0001628280-26-031397
SEC filingStrong quarter driven by regulatory initiatives, pipeline expansions, and colder weather boosting propane consumption, with double-digit growth across revenue, operating income, and net income.
Chesapeake Utilities Corporation reported strong financial results for the first quarter of 2026, with revenue increasing 18.2% to $353.1 million compared to $298.7 million in the prior-year quarter. The growth was primarily driven by incremental margin from regulatory initiatives and infrastructure programs, pipeline expansion projects, and organic growth in our natural gas distribution businesses. Operating income rose 14.5% to $99.4 million, reflecting the same underlying drivers. Net income increased 16.5% to $59.3 million, and diluted earnings per share grew 11.8% to $2.47.
The increase in adjusted gross margin in the Unregulated Energy segment was primarily due to increased consumption in our propane distribution business, which benefited from colder year-over-year weather in the Delmarva service areas, as well as improved performance from Aspire Energy. These factors contributed to the overall revenue and earnings growth.
Net cash provided by operating activities increased to $118.0 million from $85.0 million in the prior-year quarter, driven by higher net income and deferred taxes. Capital expenditures rose to $141.9 million from $113.8 million, reflecting continued investment in infrastructure programs and pipeline expansions. As a result, free cash flow was negative $23.9 million, consistent with the company's strategy of deploying capital for long-term growth.
While specific expense details are not provided in the authoritative packet, the increase in operating income indicates that revenue growth outpaced expense growth. Interest costs likely increased due to higher debt levels associated with capital investments, but the impact was manageable given the strong earnings performance.
Management continues to focus on prudently deploying investment capital across its growth platforms, including regulatory initiatives such as FCG's SAFE program, Florida's GUARD program, Eastern Shore's Capital Cost Surcharge program, and FPU Electric's SPP. The company expects to benefit from ongoing pipeline expansions and organic growth in its natural gas distribution businesses. Additionally, the Florida PSC approved a permanent rate increase in March 2025, though the order was subsequently protested; the outcome remains uncertain but could provide future margin support.