Standing Strong

As I write this letter, the COVID-19 pandemic continues to dramatically impact our nation. We are ever mindful of the millions of people who have been touched by this virus and especially those that have lost family members, friends and coworkers.

At Chesapeake Utilities Corporation, the pandemic has tested our processes, our technology, our safety protocols, our employee policies and our financial strength. Of greater importance, it tested our ability to work remotely and collaborate as a team, making tough and informed decisions, acting quickly, standing strong together and supporting each other. It’s that sense of community, of uniting in common purpose to succeed no matter the obstacle, that I will most remember about our team in 2020. It was a year where we could have easily opted to defer our growth plan, delayed construction projects, postponed important process and technology advances and just focused on maintaining minimum service levels. We decided early on that was not for us. We moved quickly to strengthen our cash liquidity, reassured employees that their jobs were safe, engaged with our communities, scoured the globe for personal protective equipment, and instituted virus protocols to keep our frontline operations employees as safe as possible. We figured out how to operate with half of our employees working remotely. As a Company, collectively, we were determined that the pandemic would not sidetrack our long-standing growth and earnings achievements.

I am pleased to report that Chesapeake Utilities Corporation delivered record Diluted earnings per share for 2020 of $4.26. Let me share a few additional financial highlights:

Embracing Change

2020 changed not only the way we conduct our business, but the way we approached problem-solving and our view of the future. We finished a tough year as a stronger organization, more confident in our abilities and decision-making, with an intense focus on meeting both investor and societal long-term expectations.

I think the success we achieved in modifying our policies and operating practices to overcome the pandemic has energized and accelerated our efforts to address diversity and inclusion, environmental sustainability, and the business transformation required to support growth. The lessons learned and actions taken during 2020, both operationally and culturally, will help propel our Company to greater success in the years to come.

One of our most important objectives is the continued support of a culture that encourages diversity, inclusion and acceptance. We understand clearly that our stated values must be tied to actions. We made significant progress in 2020. Our Board of Directors now includes two female Directors, an African American Director and a Director who is of Middle Eastern descent. Our Women in Energy initiative, which has been active for a number of years, supported increased gender diversity in the Company that has resulted in several female employees moving into leadership positions. We established an Equity, Diversity and Inclusion (EDI) Council in 2020 to build on this momentum. The Council oversees our efforts to improve diversity in recruitment, employee development and advancement, cultural awareness and related policies. We also acknowledge our obligations to be leaders in the communities where we live and work. Chesapeake Utilities Corporation’s employees have a long history of assuming leadership roles and supporting, through contributions and volunteerism, organizations that serve our diverse communities. We will continue to take an active role in opposing racial inequality while ensuring that our Company reflects the communities we serve, is inclusive and welcomes diversity of thoughts and ideas.

Chesapeake Utilities Corporation has a long history of responsible, community-centric and ethical business practices. This year, we are formally highlighting many of the Company’s accomplishments to date in our inaugural ESG Report. The call for a lower carbon energy future aligns with actions we already have underway, but also necessitates additional action on our part. We are pursuing a three-part plan. First, we have identified a number of internal actions to reduce greenhouse gas emissions, ranging from the completion of our pipeline replacement programs to improved emission detection technology at our pipeline compressor stations. We are also working with our contractors and suppliers to encourage their environmental efforts. Second, we are committed to supporting our customers’ efforts to reduce end-use emissions through conservation programs that promote high-efficiency appliances and technical assistance for large volume customers to identify emission reduction opportunities. Third, we are actively supporting the development of several waste to energy Renewable Natural Gas (RNG) projects. Our participation extends from transporting the RNG to market by pipeline or our Marlin Gas Services’ compressed natural gas (CNG) trailers to potential investment in a biogas plant and, in some cases, solar energy facilities to provide electricity to a plant and significantly improve the RNG carbon intensity score. In our inaugural ESG report, which will be published later this year, you will find more details on our community giving, award-winning governance practices and our continued steps down the path to a sustainable energy future.

In 2020, we remained steadfast in identifying growth opportunities that will significantly grow the Company over the next five years, similar to our historical track record. To meet this growth, we have continued to make progress on our Business Transformation initiative. This included ensuring that our organizational structure, processes, employee skills, diversity and technology were able to keep pace with our growth objectives. We have simplified our organization and business unit management structure and are working to achieve greater process standardization across our units.

We completed construction of our Safety Town facility in Dover, Delaware, to provide both hands-on and classroom training for our operations technicians. We also committed to the implementation of a comprehensive Safety Management System and completed development of a safety roadmap to guide policy, process and training initiatives for execution in 2021. Several technology enhancement projects went into service in 2020: the Power Plan asset management system, an automated work order management system and a new customer portal for our propane business were among the most notable. We also continued to commit significant resources to cybersecurity, including a network-wide assessment to assure that no damage was caused by the recent SolarWinds Corp event. We have also accelerated adoption of improved technology to advance communications and support the “new normal” work environment likely to continue even after the pandemic recedes.