CPK 10-K & 10-Q changes, risk factors and insider trading

Our business strategy includes the continued pursuit of growth and requires capital investment in excess of cash flow from operations. As a result, the successful execution of our strategy is dependent upon access to equity and debt on acceptable terms and at reasonable costs. Our ability to issue new debt and equity capital and the cost of equity and debt are greatly affected by our financial performance and the conditions of the financial markets. In addition, our ability to obtain adequate and cost-effective debt depends on our credit ratings. A downgrade in our current credit ratings could negatively impact our access to and cost of debt. If we are not able to readily access capital at competitive rates,rates and on terms that are acceptable to us, our ability to implement our strategic plan, undertake improvements and make other investments required for our future growth may be limited.

Increases in interest rates could increase the cost of future debt issuances. To the extent we are not able to fully recover higher debt costs in the rates we charge our utility customers, or the timing of such recovery is not certain, our earnings could be adversely affected. Increases in short-term interest rates could negatively affect our results of operations, whichwe dependrely on short-term debt to finance accounts receivable and storage gas inventories and to temporarily finance capital expenditures. Reference should be made to Item 7A, Quantitative and Qualitative Disclosures about Market Risk for additional information.

Our business is dependent on the supply chain to ensure that equipment, materials and other resources are available to both expand and maintain our services in a safe and reliable manner. Pricing of equipment, materials and other resources have increased steadily in recent years and may continue to do so in the future. Failure to secure equipment, materials and other resources on economically acceptable terms, including failure to eliminate or manage the constraints in the supply chain, may Chesapeake Utilities Corporation 2025 Form 10-K Page 15 impact the availability of items that are necessary to support normal operations as well as materials that are required for continued infrastructure growth, and as a result, may adversely impact our financial condition and results of operations.

Construction of new facilities required to support future growth is subject to various regulatory and developmental risks, including but not limited to: (i) our ability to obtain timely certificate authorizations, necessary approvals and permits from regulatory agencies and on terms that are acceptable to us; (ii) potential changes in federal, state and local statutes and regulations, including environmental requirements, that prevent a project from proceeding or increase the anticipated cost of the project; (iii) our inabilityability to acquire rights-of-way or land rights on a timely basis on terms that are acceptable to us; (iv) lack of anticipated future growth in available natural gas and electricity supply and demand; (v) insufficient customer throughput commitments; and (vi) lack of available and qualified third-party contractors which could impact the timely construction of new facilities. Adverse outcomes and/or changes in these risks could limit the future growth of our business and cause a material adverse change in our financial condition, results of operations and cash flows.

Because we do not own all of the land on which our pipelines and facilities have been constructed, we are subject to the possibility of more onerous terms or increased costs to retain necessary land use if we do not have valid rights-of-way, easements or other property rights or if such rights or easements lapse or terminate. We obtain the rights to construct and Chesapeake Utilities Corporation 2025 Form 10-K Page 16 operate our pipelines on land owned by third parties and governmental agencies for a specific period of time. Our loss of these rights, through our inability to renew right-of-way contracts or otherwise, could have a material adverse effect on our business, financial condition and results of operations.

Our natural gas distribution, propane operations and natural gas transmission operations are sensitive to fluctuations in weather conditions, which directly influence the volume of natural gas and propane we transport, sell and deliver to our customers. A significant portion of our natural gas distribution, propane operations and natural gas transmission revenue is derived from the sales and deliveries to residential, commercial and industrial heating customers during the five-month peak heating season (November through March). Other than our Maryland natural gas distribution businesses (CUC-Maryland division, Sandpiper Energy and Elkton Gas)business which havehas revenue normalization mechanisms, if the weather is warmer than normal, we generally sell and deliver less natural gas and propane to customers, and earn less revenue, which could adversely affect our financial condition, results of operations and cash flows. Conversely, if the weather is colder than normal, we generally sell and deliver more natural gas and propane to customers, and earn more revenue, which could positively affect our financial condition, results of operations and cash flows. Variations in weather from year to year can cause our financial condition, results of operations and cash flows to vary accordingly.

Many of our employees, service providers, and vendors have been working, and continue to work, from remote locations where cybersecurity protections could be limited and cybersecurity procedures and safeguards could be less effective. As such, we could be subject to a higher risk of cybersecurity breaches than ever before. Therefore, we could be required to expend significant resources to continue to modify or enhance our procedures and controls or to upgrade our digital and operational systems, related infrastructure, technologies and network security. In addition, despite steps we may take to detect, mitigate, and/or eliminate threats and respond to security incidents, the techniques used by those who wish to obtain unauthorized access, and possibly disable or sabotage systems and/or abscond with information and data, change frequently and continue to evolve with the use of artificial intelligence (“AI”) and we may not be able to protect against all such actions.

Concerns relating to the responsible use of new and evolving technologies, such as artificial intelligence (AI),AI, may result in reputational or financial harm and liability.

Federal and state legislative and regulatory initiatives to promote energy efficiency, conservation and the use of alternative energy sources could lower consumption of natural gas and propane by our customers. For example, in August 2022, the Inflation Reduction Act of 2022 was signed into law, with hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, and clean fuels, amongst other provisions. These incentives couldhave furthercontinued to accelerate the transition of the U.S. economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives and impact demand for our products and services. In addition, increasing attention to climate change, societal expectations on companies to address climate change, investor and societal expectations including mandatory climate related disclosures, and the aforementioned demand for alternative forms of energy, may result in increased costs and reduced demand for our products and services. While we cannot predict the ultimate effect that the development of alternative energy sources and related laws might have on our operations, we may be subject to reduced profits, increased investigations and litigation against us, and negative impacts on the market price of our common stock and access to capital markets.

•We may fail to realize thesynergies, benefits and growth prospectsopportunities anticipated as a result of the acquisition;

Further, existing environmental laws and regulations may be revised, or new laws and regulations seeking to protect the environment may be adopted and applicable to us. Revised or additional laws and regulations could result in additional operating restrictions on our facilities or increased compliance costs, which may not be fully recoverable. Any such increase in compliance costs could adversely affect our financial condition, results of operations and cash flows. Compliance with these legal obligations requires us to commit capital. If we fail to comply with environmental laws and regulations, even if such failure is caused by factors beyond our control, we may be assessed administrative, civil, or criminal penalties and fines, imposed with investigatory and remedial obligations, or issued injunctions all of which could impact our financial condition, Chesapeake Utilities Corporation 2025 Form 10-K Page 22 results of operations and cash flows. See Item 8, Financial Statements and Supplementary Data (Note 19,18, Environmental Commitments and Contingencies, in the consolidated financial statements).

There have been a number of federal and state legislative and regulatory initiatives proposed in recent years in an attempt to control or limit the effects of global warming and overall climate change, including greenhouse gas emissions. The direction of future U.S. climate change regulation is difficult to predict given the potential for policy changes under different Presidential administrations and Congressional leadership. The Environmental Protection Agency, or other Federal agencies, may or may not continue developing regulations to reduce greenhouse gas emissions. Even if federal efforts in this area slow, states, cities and local jurisdictions may continue pursuing climate regulations. Any laws or regulations that may be adopted to restrict or reduce emissions of greenhouse gases could require us to incur additional operating costs, such as costs to purchase and operate emissions controls, to obtain emission allowances or to pay emission taxes, and could reduce demand for our energy delivery services. Federal, state and local legislative initiatives to implement renewable portfolio standards or to further subsidize the cost of solar, wind and other renewable power sources may change the demand for natural gas. We cannot predict the potential impact that such laws or regulations, if adopted, may have on our future business, financial conditionposition, orresults financialof results.operations and cash flows.

Our certificate of incorporation and bylaws, as well as Delaware law, contain provisions that could delay, defer or prevent an unsolicited change in control of Chesapeake Utilities, which may negatively affect the market price of our common stock or the ability of stockholders to participate in a transaction in which they might otherwise receive a premium for their shares over the then current market price. These provisions may also prevent changes in management. In addition, our Board of DirectorsBOD is authorized to issue preferred stock without stockholder approval on such terms as our Board of DirectorsBOD may determine. Our common stockholders will be subject to, and may be negatively affected by, the rights of any preferred stock that may be issued in the future.

On November 30, 2023, we completed the acquisition of FCG for $922.8 million in cash, including working capital adjustments as defined in the agreement that were settled during the first quarter of 2024, pursuant to the stock purchase agreement with Florida Power & Light Company. Upon completion of the acquisition, FCG became a wholly-owned subsidiary of the Company and is included within our Regulated Energy segment. FCG currently serves approximately 123,000125,000 residential and commercial natural gas customers across eight counties in Florida, including Miami-Dade, Broward, Brevard, Palm Beach, Hendry, Martin, St. Lucie and Indian River. Its natural gas system includes approximately 3,982 miles of distribution main and 80 miles of transmission pipe. Results for FCG are included within our consolidated results from the acquisition date.

In June 2023, FCG received approval from the Florida PSC for a $23.3 million total increase in base revenue in connection with its May 2022 rate case filing. The new rates, which became effective as of May 1, 2023, included the transfer of its SAFE program provisions from a rider clause to base rates, an increase in rates associated with a liquefied natural gas facility, and approval of FCG's proposed reserve surplus amortization mechanism ("RSAM") with a $25.0 million reserve amount. The RSAM iswas recorded as either an increase or decrease to accrued removal costs on the balance sheet, with a corresponding increase or decrease to depreciation and amortization expense. At December 31, 2024, the RSAM reserve had been completely utilized.

In February 2025, FCG filed a depreciation study with the Florida PSC. The application is requesting approval of revised annual depreciation rates, as well as a reduction related to a reserve imbalance that would be amortized over a two-year period. The outcome of the application iswas subject to review and approval by the Florida PSC. In February 2026, the Florida PSC approved a $6.8 million reserve imbalance to be amortized over the remaining life of the assets, with the revised depreciation rates effective as of January 1, 2025.

We calculate Adjusted Gross Margin by deducting the purchased cost of natural gas, propane and electricity and the cost of labor spent on direct revenue-producing activities from operating revenues. The costs included in Adjusted Gross Margin exclude depreciation and amortization and certain costs presented in operations and maintenance expenses in accordance with regulatory requirements. We calculate Adjusted Net Income and Adjusted EPS by deducting non-recurring costs and expenses associated with significant acquisitions that may affect the comparison of period-over-period results. These non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures. We believe that these non-GAAP financial measures are useful and meaningful to investors as a basis for making investment decisions, and provide investors with information that demonstrates the profitability achieved by the Company under allowed rates for regulated energy operations and under the Company's competitive pricing structures for unregulated energy operations. The Company's management uses these non-GAAP financial measures in assessing a business unit's and the overall Company performance. Other companies may calculate these non-GAAP financial measures in a different manner.

**(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.

***(3) Reflects the impact of 4.4 million common shares issued in November 2023 in connection withunder the acquisition of FCGDRIP and sharesATM also issued in 2024.program.

(31) Includes adjusted gross margin attributable to interim rates during 2024.2024 and 2025. See additional information provided below.

In July 2022, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreement with FPU for an additional 2,400 Dts/d of firm service in the St. Cloud, Florida area. As part of this agreement, Peninsula Pipeline constructed a pipeline extension and regulator station for FPU. 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. This project was placed into service in July 2023 and generated additional adjusted gross margin of $0.3 million for the year ended December 31, 2024. We expect this extension to generate annual adjusted gross margin of $0.6 million in 20252026 and thereafter.

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of an amendment to its Transportation Service Agreement with FPU for a project that will support additional supply to communities in the St. Cloud, Florida 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 fourthsecond quarter of 2025.2026. We expect this expansion to generate approximately $2.2$3.2 million of adjusted gross margin in 20252026 and $3.2 million thereafter.

In August 2022, Peninsula Pipeline and FPU filed a joint petition with the Florida PSC for approval of its Transportation Service Agreement associated with the Wildlight planned community located in Nassau County, Florida. The project enables us to meet the significant growing demand for service in Yulee, Florida. The agreement enables us to construct the project during the build-out of the community and charge the reservation rate as each phase of the project goes into service. Construction of the pipeline facilities will occur in two separate phases. Phase one consists of three extensions with associated facilities, and a gas injection interconnect with associated facilities. Phase two will consist of two additional pipeline extensions. The petition was approved by the Florida PSC in November 2022. The various phases of the project commenced in the first quarter of 2023, withand construction onwas thecompleted overall project continuing throughin 2025. The project generated additional adjusted gross margin of $1.0$1.1 million for the year ended December 31, 2024,2025, and is expected to contribute adjusted gross margin of approximately $3.0$4.3 million in 20252026 and $4.3 million thereafter.

In April 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreement with FPU for an additional 8,000 Dts/d of firm service in the Newberry, Florida area. The petition was approved by the Florida PSC in the third quarter of 2023. Peninsula Pipeline will construct a pipeline extension, which will be used by FPU to support the development of a natural gas distribution system to provide gas service to the City of Newberry. A filing to address the acquisition and conversion of existing Company owned propane community gas systems in Newberry was made in November 2023. The Florida PSC approved it in April 2024,2024. and conversionsConversions of the community gas systems commenced in the second quarter of 2024.2024 and are projected to be complete in the first quarter of 2026. The project generated additional adjusted gross margin of $1.4$1.2 million for the year ended December 31, 2024,2025, and is expected to contribute adjusted gross margin of approximately $2.6 million in 20252026 and thereafter.

In August 2023, Eastern Shore filed an application with the FERC requesting authorization to construct the Worcester Resiliency Upgrade, which consists of a mixture of storage and transmission facilities in Sussex County, DE and Wicomico, Worcester, and Somerset Counties in Maryland. The project will provide long-term incremental supply necessary to support the growing demand of the participating shippers. In January 2025, the FERC approved the project, and construction is expected to be complete in the third quarter of 2025. The project is expected to contribute adjusted gross margin of approximately $3.0 million in 2025 and $13.7 million thereafter.project.

In December 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities on the East Coast of Florida. The projects are driven by the need for increased supply to coastal portions of the state that have experienced an increase in population growth. Peninsula Pipeline will construct several pipeline extensions which will support FPU’s distribution system in the areas of Boynton Beach and New Smyrna Beach with an additional 15,000 Dts/d and 3,400 Dts/d, respectively. The Florida PSC approved the projects in March 2024. ConstructionNew Smyrna Beach was placed into service during May 2025 and construction is projected to be complete for Boynton Beach in the second and fourth quartersquarter of 2025 for New Smyrna Beach and Boynton Beach, respectively.2026. The projects generated adjusted gross margin of $4.6 million for the year ended December 31, 2025, and are expected to contribute adjusted gross margin of approximately $4.8 million in 2025 and $6.0 million in 2026 and thereafter.

Central Florida Reinforcement Projects (Plant City and Lake Mattie)

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities located in Central Florida. The projects are driven by the need for increased supply to communities in central Florida that are experiencing significant population growth. Peninsula Pipeline will construct several pipelinePipeline's extensions which will support FPU’s distribution system inaround the areas of Plant City and Lake Mattie area's of Florida with an additional 5,000 Dts/d and 8,700 Dts/d, respectively. The Florida PSC approved the projects in May 2024. The Plant City project was completed in the fourth quarter of 2024, and the Lake Mattie project iswent projectedinto toservice bein completed during the fourth quarter ofJuly 2025. The completed projectprojects generated additional adjusted gross margin of $0.1$2.5 million for the year ended December 31, 2024,2025, and isare expected to contribute adjusted gross margin of approximately $2.0$4.3 million in 20252026 and $4.3 million thereafter.

In July 2024, we announced plans to extend Eastern Shore's transmission deliverability by constructing an additional 4.4 miles of six inch steel pipeline. The project will reinforce the supply and growth for our Delaware division distribution system and expand natural gas service further into Maryland for anticipated future growth. This project was placed into service during the fourth quarter of 2024, generated additional adjusted gross margin of $0.4$1.5 million for the year ended December 31, 2024,2025, and is expected to contribute adjusted gross margin of approximately $1.9 million in 20252026 and thereafter.

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for its approval of its Transportation Service Agreements with FCG for projects that will support the transportation of additional renewable energy supply to FCG. The projects, located in Florida’s Brevard, Indian River and Miami-Dade counties, will bring renewable natural gas produced from local landfills into FCG’s natural gas distribution system. Peninsula Pipeline will construct several pipeline extensions which Chesapeake Utilities Corporation 2024 Form 10-K Page 37 will support FCG's distribution system in Brevard County, Indian River County, and Miami-Dade County. Benefits of these projects include increased gas supply to serve expected FCG growth, strengthened system reliability and additional system flexibility. The Florida PSC approved the petition inat its July 2024 withmeeting. In October 2025, the Florida PSC approved amendments to the Transportation Service Agreements that were filed to include Peninsula Pipeline as a party to the related interconnection agreements. The projects are underway and are estimated to be completed in the firstsecond half of 2025.2026. These three renewable projects generated adjusted gross margin of $2.5 million for the year ended December 31, 2025, and are projected to generate total adjusted gross margin of approximately $5.7$5.4 million in 20252026 and $6.7$6.4 million thereafter.

In June 2023, the Florida PSC issued the approval order for the continuation of the SAFE program beyond its 2025 expiration date and inclusion of 150 miles of additional mains and services located in rear property easements. The SAFE program is designed to relocate certain mains and facilities associated with rear lot easements to street front locations to improve FCG's ability to inspect and maintain the facilities and reduce opportunities for damage and theft. In the same order, the CommissionFlorida PSC approved a replacement of 160 miles of pipe that was used in the 1970s and 1980s and shown through industry research to exhibit premature failure in the form of cracking. The program includes projected capital expenditures of $205$205.0 million over a 10-year period. For the year ended December 31, 2024,2025, there was $3.8$4.6 million of additional adjusted gross margin generated pursuant to the program. The program is expected to generate $8.3$12.7 million of adjusted gross margin in 20252026 and $10.9$16.4 million in 2026.2027.

In December 2024,2025, Eastern Shore submitted a filing with the FERC regarding a capital cost surcharge to recover capital costs associated with the replacement of existing Eastern Shore facilities because of mandated highway relocation projects as well as compliance with a PHMSA regulation. The capital cost surcharge mechanism was approved in Eastern Shore's last rate case. 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 2024.2025. The combined revised surcharge became effective January 1, 2025.2026. For the year ended December 31, 2024,2025, there was $0.4$2.5 million of incremental adjusted gross margin generated pursuant to the program. Eastern Shore expects to produce adjusted gross margin of approximately $5.3 million in 2025 and $6.7$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.

In January 2024, our natural gas distribution businesses in Maryland, CUC-Maryland Division, Sandpiper Energy, Inc., and Elkton Gas Company (collectively, the “Maryland natural gas distribution businesses”) filed a joint application for a natural gas rate case with the Maryland PSC. In connection with the application, we sought approval of the following: (i) permanent rate relief of approximately $6.9 million with ana 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 which we anticipate will be called Chesapeake Utilities of Maryland, Inc.; and (iii) authorization to establish a rider for recovery of the costs associated with our new technology systems. In August 2024, the Maryland natural gas distribution businesses, the Maryland Office of Peoples' Counsel ("OPC") and PSC Staffstaff reached a settlement agreement which provided for, among other things, an increase in annual base rates of $2.6 million. In September 2024, the Maryland Public Utility Judge issued an order approving the related settlement agreement in part. The $2.6 million increase in annual base rates was approvedapproved, and the Company filed thea Phase II filing in November 2024 to determine rate design across the Maryland natural gas distribution businesses, consolidation of the applicable tariffs and recovery of technology costs. The hearing haswas beenheld scheduledin March 2025, during which Phase II was approved, including an additional $0.9 million in revenue requirement, for Marcha total cumulative increase of $3.5 million. A final order was issued in April 2025 and theincluded outcomeapproval of the applicationconsolidation 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 year ended December 31, 2025, there was $1.5 million of adjusted gross margin generated pursuant to the program. The program is subjectexpected to reviewgenerate $3.5 million of adjusted gross margin in 2026 and approvalin by the Maryland PSC.2027.

In January 2024, our Maryland natural gas distribution businesses filed a joint petition for approval of their proposed unified depreciation rates with the Maryland PSC. A settlement agreement between the Company, PSC staff and the OPC was reached and the final order approving the settlement agreement went into effect in July 2024, with new depreciation rates effective as of Chesapeake Utilities Corporation 2024 Form 10-K Page 39 January 1, 2023. The approved depreciation rates resulted in an annual reduction in depreciation expense of approximately $1.2 million.

In August 2024, our Delaware natural gas division filed an application for a natural gas rate case with the Delaware PSC. In connection with the application, we arePSC seeking approval of the following: (i) permanent rate relief of approximately $12.1 million with a ROE of 11.5 percent; (ii) proposed changes to depreciation rates which were part of a depreciation study also submitted with the filing; 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. TheA hearingsettlement foramong the proceedingCompany, hasPSC been scheduled for May 2025,staff and the outcomeDelaware Division of the applicationPublic isAdvocate subjectwas to reviewreached and approvalapproved by the Delaware PSC.PSC in June 2025 providing an annual revenue increase of $6.1 million, as well as dividing the rate case into two phases. Rates set to recover the approved components of the increase were effective in March 2025. In October 2025, a settlement was reached for Phase II of the rate case addressing tariff-related changes including rate design and approved by the Delaware Public Service Commission with rates effective as of October 15, 2025. For the year ended December 31, 2025, there was $4.1 million of additional adjusted gross margin generated and final rates are expected to generate approximately $6.1 million of adjusted gross margin in 2026 and in 2027.

The following tables reconcile Gross Margin, Net Income, and EPS, all as defined under GAAP, to our non-GAAP financial measures of Adjusted Gross Margin, Adjusted Net Income and Adjusted EPS for the three and six months ended MarchJune 31,30, 2026 and 2025:

Gross Margin (GAAP) for the Regulated Energy segment for the three monthsquarter ended MarchJune 31,30, 2026 was $114.9$91.9 million, an increase of $17.7$5.6 million, or 18.26.5 percent, compared to the same period in 2025. The increase in gross margin largely reflects incremental margin fromattributable regulatory initiatives and infrastructure programs,to pipeline expansion projects, and organic growth in our natural gas distribution businesses.businesses and regulatory infrastructure programs.

Gross Margin (GAAP) for the Unregulated Energy segment for the three monthsquarter ended MarchJune 31,30, 2026 was $42.3$9.4 million, ana increaseslight of $2.4 million, or 6.0 percent,decrease compared to the same period in 2025. The increasedecrease in gross margin was primarily attributable to higherlower resultsvolumes associated with our CNG, RNG and LNG transportation and hold services partially offset by improved margins 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.business.

Net income (GAAP) for the three monthsquarter ended MarchJune 31,30, 2026 was $59.3$25.4 million, or $2.47$1.05 per share, compared to $50.9$23.9 million, or $2.21$1.02 per share, for the same quarter of 2025. Net income for the three months ended MarchJune 31,30, 2025 included $0.2$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 $8.2$1.1 million or 16.04.5 percent compared to the prior-year period.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026

Our adjusted net income for the threesix months ended MarchJune 31,30, 2026 was $59.3$84.7 million, or $2.47$3.51 per share, compared to $51.1$75.4 million, or $2.22$3.25 per share, for the same period in 2025. Operating income for the first threesix months of 2026 was $99.4$152.3 million, an increase of $12.6$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 $12.3$14.4 million or 14.110.4 percent compared to the prior-year period. The increase in adjusted gross margin in the first quarterhalf 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 resultingcompared from year-over-year colder temperatures largely into the Company'sprior-year Delmarvaperiod. serviceThese areas,factors were partially offset by lower total margins associated with our CNG, RNG and improvedLNG performancetransportation atand Aspirehold Energy.services Higherand higher operating expenses werecompared drivento largelythe byprior-year increasedperiod. The increase in operating expenses was primarily attributable to higher payroll, benefits and other employee-related expensesexpenses, depreciation, amortization and higherproperty taxes, facilities, maintenance costs and outside servicesservices, and increased credit, collections and customer service costs compared to the prior-year period. DepreciationDepreciation, 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 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.Michael.

Key variances between the threesix months ended MarchJune 31,30, 2025 and MarchJune 31,30, 2026 included:

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

(4) Reflects the impact of approximately 0.80.6 million common shares issued under the DRIP/DSSPDSPP and ATM program.

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of an amendment to its Transportation Service Agreement with FPU for a project that will support additional supply to communities in the St. Cloud, Florida 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 secondthird quarter of 2026. For the three and six months ended MarchJune 31,30, 2026, these projects generated incremental adjusted gross margin of $0.9$0.2 million.million and $1.1 million, respectively. We expect this expansion to generate approximately $3.2 million in 2026 and annually thereafter.

In August 2022, Peninsula Pipeline and FPU filed a joint petition with the Florida PSC for approval of its Transportation Service Agreement associated with the Wildlight planned community located in Nassau County, Florida. The project enables us to meet the significant growing demand for service in Yulee, Florida. The agreement enables us to construct the project during the build-out of the community and charge the reservation rate as each phase of the project goes into service. Construction of the pipeline facilities will occur in two separate phases. Phase one consists of three extensions with associated facilities, and a gas injection interconnect with associated facilities. Phase two will consist of two additional pipeline extensions. The petition was approved by the Florida PSC in November 2022. 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 and $1.2 million, respectively, for the three and six months ended MarchJune 31,30, 2026,2026 and is expected to contribute adjusted gross margin of approximately $4.3 million in 2026 and annually thereafter.

In June 2025, Eastern Shore filed a limited amended application with the FERC requesting revised initial transportation rates for the project. The revised rates reflected increased capital costs associated with unanticipated changes in global markets and supply chains, including the availability of skilled laborers with the requisite certifications to work on this project. Eastern Shore requested expedited action by the FERC in relation to this matter and an approved order was issued in July 2025. Construction commenced shortly after approval and is well underway. 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 and $0.8 million, respectively, for the three and six months ended MarchJune 31,30, 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.

In December 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities on the East Coast of Florida. The projects are driven by the need for increased supply to coastal portions of the state that have experienced an increase in population growth. Peninsula Pipeline will construct several pipeline extensions which will support FPU’s distribution system in the areas of Boynton Beach and New Smyrna Beach with an additional 15,000 Dts/d and 3,400 Dts/d, respectively. 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 secondthird quarter of 2026. The projects generated incremental adjusted gross margin of $1.0$0.3 million and $1.3 million, respectively, for the three and six months ended MarchJune 31,30, 2026, and are expected to contribute adjusted gross margin of approximately $6.0 million in 2026 and annually thereafter.

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities located in Central Florida. The projects are driven by the need for increased supply to communities in central Florida that are experiencing significant population growth. Peninsula Pipeline's extensions support FPU’s distribution system around the Plant City and Lake Mattie area's of Florida with an additional 5,000 Dts/d and 8,700 Dts/d, respectively. The Florida PSC approved the projects in March 2024. The Plant City project was completed in the fourth quarter of 2024, and the Lake Mattie project went into service in July 2025. TheThese projects generated incremental adjusted gross margin of $0.8 million and $1.6 million, respectively, for the three and six months ended MarchJune 31,30, 2026, and both projects are expected to contribute total adjusted gross margin of approximately $4.3 million in 2026 and annually thereafter.

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of Transportation Service Agreements with FCG for projects that will support the transportation of additional renewable energy supply to FCG. The projects, located in Florida’s Brevard, Indian River and Miami-Dade counties, will bring renewable natural gas produced from local landfills into FCG’s natural gas distribution system. Peninsula Pipeline will construct several pipeline extensions which will support FCG's distribution system in Brevard County, Indian River County, and Miami-Dade County. Benefits of these projects include increased gas supply to serve expected FCG growth, strengthened system reliability and additional system flexibility. The Florida PSC approved the petition at its July 2024 meeting. In October 2025, the Florida PSC approved amendments to the Transportation Service Agreements that were filed to include Peninsula Pipeline as a party to the related interconnection agreements. The projects are underway and are estimated to be completed in the second half of 2026. These three renewable projects generated incremental adjusted gross margin of $1.3$0.7 million and $2.0 million, respectively, for the three and six months ended MarchJune 31,30, 2026, and are projected to generate total adjusted gross margin of approximately $5.4 million in 2026 and $6.4 million annually thereafter.

In September 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of the Transportation Service Agreement with FCG for a series of projects that will enhance gas infrastructure in Miami-Dade County. 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 quarterhalf of 2026. The project generated adjusted gross margin of $1.9 million and $3.8 million, respectively, for the three and six months ended MarchJune 31,30, 20262026, and is expected to contribute adjusted gross margin of approximately $7.6 million in 2026 and annually thereafter.

In February 2023, FPU filed a petition with the Florida PSC for approval of the GUARD program. GUARD is a ten-year program to enhance the safety, reliability, and accessibility of portions of our natural gas distribution system. We identified various categories of projects to be included in GUARD, which include the relocation of mains and service lines located in rear easements and other difficult to access areas to the front of the street, the replacement of problematic distribution mains, service lines, and maintenance and repair equipment and system reliability projects. 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 the three and six months ended MarchJune 31,30, 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 $10.1$10.9 million of adjusted gross margin in 2026 and $13.0 million in 2027.

In June 2023, the Florida PSC issued the approval order for the continuation of the SAFE program beyond its 2025 expiration date and inclusion of 150 miles of additional mains and services located in rear property easements. The SAFE program is designed to relocate certain mains and facilities associated with rear lot easements to street front locations to improve FCG's ability to inspect and maintain the facilities and reduce opportunities for damage and theft. In the same order, the Florida PSC approved a replacement of 160 miles of pipe that was used in the 1970s and 1980s and shown through industry research to exhibit premature failure in the form of cracking. The program includes projected capital expenditures of $205.0 million over a 10-year period. For the three and six months ended MarchJune 31,30, 2026, there was $1.1$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.

In December 2025 Eastern Shore submitted a filing with the FERC regarding a capital cost surcharge to recover capital costs associated with the replacement of existing Eastern Shore facilities because of mandated highway relocation projects as well as compliance with PHMSA regulation. The capital cost surcharge mechanism was approved in Eastern Shore's last rate case. 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 approvingapproved the surcharge as filed in December 2025. The combined revised surcharge became effective January 1, 2026.

In March 2026, Eastern Shore submitted an annual true-up filing with the FERC regarding a capital cost surcharge to recover capital costs associated with the replacement of existing Eastern Shore facilities because of mandated highway relocation projects as well as compliance with a PHMSA regulation. The capital cost surcharge mechanism was approved in Eastern Shore's last rate case. 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 approvingapproved the surcharge as filed effective April 1, 2026. For the three and six months ended MarchJune 31,30, 2026, there was $0.8$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.

In 2020, the Florida PSC implemented the Storm Protection Plan ("SPP") and Storm Protection Plan Cost Recovery Clause ("SPPCRC"), which require electric utilities to petition the Florida PSC for approval of a Transmission and Distribution Storm Protection Plan that covers the utility’s immediate 10-year planning period with updates to the plan at least every 3 years. The SPPCRC rules allow the utility to file for recovery of associated costs related to its SPP. Our Florida electric distribution operation's SPP and SPPCRC were filed and approved in 2022, with modifications, by the Florida PSC. Rates associated with this initiative were effective in January 2023. In October 2024, the Florida PSC approved the Company's projected 2025 SPP costs of $20.4 million for both capital and operating expenses. 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 and six months ended MarchJune 31,30, 2026, this initiative generated additional adjusted gross margin of $2.2$0.3 million and $2.5 million, respectively, and is expected to generate $10.7$9.7 million of adjusted gross margin in 2026 and $11.0$10.4 million in 2027. We expect continued investment under the SPP going forward.

In October 2025, FPU and FCG filed a joint petition for approval to establish a recovery surcharge for actual, estimated and projected relocation costs pursuant to the Florida Administrative Code which enables companies to recover the costs associated with relocating or reconstructing facilities that have been required by governmental entities. The Florida PSC approved the petition in February 2026, with the surcharge effective in March 2026. For the three and six months ended MarchJune 31,30, 2026, there was $0.5$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.

In January 2024, our natural gas distribution businesses in Maryland, CUC-Maryland Division, Sandpiper Energy, Inc., and Elkton Gas Company (collectively, the “Maryland natural gas distribution businesses”) filed a joint application for a natural gas rate case with the Maryland PSC. 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; (ii) authorization to make certain changes to tariffs to include a unified rate structure and to consolidate the Maryland natural gas distribution businesses; and (iii) authorization to establish a rider for recovery of the costs associated with our new technology systems. In September 2024, the Maryland Public Utility Judge approved a $2.6 million increase in annual base rates, which was followed by the Company submitting a Phase II filing in November 2024 to determine rate design across the Maryland natural gas distribution businesses, consolidation of the applicable tariffs and recovery of technology costs. In March 20252025, the Phase II was approved, including an additional $0.9 million in revenue requirement, for a total cumulative increase of $3.5 million. A final order was issued in April 2025 and included approval of the consolidation of the operations and the assets of CUC-Maryland Division, Sandpiper Energy, and Elkton Gas into one entity which was renamed and operates as Chesapeake Utilities of Maryland, Inc. For the three and six months ended MarchJune 31,30, 2026, there was $1.3$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.

In August 2024, our Delaware natural gas division filed an application for a natural gas rate case with the Delaware PSC seeking approval of the following: (i) permanent rate relief of approximately $12.1 million with a ROE of 11.5 percent; (ii) proposed changes to depreciation rates which were part of a depreciation study also submitted with the filing; 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. A settlement among all interested parties was reached and approved by the Delaware PSC in June 2025 providing an annual revenue increase of $6.1 million, as well as dividing the rate case into two phases. Rates set to recover the approved components of the increase were effective in March 2025 and approved tariff-related changes including rate design were effective as of October 15, 2025. For the threesix months ended MarchJune 31,30, 2026, there was $1.3$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.

In August 2024, our Florida Electric division filed a petition with the Florida PSC seeking a general base rate increase of $12.6 million with a ROE of 11.3 percent based on a 2025 projected test year. Annualized interim rates of approximately $1.8 million were approved with an effective date of November 1, 2024. In March 2025, the Florida PSC approved the permanent rate increase, but the order was subsequently protested. In May 2025, the Company reached a settlement agreement with the interested parties. This settlement which was approved by the Florida PSC in July 2025, provides for a total base rate increase of approximately $8.6 million on an annual basis, with $1.0 million of the increase deferred from the first year's base rate increase and recovered over three years. 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 threesix months ended MarchJune 31,30, 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.

In April 2026, Florida City Gas filed a petition with the Florida PSC. In connection with the application, we are seeking approval of the following: (i) interim rate relief of approximately $16.2 million, subject to refund, pending the outcome of the rate case proceeding; (ii) general base rate increase of $46.9 million with a ROE of 11.25 percent based on a 2027 projected test year; (iii) reclassification of approximately $16.4 million in the existing SAFE program revenues from surcharge recovery to base rates; (iv) authorization to retain the unamortized portion of the previously approved acquisition adjustment; and (v) further implementation of the advanced metering infrastructure (“AMI”). 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 will beis subject to review and approval by the Florida PSC.

For the threesix months ended MarchJune 31,30, 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 $4.5$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 MarchJune 31,30, 2026 and 2025.

The average number of residential customers served on the Delmarva Peninsula, by FPU and by FCGPeninsula increased by approximately 3.32.8 percent, 2.2 percent,percent and 2.03.0 percent, respectively, for the three and six months ended MarchJune 31,30, 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.

For the quarter ended MarchJune 31,30, 2026 compared to the quarter ended MarchJune 31,30, 2025:

Operating income for the Regulated Energy segment for the firstsecond quarter of 20262025 was $71.1$55.2 million, an increase of $10.6$3.4 million,million over the same period in 2025. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $10.3$2.9 million, or 16.95.5 percent, compared to the same period in 2025. Higher operating income reflects incremental margin from pipeline expansion projects, regulatory initiatives and infrastructure programs, pipeline expansion projects, and organic growth in our natural gas distribution businesses.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 $9.3$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, higher facilities, maintenance costs and outside services, and increased costs related to credit, collections and customer service. 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.