: So we have -- Nick, as we've talked about previously, achieving the guidance range would assume that we do get a successful outcome from that rate -- from that proceeding. And where we actually fall within the range will ultimately be based on where that outcome is, meaning when you look at -- we have filed for a 2-year amortization period. The standard is 5 years. So that will come into play. But as long as there is an outcome from the proceeding from the hearing in December, and we get a final order in time to be able to record it for 2025, that will determine ultimately the timing of the period as well as the amount that would enable us to achieve the guidance range.
Nicholas Campanella: And if it doesn't, is it just that you're at the lower end? Or I was just trying to parse through what you were saying there. And just to be completely clear, it's the $19 million that's kind of shown in slides, and I would just take half of that.
Beth Cooper: Yes, that is correct. And so achievement of that would enable us to be within the range and enable -- so there's some other factors certainly that we have to -- the reason why we're not saying exactly where it will depend on, again, the period of time, the ultimate conclusion of what gets approved in terms of amount. And then certainly, there's other factors that could impact our results, but that is the clear differentiator to us being within the range or not being within the range. And I would add if for some reason, right, it's much lower than expected, we would anticipate that we're going to be filing a rate case next year anyway. So we see dollars there that need to be part of the final outcome. We're very confident in the numbers that we've filed as being the excess reserve. And so we believe we're well positioned, whether it's through a depreciation study or ultimately, if we have to come back in some form of rate proceeding as well next year.
Nicholas Campanella: That's great. Really appreciate that clarity. And then I know Jim just kind of talked about the process overall in the prepared remarks and just brought up the prospects of settlement. But just as you've seen kind of testimonies roll in, just how would you kind of frame the prospects to -- for parties to kind of come to a settlement before December? And are you really trying to achieve an all-party settlement? Or could this be more partial?
Beth Cooper: Yes, Jim, please go ahead.
James Moriarty: Nick, this is Jim. As you know, it's very difficult to predict the process trying to land a case like this or if the parties will even entertain a potential settlement. We're working very hard if there were to be one. Our preference, of course, would be that it'd be unanimous. So I really can't say more than that, Nick, other than our historical approach would be try and resolve something, if at all possible.
Operator: Our next question comes from Tate Sullivan with Maxim Group.
Tate Sullivan: First to follow up on a comment from earlier in the call. Jeff, did you say that you had 400 new distribution projects in service in the last 9 months? Or did I mishear that? And if I did not, what does that -- what qualifies as an individual project, please?
Jeffrey Householder: Yes, that's sure. Those are of a variety of different sizes. It is 400, just to give you some idea of the significant number of projects that we are moving forward on. Those range from distribution level subdivision projects up into some of the transmission work that we do. So it really is just a compilation of the construction activity that's going on throughout the company. And it's a substantial increase over what we would typically see. And so some of that's reflective of the fact that we now have Florida City Gas in the fold and are doing construction activity on that system. And some of it continues to reflect the very substantial growth, especially in residential projects that we see both in Delmarva and in Florida. So yes, I didn't mean to -- that's not all $1 billion transmission projects, but it's a lot of things that add up to a significant amount of work and a substantial amount of customer growth.
Tate Sullivan: Yes. I mean the scale of organizing all that. I mean, the previous year's period of 9 months, I mean, I imagine what, roughly 200 to 300 projects. Would that be fair? I mean just...
Jeffrey Householder: Yes, maybe even less. Yes, it's a significant amount of work, and our guys have done a really great job. We've spent a fair amount of time over the last couple of years in that particular area, trying to consolidate our construction teams, trying to make sure that we had different tools and systems that would allow us to track those projects in a better way, improving some of the supply chain issues. I mean all of that has kind of come together intentionally to allow us to be able to actually move through that level of project.
Tate Sullivan: And separately, you called out the Ohio data center growth in one of the slides. And just to refresh on the business, your Ohio business is an unregulated business -- energy segment, I believe. And -- can you talk about the type of infrastructure? Is it pipelines to backup generators, pipelines to isolated power plants? Or can you talk about that opportunity?
Jeffrey Householder: On the data center side?
Tate Sullivan: Yes.
Jeffrey Householder: Yes. What we actually have one announced project with AEP in Ohio right now to build a pipeline to serve a data center that AEP is building the project itself. We have a number of other possibilities out there that we're looking at. And I mean, we're in the same boat, I think, with a lot of people across the country. As you well know, there are a lot of data center possibilities out there. Everybody is trying to understand where these things might actually land. We've seen, as we mentioned in the remarks, significant activity in Ohio. It seems to be one of those places where folks like the political regulatory climate. They like the fact that there are in-state gas supplies that are possible and there are transmission opportunities there that can bring that gas to the projects as well as some large electric utilities that seem to be eager to pursue them. So we hope to continue to do business in Ohio with the possibility of adding additional transmission assets there.
Tate Sullivan: And that's all of Ohio has been unregulated. Is that correct?
Jeffrey Householder: That's correct. I guess we have -- I should probably clarify that -- we have a small transmission pipeline that's sort of quasi-regulated in Ohio. But we don't have regulated distribution assets there in the sense that we do on Delmarva, Florida.
Tate Sullivan: Okay. I asked this question because I saw an acquisition in Ohio territory as well recently in the industry and thank you for all the comments.
Operator: Our next question comes from Paul Fremont with Ladenburg.
Paul Fremont: I guess my first question, Beth, just to clarify, is the cutoff date for a Retroactive treatment of the amortization of the depreciation reserve, is that December 31? Or is that -- is it a different date?
Beth Cooper: So basically, Paul, as long as we would have an order that would be in the first week or 2 in February, we would be able -- because it would be a subsequent event and the magnitude of that subsequent event, it could be factored into our 2025 earnings.
Paul Fremont: Great. So it could be as late as the second week of February?
Beth Cooper: It could be as late as that. When it gets beyond that, it would be very challenging for us at that point. So yes, as long as an order is received, we can go back and we have worked through and evaluated that on the accounting side. Mike Galtman and his team have researched that. We've talked to experts around that. And so yes, it could go back and be included because of the magnitude of that event.
Paul Fremont: Great. And then my second question is, can you help us split between the 22 that you had initially filed for and the 19 amended request?
Beth Cooper: Yes. So the process, Paul, as we started, and it actually -- it happens for all the parties. When you file that -- when you're filing that initial filing, you are certainly filing that with the thought that it is comprehensive. But as you continue to go through and look at the data, and we're scrubbing the data as we're moving through the process, ultimately, there are positive adjustments or things that you may find and sometimes there are updates that can be downward. And in this particular case, the net effect of the adjustments that we found among the various different asset categories or classes ultimately resulted in a decline. We have had our work papers reviewed by some of the experts that we utilize -- but it happens. And so as we continue to scrub the data within our systems, we feel very good about that $19 million. But it is us just constantly going through and validating the data.
Operator: [Operator Instructions] We'll go next to Alex Kania with BTIG.
Alexis Kania: Maybe just a question just thinking about the -- maybe the year-end earnings call. Has there been just any kind of change in thinking about what the roll forward, what updates you may end up giving on the CapEx plan? I know there's some discussion just about rolling in some of the projects that were talked a little bit about earlier on the call as well as the, I guess, the ERP or business transformation investments. But do you still consider planning on just keeping kind of the '28 long-term target? Or is there a sense maybe you want to do a more kind of full roll forward?
Beth Cooper: Thank you. Great question, Alex. So number one, I think right now, we happen to be in the process where we're working on and finalizing our 2026 budget. And that certainly, that is inclusive of our capital projects. And as we start the year, we have a really good sense and even years prior to that as we're moving through looking at the 5 years, it's a constant updating of CapEx guidance as we're looking at it. So as I think about February, what you will definitely see is you will see us come out with our projection of our capital spend for the year that will be reflective of an updated estimate for our ERP process and plan. And so I think that will be something new that we will include. Our expectation right now is that we will continue to hold to the $1.5 billion to $1.8 billion through 2028. And there is some likelihood in February of 2027 that we will revisit that and decide whether there's just an update or whether there's an extension of guidance from there. But most likely, we don't think it will be next year, but it will likely be the following year.
Alexis Kania: Great. And then just a follow-up on kind of the underlying growth of the businesses. It's just very notable that the Delmarva growth is even trending ahead of Florida. year-to-date. Do you -- what's kind of the view about how long that maybe could persist? I mean it's obviously a good thing to see. I'm just kind of curious about what the kind of current views are just in terms of trajectory of, let's say, in the Mid-Atlantic versus the Florida franchises.
Beth Cooper: Well, thank you. Great question. I happen to be -- and I'm certainly not saying this statistic is in true. I can't confirm it or deny it, but I happened to be in an event not long ago where the speaker at this particular setting was talking about Sussex County, which is really the county in Delaware where we're seeing the most growth because it's at our resort and beach areas. And they were talking about some of the statistics they had seen, right, show that, that county is one of the fastest-growing counties in the entire country. And I think we're continuing to see that. That's reflected in our numbers. There's a substantial build-out that's occurring that for right now, we continue to see occurring into the foreseeable future. You had Jeff talk about on the call today, actually what I would call more of a bedroom community to the beach areas. We're seeing growth actually start up in some of these small communities that I, as a lifetime resident of the state would not have expected some of these areas to be kind of natural extensions necessarily of the beach area, but the quality of life in the area that's around here, I think, is continuing to bring more people in. So I think for right now, Alex, we're continuing to expect strong growth in that area. I don't think that takes away at all from the strong growth, though that we're also seeing in Florida. And one of the things that you saw us do in this particular release, and we're trying to make sure it stands out is that the areas that our Florida legacy business actually serves have tremendous growth that's also significantly above the industry average. And we're seeing growth with even in Florida City Gas also pick up as well. So we're excited about the growth prospects and continue to be. And hopefully, those, as always, will continue to also result in some additional pipeline -- upstream pipeline capacity needs as well.
Operator: This does conclude today's question-and-answer session. I would now like to turn the program back over to Jeff Householder for any additional or closing remarks.
Jeffrey Householder: Well, thank you for joining our call this morning. We, as always, appreciate your continued interest in Chesapeake Utilities. I have to say that I like where we are this year, less than 2 years from the transformational FCG acquisition, double-digit growth in earnings. We've more than doubled our pre-FCG capital investment, positive results in 3 rate cases, significant progress in our modernization business transformation efforts and really excellent outlooks for 2026. So we look forward to seeing many of you at the EEI Financial Forum in Florida in a couple of days and safe travels if you're headed to Florida. Goodbye.
Operator: Thank you. This concludes Chesapeake Utilities Corporation's Third Quarter 2025 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.