Slide 1: Q2 2021 Earnings Conference Call
Q2 2021 EARNINGS CONFERENCE CALL JULY 29, 2021
Slide 2: Forward Looking Information
FORWARD LOOKING INFORMATION Fortis includes forward-looking information in this presentation within the meaning of applicable Canadian securities laws and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (collectively referred to as "forward-looki
Slide 3: David Hutchens, President and CEO
DAVID HUTCHENS PRESIDENT AND CEO
Slide 4: Q2 Business Highlights
Q2 BUSINESS HIGHLIGHTS Safe and Reliable Operations Strong Earnings Growth Absent FX Released 2021 Sustainability Update & Signed on as TCFD Supporter 2021 Capital Plan on Track 4
Slide 5: Q2 Sales Trends
Q2 SALES TRENDS Retail Sales Q2 2021 vs. Q2 2020 Sales Trends • Peak load increased 5% due to temporary closure N/A of auto manufacturers and suppliers in Q2 2020 • Overall increase driven by warmer weather and +3% increased cooling load; residential sales up 1%; C&I up 5% • Q2 sales reflect warmer
Slide 6: 2021 Sustainability Update Highlights
2021 SUSTAINABILITY UPDATE HIGHLIGHTS Delivering Cleaner Energy to Customers Report Highlights: 50+ new key performance indicators added to Carbon emissions reduction report, including 14 that align with SASB standards target of 75% by 2035 compared to 2019 levels Strengthened linkage between sustai
Slide 7: Fortis Signs On as a TCFD Supporter
FORTIS SIGNS ON AS A TCFD SUPPORTER Solidifying Our Commitment to the Task Force on Climate-Related Financial Disclosures (“TCFD”) Recommendations: • Fortis has become a TCFD supporter and is committed to implementing the TCFD recommendations • Climate scenario analysis ongoing to assess the resilie
Slide 8: Capital Plan Supports Low-Risk Growth
CAPITAL PLAN SUPPORTS LOW-RISK GROWTH Rate Base 5% 3% 6% 6% 6% $40.3B 8% $30.5B 2021-2025 Capital Plan $19.6 Billion 36% 30% Distribution Transmission 2020A 2025F Transmission supporting clean energy RNG/LNG Clean Generation Traditional Generation (1) Information Technology Other Note: Rate base gro
Slide 9: Update on Opportunities to Expand & Extend Growth
UPDATE ON OPPORTUNITIES TO EXPAND & EXTEND GROWTH • Ontario government • FERC issued Advanced Notice • British Columbia amended authorized IESO to of Proposed Rulemaking on GHG Reduction Regulations to commence contract regional transmission planning, allow the increase in the negotiations cost allo
Slide 10: 6% Average Annual Dividend Growth Guidance to 2025
6% AVERAGE ANNUAL DIVIDEND GROWTH GUIDANCE TO 2025 47 Years of Consecutive Dividend Increases 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 10
Slide 11: Jocelyn Perry, Executive Vice President and CFO
JOCELYN PERRY EXECUTIVE VICE PRESIDENT AND CFO
Slide 12: Second Quarter Adjusted Results
SECOND QUARTER ADJUSTED RESULTS Second Quarter EPS Impacted by Lower FX: • Q2 Adjusted EPS impact of ($0.05) Adjusted Earnings Adjusted EPS • FX rate 1.23 (Q2 2020 – 1.39) v $258M $259M • YTD June Adjusted EPS impact of ($0.07) $0.56 $0.55 • FX rate 1.25 (YTD June 2020 – 1.37) Q2 2020 Q2 2021 Q2 202
Slide 13: Second Quarter EPS Drivers
SECOND QUARTER EPS DRIVERS Excluding FX, EPS $0.04 over Q2 2020 $0.02 ($0.02) $0.03 $0.02 ($0.01) ($0.05) $0.56 $0.55 Q2 2020 U.S. U.S. Other Corporate & Weighted Foreign Q2 2021 (2) Adjusted Electric & Transmission Electric Other Average Exchange Adjusted (1) (1) EPS Gas (ITC) Shares EPS (1) Non-US
Slide 14: Year-to-Date June EPS Drivers
YEAR-TO-DATE JUNE EPS DRIVERS Excluding FX, EPS $0.16 over YTD June 2020 $0.02 $0.01 ($0.01) ($0.07) $0.02 $0.04 $0.08 $1.32 $1.23 YTD 2020 U.S. U.S. Western Other Energy Weighted Foreign YTD 2021 (2) Adjusted Electric & Transmission Canadian Electric Infrastructure Average Exchange Adjusted (1) EPS
Slide 15: Strong Access to Debt Markets and Liquidity
STRONG ACCESS TO DEBT MARKETS AND LIQUIDITY DEBT ISSUANCES COMPLETED Over $1B Debt Raised in 2021 Credit Facilities ($B) ✓ UNS Energy • US$325M 30-year 3.25% notes ✓ FortisBC Energy 4.3 • $150M 10-year 2.42% debentures 3.9 (3) ✓ Fortis • $500M 7-year 2.18% notes 1.0 1.3 ✓ ITC June 30, 2021 Dec. 31,
Slide 16: Regulatory Update
REGULATORY UPDATE • Notice of Proposed Rulemaking (NOPR) on Incentives – In April 2021, FERC issued a supplemental NOPR proposing to eliminate the 50 bps RTO adder for transmission owners that have been RTO members for more than three years; stakeholder comments filed in June 2021; initial NOPR issu
Slide 17: Why Invest in Fortis?
WHY INVEST IN FORTIS? Geographic Focused on Low-Risk Virtually 6% Well-Run ESG Innovative & Regulatory Energy Growth All Dividend Growth Businesses Leader Diversity Delivery Profile Regulated Guidance 17
Slide 18: Expected Earnings Release Dates
Expected Earnings Release Dates Q3 2021 October 29, 2021 18
Slide 19: Q2 2021 Earnings Conference Call
Q2 2021 EARNINGS CONFERENCE CALL JULY 29, 2021
Slide 20: Q2 2021 Results by Segment
Q2 2021 RESULTS BY SEGMENT Second Quarter Variance Analysis by Segment Adjusted Adjusted Adjusted ($millions, except weighted average shares and EPS) Q2 2021 Adjustment (1) Q2 2020 Adjustment (1) Q2 Q2 2021 Q2 2020 Variance Regulated – Independent Electric Transmission ITC 103 - 103 138 (27) 111 (8)
Slide 21: YTD June 2021 Results by Segment
YTD JUNE 2021 RESULTS BY SEGMENT Year-To-Date June Variance Analysis by Segment Adjusted Adjusted Adjusted ($millions, except weighted average shares and EPS) YTD 2021 Adjustment (1) YTD 2020 Adjustment (1) YTD YTD 2021 YTD 2020 Variance Regulated – Independent Electric Transmission ITC 206 - 206 23
Slide 22: Q2 Adjusted Earnings Reconciliation
Q2 ADJUSTED EARNINGS RECONCILIATION Non-US GAAP Reconciliation YTD June YTD June ($millions, except EPS) Q2 2021 Q2 2020 Variance Variance 2021 2020 Common Equity Earnings 253 274 (21) 608 586 22 Adjusting Items: Unrealized loss (gain) on mark-to-market of derivatives(1) 6 (2) 8 11 1 10 FERC base RO
Slide 23: 2020-2025 Rate Base by Segment
2020-2025 RATE BASE BY SEGMENT (1) Rate Base 5-Year CAGR to ($billions) 2020A 2021F 2022F 2023F 2024F 2025F 2025 Regulated - Independent Electric Transmission ITC(2) 9.5 9.9 10.6 11.3 11.9 12.5 6.0% Regulated - US Electric & Gas UNS Energy 5.7 6.2 6.7 7.0 7.3 7.6 6.2% Central Hudson 2.1 2.3 2.5 2.7
Slide 24: 2021-2025 Capital Plan by Segment
2021-2025 CAPITAL PLAN BY SEGMENT (1) Capital Plan 2021-2025 ($millions) 2021F 2022F 2023F 2024F 2025F TOTAL Regulated - Independent Electric Transmission ITC 1,000 1,007 993 1,107 993 5,100 Regulated - US Electric & Gas UNS Energy 749 781 840 853 547 3,770 Central Hudson 306 416 409 346 310 1,787 T
Slide 25: Major Capital Projects
MAJOR CAPITAL PROJECTS Total Incurred to Expected the End of 2021-2025 Year of ($ Millions) 2020 Plan(1) Completion Major Capital Projects ITC Multi-Value Regional Transmission Projects 642(2) 261 2023 15% ITC 34.5 kV to 69 kV Transmission Conversion Project 445 148 Post-2025 UNS Vail-to-Tortolita P
Slide 26: ESG Leadership
ESG LEADERSHIP Continued focus on Carbon emissions reduction Energy (1) target of 75% by 2035 Delivery using a 2019 base year Industry leader in Industry recognition for Safety Strong Governance and Reliability grounded in local leadership & independence Focused on More than Gender Diversity $15 mil
Slide 27: Carbon Emissions Reduction Target of 75% by 2035
CARBON EMISSIONS REDUCTION TARGET OF 75% BY 2035 Our target represents avoided emissions equivalent to taking ~2 million cars off the road in 2035 compared to 2019 levels Reduction in Scope 1 Emissions by 2035 Achievable Target Largely Driven by Plan Improves Already Using a 2019 Base Year TEP’s Int
Slide 28: Foreign Exchange Exposure
FOREIGN EXCHANGE EXPOSURE Earnings and Capital Plan • ~66% of operating earnings(1) from U.S. and Caribbean • ~60% of $19.6B five-year capital plan from U.S. and Caribbean • Five-year capital plan translated at forecast USD:CAD FX rate of $1.32; FX rate to be updated in conjunction with release of n
Slide 29: Investment-Grade Credit Ratings
INVESTMENT-GRADE CREDIT RATINGS Company Fortis Inc. A-(1) Baa3 A (low) ITC Holdings Corp. A-(1) Baa2 n/a ITC Regulated A A1 n/a Subsidiaries TEP A- A3 n/a Central Hudson A- A3 n/a FortisBC Energy n/a A3 A FortisBC Electric n/a Baa1 A (low) FortisAlberta A- Baa1 A (low) Newfoundland Power n/a A2 A (1
Slide 30: Manageable Debt Maturities
MANAGEABLE DEBT MATURITIES 5-Year Average ~$0.8B 2.0 1.5 $ billions 1.0 0.5 - 2021F 2022F 2023F 2024F 2025F Fortis Fortis Subsidiaries Note: Debt as at June 30, 2021 and excludes any new debt issuances during the forecast period. Excludes repayments of finance leases along with the current portion o