Chesapeake Utilities Corporation (CPK) has reported a 6 percent fall in profit for the quarter ended Mar. 31, 2017. The company has earned $19.14 million, or $1.17 a share in the quarter, compared with $20.37 million, or $1.33 a share for the same period last year. Revenue during the quarter grew 26.57 percent to $185.16 million from $146.30 million in the previous year period. Gross margin for the quarter contracted 748 basis points over the previous year period to 43.71 percent. Total expenses were 81.27 percent of quarterly revenues, up from 75.13 percent for the same period last year. That has resulted in a contraction of 614 basis points in operating margin to 18.73 percent.
Operating income for the quarter was $34.68 million, compared with $36.38 million in the previous year period.
“First quarter results reflect both the continuing benefits of our growth strategy and the importance of investing in our systems and expanding our staff to deliver excellent service and maximize our future growth opportunities. Margin growth from both our regulated and unregulated businesses largely offset the first quarter impacts of warmer weather and higher costs from expanding our capacity to serve recent and future growth,” stated Michael P. McMasters, president and chief executive officer of Chesapeake Utilities Corporation. “The investment in our ability to provide our customers with excellent service and expand our capacity to identify and develop future growth opportunities is critical to ensure that we continue to generate the kind of margin growth we delivered in the first quarter, as we seek to extend our ten years of record reported earnings per share in 2017 and beyond. We will continue to execute our growth plan with financial discipline, which includes walking away from opportunities that do not meet our strict guidelines for risk and return, even after incurring due diligence costs to fully vet them, as we did this quarter, or winding down operations after carefully weighing alternatives, as we did in the case of Xeron," added Mr. McMasters.
Working capital remains negative
Working capital of Chesapeake Utilities Corporation was negative $201.92 million on Mar. 31, 2017 compared with negative $174.07 million on Mar. 31, 2016. Current ratio was at 0.37 as on Mar. 31, 2017, up from 0.37 on Mar. 31, 2016. Cash conversion cycle (CCC) has decreased to 6 days for the quarter from 11 days for the last year period. Days sales outstanding went down to 40 days for the quarter compared with 43 days for the same period last year.
Days inventory outstanding has decreased to 4 days for the quarter compared with 16 days for the previous year period. At the same time, days payable outstanding went down to 38 days for the quarter from 48 for the same period last year.
Debt moves up
Chesapeake Utilities Corporation has witnessed an increase in total debt over the last one year. It stood at $347.98 million as on Mar. 31, 2017, up 5.29 percent or $17.47 million from $330.51 million on Mar. 31, 2016. Total debt was 28.10 percent of total assets as on Mar. 31, 2017, compared with 30.55 percent on Mar. 31, 2016. Debt to equity ratio was at 0.76 as on Mar. 31, 2017, down from 0.88 as on Mar. 31, 2016. Interest coverage ratio deteriorated to 12.66 for the quarter from 13.73 for the same period last year.
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