Good morning. My name is Stephanie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chesapeake Utilities First Quarter 2012 Earnings Conference Call. [Operator Instructions] Ms. Cooper, you may begin your conference.

Thanks, Stephanie. Good morning, everyone, and welcome to the Chesapeake Utilities First Quarter 2012 Earnings Conference Call. Before we begin, let me remind you that matters discussed in this conference call may include forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements. Please refer to the Safe Harbor for forward-looking statements in the company's most recent report on Form 10-K as amended, for further information on the risks and uncertainties related to the company's forward-looking statements. Now I'll turn the call over to Mike McMasters, President and Chief Executive Officer.

Thanks, Beth, and good morning, everyone. On Wednesday, we announced first quarter results including net income of $10.7 million and earnings per share of $1.11. These results reflect the impact of weather that was 23% warmer on the Delmarva Peninsula and 36% warmer in Florida than 2011. We estimate that warmer weather reduced net income during the first quarter compared to the first quarter of '11 by $2.4 million or $0.25 per share. The first quarter was the warmest in the last 10 years. It also was the second warmest quarter in the last 40 years on the Delmarva Peninsula and the third warmest in the last 40 years in Florida. While the results are lower because of the weather, the underlying fundamentals of the company remain strong. Inherent in our first quarter results was growth of $0.07 per share for our Natural Gas Distribution and Transmission businesses. The $0.07 a share increase in growth demonstrates the success we continue to achieve in executing our growth strategy. In this regard, I want to thank our employees for their continued hard work in identifying growth opportunities in and around the territories we serve, then translating these opportunities into savings for our customers and communities, and earnings growth for our investors. Also on Wednesday, our Board of Directors approved an $0.08 per share, or 5.8% increase, in our annual dividend. This marks the 9th straight year of dividend increase. It was only approved after a careful analysis and [Audio Gap] to ensure that the $0.08 per share increase is sustainable based upon our expected earnings growth. Of course, all future dividends are subject to review and approval by the Board. As we said in our annual report, our growth and our financial performance is a result of our employees' sustained team efforts.…

Thanks, Mike. For the quarter ended March 2012, consolidated net income decreased by $3 million to $10.7 million or $0.32 per share, to $1.11 in diluted earnings per share. This is due largely to an average 25% decrease in heating degree days across the entire company as compared to the first quarter of 2011. As Mike mentioned, the impact of weather masked the benefits of system expansions, customer growth, improved margins in the propane business and higher performance from BravePoint. Detailed discussions of the changes in gross margin and operating expense by segment for the quarter ended March 2012 are provided in our press release and 10-Q, which were issued Wednesday and Thursday, respectively. However, I will highlight the key accomplishments and results for the business units during the first quarter of 2012. Chesapeake's Regulated Energy businesses, which include our Natural Gas Transmission and Distribution and Electric Distribution operations, generated operating income of $14.8 million for the first quarter of 2012, compared to $16.2 million for 2011. Lower margin due to reduced consumption as a result of extremely warm weather, was partially offset by additional margin generated by growth in residential, commercial and industrial customers for both the Delmarva and Florida Natural Gas Distribution operations and continued expansion of our transmission systems and additional transportation services. We commenced natural gas service to 2 industrial customers in Lewes, Delaware and 1 new facility of an existing customer in Eastern Sussex County, Delaware in December 2011 and March 2012. These 3 customers generated $147,000 in gross margin during the first quarter of 2012. We also generated an additional $158,000 in margin, primarily from the addition of 9 other large commercial and industrial customers on the Delmarva Peninsula since the beginning of 2011, and $116,000 from a 1% growth in commercial and industrial…

[Operator Instructions] Your first question comes from Spencer Joyce with Hilliard Lyons.

First question I have, I want to talk about the propane for a second. Mike, I just missed part of it but you mentioned a statistic about the -- I believe the operating income had increased 150% for propane. What exactly was that figure?

It was 150% and that's -- a big chunk of that came as a result of the merger with Florida Public Utilities, and actually, the resulting -- the subsequent increase in the performance of that unit.

Okay, got you. So a big chunk of that was the merger. Also, on the propane side, it looks like we did 2 small acquisitions in Florida that added some customers. But we also -- I guess, there's a line there that says it was partially offset by a decline in existing customers. What were some of the drivers there? Are you seeing a secular decline, or is it something exogenous there?

We're experiencing a little bit of the continued small commercial growth. There's also -- there can be in some of the markets, some residential turnover, particularly in Florida. But nothing that really stands out, Spencer.

Okay, got you. Also a question, I saw the trading revenues or gross margin were down considerably. And that was sort of opposite of the retail margins. I guess generally, when I think of higher and more volatile prices, that the wholesale generally corresponds with the retail. Is it typical to see a disconnect there? Or was there something, maybe the weather, that I guess allowed the retail margin to come up for us and then I guess still hurt the trading side?

Actually, what you have there on the trading side, the prices were actually less volatile during the first quarter and I just had a conversation with them yesterday about that and they had seen some pickup in volatility in April, surprisingly enough. But in any event, during the first quarter, they were less -- there was less volatility and what you're seeing in our retail margins is something that relates to Florida, focusing on the current market conditions in the markets they're serving down there and enhancing those margins to bring them into, I guess, closer to market conditions. And so we didn't see that same expansion on the Delmarva Peninsula.

Okay, and the expansion in the retail margins year-over-year this quarter, I know last year was generally pretty positive in that sense as well. Were we still, in this quarter, coming off a bit of a low base in Q1 '11 or was it relatively normalized?

Yes, in Florida, it was a relatively low base.

Okay, got you. Also to switch gears here for a second, another -- there wasn't a whole lot about it in the press release, but any kind of color you guys can give on the Nat Gas Marketing segment? I know we've had a couple of good news items there, not a big change in operating results this quarter. But I guess, what's kind of your outlook into the future of when we may see some incremental EPS from those businesses?

Well, the Natural Gas Marketing business, we're in both Florida, probably larger in Florida than we are in Delmarva, and we're seeing, I'm going to say, growth there -- I'm going to say, consistent growth there, but we don't see a dramatic increase in that growth looking forward. Now there are some initiatives that they are working on, which could generate growth, but it's going to take us some time before we can project what that's going to turn out to be significant are not.

[Operator Instructions] Your next question comes from Michael Gaugler with Brean Murray, Carret.

I had just 2 questions. The first one, just wondering how you're thinking about the new proposed Commonwealth pipeline, and if that can, and how that could potentially impact Chesapeake on a go-forward basis.

We are looking at that as an opportunity. We have -- haven't finished our analysis of that, Michael, but we are investigating that potential.

And then, now that you're kind of spread out between the Delmarva Peninsula and Florida, just wondering how the acquisition landscape looks in those 2 areas, and maybe could put a little color around that, if you're seeing opportunities or if you're kind of focused elsewhere in terms of looking to grow the business?

We're still, like for the most recent quarter, we talked a little bit about this, 2 relatively small propane acquisitions in Florida. So we're still -- we look at acquisitions all the time and we're pretty disciplined and we're evaluating those so that's always a hard thing to predict. But then again, as you can see, there has been some activity there.

There are no further questions at this time. Mr. McMasters, I turn the call over to you.

Well, thanks everyone for listening in and hope you have a nice weekend, and we will be talking to you, I guess, next quarter. Thanks.

Thank you.

Bye.

Thank you. This concludes today's conference call. You may now disconnect.