Good morning. My name is Shannon, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chesapeake Utilities Third Quarter Earnings Call. [Operator Instructions] I would now like to turn the call over to Ms. Beth Cooper, Senior Vice President and Chief Financial Officer. Ms. Cooper, you may begin.

Thank you, Shannon. Good morning, everyone, and welcome to the Chesapeake Utilities Corporation Third Quarter 2013 Earnings Conference Call. We have prepared a presentation to accompany our discussion today. This presentation can be accessed on our website under the Investors section and the Events & Webcasts subsection. Moving to Slide 2. Today's 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 annual report on Form 10-K. Yesterday, we announced results for the third quarter and first 9 months of 2013. Continued growth in the Natural Gas Distribution and Transmission businesses, as well as contributions from the acquisitions we have completed earlier in the year, were the key drivers of gross margin growth during the quarter. The pipeline extensions we completed in recent years, as well as earlier this year, generated increased results for the quarter and provide opportunities for continued growth. The company's third quarter 2013 net income was $3.9 million or $0.40 per share, which is highlighted on Slide 3. This represents an increase over third quarter 2012 net income, which was $3.2 million or $0.33 per share. During the third quarter of 2013, the company recorded a onetime reduction in operating expenses of $1.9 million related to the establishment of a regulatory asset for previously incurred litigation costs associated with the Marianna, Florida electric franchise dispute. Late last month, the Florida Public Service Commission approved recovery of the litigation costs. Partially offsetting the impact of this recovery on third quarter results was a $698,000 contingency for taxes other than income. I will highlight the key accomplishments and results for the business segments during the third quarter of 2013. Detailed discussions of…

Thanks, Beth. Before I talk about our growth strategy, I want to take a step back to reinforce what I think has been a key to our success over the years: the underlying foundation to our success that has not and will not change; our continued commitment to our core values; care for our customers, communities, employees and our shareholders; our relentless financial discipline; and our profound aspiration to be better at what we do. With this as a foundation, our employees are dedicated to providing safe, environmentally friendly service to our customers in a manner that represents value to them. Our drive to grow the company by extending service to new communities is generating significant savings for our customers and growth in earnings and shareholder value for our investors. Whether it's a pipeline expansion to serve a new community, a regulatory strategy for large information technology implementation or favorably resolving a complex lawsuit, such as the Marianna case, our employees will continue to drive to achieve results that benefit our customers, the communities we serve and our investors. As Beth mentioned earlier, our business units are continuing to generate growth, and we are continuing to see opportunities for growth looking forward. In that regard, I want to spend a little bit of time today talking about growth, opportunity and investment, both past and future. Turning to Slide 12. Over the past several years, one of the major things that differentiates Chesapeake from other utility investments is our ability to identify and develop significant growth opportunities, while maintaining consistently high returns on equity. The combination of earning higher returns, while investing higher levels of capital, has been generating higher earnings growth. Turning to Slide 13, you can see more clearly the comparative rate of capital investments that Chesapeake and our…

[Operator Instructions] Your first question comes from the line of Spencer Joyce of Hilliard Lyons.

Just from a high level, I want to make sure I'm thinking about this correctly. If we think ex items just in Q3, we're roughly flat from year ago on an EPS basis, with a little bit of upside from acquisitions in nat gas that would be offset by a little downside on the unregulated propane side. Is that a correct assumption?

Yes, that is, Spencer.

Okay. And then on a year-to-date basis, we had some headwind from the sales tax in Q2 and then some upside with the litigation this quarter. So sort of netting those items, we're flat roughly on a year-to-date basis, correct, too, as far special items go?

The special items on a year-to-date basis that you're referring to, yes, that would be correct.

Okay. Yes, the return to normal weather, I feel like we can kind of cross that out.

Right.

With respect to the CapEx line, you all are already above the spend for last year. Is there a sense of how close you're going to be to your budgeted amount this year? And is there any glimpse maybe into '14, what we could see budgeted?

Well, we've continued, and even in this Form 10-K, to put that our current forecast as $127 million. And with some of the projects that we talked about, we expect our expenditures to be high, as we have previously indicated, although we do recognize some of that will flow over into next year. I think, Spencer, as we get into next year, in our Form 10-K for 2013, we will definitely put what our budget is for next year. But we have those large expansions that are out there that we're going to be undertaking. We put some information out there in regards to the Calpine project. The filings are in with the FERC for the NRG project and the Delaware City project. So there's some information out there, but there are still several large projects that are out there. So on a looking back basis, the trend will be above several years ago, certainly. But I really can't comment beyond that at this time.

One thing you will see, Spencer, is that with the interstate pipeline expansions, there'll be -- obviously, notice will show up because we'll be making filings with the FERC to construct facilities. And also, we typically would do a press release once we have a contract or something significantly locked down. So you may have a hard time seeing '14 right now, but it'll evolve as we move down the road.

Okay. Fair enough there. The $757,000 of additional gross margin on the unregulated side, the bulk of that is from Glades, correct, or the acquisition amount, just in this quarter?

The bulk of that, yes, is from Glades, although there was some contribution as well by Austin Cox during the quarter.

Okay. Do you know what that would've been, up or down, on a pro forma basis?

I will have to get back to you on that, Spencer. I don't, right off the top.

Do you know just, I mean, would it have been down? I'm assuming with the rest of the segment down, it would have probably been down. Do you know?

A little bit -- for those 2 businesses, once we're in the third quarter, as with our legacy businesses, so when you look at their operations over the course of the year, you know, this is also for them probably what I would say more of the valley for them, just like it would be with Chesapeake's other legacy businesses. But they were accretive for the quarter, as we indicated. And on a year-to-date basis, along with Sandpiper, those acquisitions have been positive from an accretion standpoint.

Okay. Yes, speaking of Sandpiper, the $1.7 million in gross margin was just a great number compared to what we were looking for. Can you talk a little about the seasonality there? I mean, if we're seeing $1.7 million during the summer, can we think $3 million, $3.5 million during a winter quarter? Or is $1.7 million maybe a fair run rate there?

Well, they've only been part of us now for not even 1/2 a year yet. But certainly, there is seasonality to their business. And as we've started to look at it, some of it is a little different than Chesapeake's legacy businesses. And I think as we move forward, we'll be able, once again, to put more information out there. But I would think that you're going to expect the typical pattern that Chesapeake has with its existing propane businesses, where you're going to come into the fourth quarter, there will be the weather, the impact of that. It might be a little bit less than it would be in some of Chesapeake's other businesses, primarily because Eastern Shore Gas is operating in more of those resort areas. But there still will be that weather impact. You'll have it in the first quarter. And then once again, you'll start to have that valley in the second and the third quarters.

Okay. So there will be a little, at least a little bit of natural valley and this completed third quarter would be part of that valley?

Yes.

[Operator Instructions] There are no further questions on the phone lines at this time. I will turn the call back to the presenters.

Well, thanks, everyone, for joining us here this morning. I guess we'll be talking to you next quarter.

Thank you.