Chesapeake Utilities Corp. (CPK) reported third-quarter 2014 operating earnings of 22 cents per share, lagging the Zacks Consensus Estimate of 27 cents by 18.5%. Earnings remained flat year over year.
Total Revenue
Total revenues at the end of the third quarter were $91.6 million, missing the Zacks Consensus Estimate of $96 million. Revenues however increased 5.9% from $86.5 million in the year-ago period. The year-over-year rise was primarily due to better performance at Regulated Energy and customer growth in natural gas and transmission services.
Highlights of the Release
Total operating expenses were $83.8 million, up 7.7% from $77.8 million incurred in the year-ago period.
Operating income was $7.8 million, down 10.6% from $8.7 million in the year-ago quarter.
Interest expenses increased to $2.5 million from $2.0 million in the year-ago quarter.
Financial Highlights
Cash and cash equivalents as of Sep 30, 2014, were $2.3 million compared with $3.4 million as of Dec 31, 2013.
Long-term debt was $165.0 million as of Sep 30, 2014, up from $117.6 million as of Dec 31, 2013.
Cash flow from operating activities in the first nine months of 2014 was $64.4 million compared with $66.4 million in the year-ago period.
Other Company Releases
Sempra Energy’s (SRE) third-quarter 2014 earnings per share came in at $1.39, far ahead of the Zacks Consensus Estimate of $1.23.
Questar Corp (STR) reported adjusted third-quarter earnings of 22 cents per share, beating the Zacks Consensus Estimate by 4 cents.
ONEOK Inc. (OKE) reported third-quarter 2014 adjusted earnings of 40 cents per share, surpassing the Zacks Consensus Estimate of 38 cents.
Our View
Chesapeake Utilities continues to invest in its natural gas distribution and transmission systems. In the quarter under review, the company added more customers in its natural gas distribution and transmission services.
The company’s Eastern Shore unit started its service to an industrial customer facility in Kent County, DE which is expected to boost margins in the quarters to come. In addition, in Sep 2014, Eight Flags Energy, LLC, another unit of Chesapeake Utilities, announced that it will build a combined heat and power plant in Florida. Once completed, the combined heat and power plant will be able to generate around 20 megawatts (MW) of base load electricity.
Owing to various expansion initiatives, Chesapeake Utilities increased its capital expenditure guidance to $112.3 million from its previous projection of $110.9 million for 2014. A major 83% chunk will be directed towards the company’s Regulated Energy business. These strategic initiatives will help to maintain the momentum and expand its footprint and serve a larger customer base. The Regulated utility business also ensures stable returns.
Chesapeake Utilities Corp. presently carries a Zacks Rank #1 (Strong Buy).
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