Fortis Inc. · TSX:FTS
Fortis — Q3 2015 Earnings Presentation
24 slides from Fortis's earnings presentation, Nov 6, 2015
Slide 1: Third Quarter 2015 Earnings Call
Third Quarter 2015 Earnings Call November 6, 2015
Slide 2: Forward-Looking Statement
Forward‐Looking Statement Fortis Inc. (the “Corporation”) includes forward‐looking information in this presentation within the meaning of applicable securities laws in Canada. The purpose of the forward‐looking information is to provide management’s expectations regarding the Corporation’s future gr
Slide 3: Barry Perry, President and CEO
Barry Perry President and CEO
Slide 4: Transformation and Growth Continue
Transformation and Growth Continue • Focus on core utility business • Focused strategy for growth • Sale of Fortis Properties complete • Capital plan on track: ~$1.7B invested YTD • Settlement of Belize expropriation matters • Continued pursuit of opportunities in • Regulatory calendar existing fran
Slide 5: 2015 Underscores the Strength of our Strategy
2015 Underscores the Strength of our Strategy • Significant EPS growth relative to 2014 mostly due to UNS acquisition and strong U.S. dollar • Contribution from Waneta Expansion • FortisAlberta growth and capital tracker resolution • New rates at Central Hudson • FortisBC Gas – operational efficienc
Slide 6: $9 Billion Capital Program Drives Rate Base Growth
(1) $9 Billion Capital Program Drives Rate Base Growth $B 2016‐2020 Average $1.8 Billion 2.5 2.2 1.9 1.9 1.8 2.0 1.6 1.6 Growth 1.5 (2) Other 1.0 Sustaining 0.5 0.0 2015F 2016F 2017F 2018F 2019F 2020F (1) US dollar denominated CAPEX converted at a USD/CAD exchange rate of 1.30 (2) Capital expenditur
Slide 7: Rate Base Growth Comes from All Areas of Business
(1) Rate Base Growth Comes from All Areas of Business $B 25 19.8 20.3 19.1 20 18.4 17.3 16.4 Waneta Expansion 15 Regulated Electric Canada & Caribbean Regulated Electric & Gas U.S. Regulated Gas Canada 10 5 0 2015F 2016F 2017F 2018F 2019F 2020F (1) Midyear Rate Base 7
Slide 8: Many Opportunities for Upside to Rate Base Growth
Many Opportunities for Upside to Rate Base Growth FortisOntario: Wataynikaneyap Project & Municipal FortisAlberta: Utility Consolidation Rural Electrification Associations FortisBC: Tilbury, Woodfibre, LNG, Gas Infrastructure Central Hudson: REV Demonstration Projects & NY Transco LLC, Gas Infrastru
Slide 9: Dividend Guidance Supported by Confidence in Business
Dividend Guidance Supported by Confidence in Business $ 2.00 1.80 1.60 1.40 • A record 42 consecutive years 1.40 Annual dividend growth of annual dividend increases 1.28 1.24 through 2020 targeted at 6% 1.20 1.20 1.16 • Two dividend increases in 2015 1.00 2011 2012 2013 2014 2015F 2016F 2017F 2018F
Slide 10: Karl Smith, Executive VP, Chief Financial Officer
Karl Smith Executive VP, Chief Financial Officer
Slide 11: Q3 Results Driven by Strong Performance of all Utilities
Q3 Results Driven by Strong Performance of all Utilities • Q3 Highlights $M Adjusted Earnings • Adjusted earnings doubled 450 447 compared to last year 300 279 • EPS increased by two‐thirds 150 145 67 • Cash flow from operations 0 $358M 2014 2015 2014 2015 Q3 YTD • Capital expenditures on track; $50
Slide 12: Multiple Drivers of EPS Growth
Multiple Drivers of EPS Growth $ 0.60 0.01 0.03 0.07 0.02 0.02 0.03 0.52 0.07 0.04 0.45 0.13 0.52 0.30 0.31 0.15 Adjusted EPS UNS Energy FortisAlberta FortisBC Waneta Foreign Corporate Other Regulatory Adjusted EPS Q3 2014 (including Energy Expansion Exchange Timing Q3 2015 foreign (FortisBC ) excha
Slide 13: Ample Liquidity and Strong Credit Ratings
Ample Liquidity and Strong Credit Ratings Cash Flow from $B Strong Credit Ratings Operating Activities 1.4 1.3 Fortis Inc. 1.2 1.0 1.0 S&P A‐ 0.9 0.8 DBRS A(low) 0.6 Outlook: Stable 0.4 0.2 0.0 2013 2014 2015 YTD 13
Slide 14: Regulatory Update
Regulatory Update Decisions Received in 2015 • UNS Energy: Clean Power Plan finalized. On track with compliance • Central Hudson: 3‐year rate plan commenced July 1, 2015 • FortisAlberta: Capital Tracker resolution Significant Filings and Applications Regulated Utility Application/Proceeding 2015 Fil
Slide 15: Tucson Electric Power General Rate Application
Tucson Electric Power General Rate Application 2012 Rate Case 2015 Rate Case ($US) 12/31/2011 Test Year 6/30/2015 Test Year Requested Approved Requested Increase in Non‐Fuel Revenue Requirement $128 million $84 million $110 million Original Cost Rate Base $1.5 billion $1.5 billion $2.1 billion 46% E
Slide 16: Strong Platform for Sustained Growth
Strong Platform for Sustained Growth • Well‐Run Utilities • Low Risk and Diversified • Financial Strength • Predictable Dividend Growth 16
Slide 17: Leader in Electric and Gas Utilities in North America
Leader in Electric and Gas Utilities in North America
Slide 18: Appendix
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Slide 19: TEP Rate Filing; Capital Investments and Rate Base Growth
TEP Rate Filing; Capital Investments and Rate Base Growth TEP Cumulative Capital Investment by Category Original Cost Rate Base US$1.3 Billion from 1/1/2012 to 6/30/2015 ($US) $2.1B ($US millions) $1.5B Utility Scale Solar Generation $151 $103 $164 Gila River Acquisition $252 SGS Unit 1 & Coal Handl
Slide 20: TEP Rate Case; Rate Design & New/Modified Tariffs
TEP Rate Case; Rate Design & New/Modified Tariffs Rate Design Changes Other Tariffs and Adjustor Mechanisms • Reduce reliance on volumetric rates for fixed cost • Economic Development Rate recovery • Rate discounts for qualifying new customers or • Increase basic service charge (residential charge c
Slide 21: Regulatory Overview
Regulatory Overview Rate Equity in Allowed Company Jurisdiction Methodology Test Year Capital 2015 ROE Comments (%) (%) No earnings cap, UNS Energy Arizona COS Historic 43.5‐52.6 9.50‐10.0 Jurisdiction supports 50% equity thickness Central COS Earnings sharing above New York Future 48 9.00 Hudson (3
Slide 22: Significant Regulatory Proceedings
Significant Regulatory Proceedings Impact of Proposed Clean Power Plan on Arizona Operations Newfoundland Power 2016 Rates Decision End of CH 3‐Year Rate Plan MECL 2016 Rates Decision New York State REV Hearing FortisAlberta Capital Tracker 2016 & 2017 End of FortisBC PBR 2015 FortisBC 2016 Cost of
Slide 23: Utility Credit Ratings
Utility Credit Ratings Company S&P DBRS Moody’s Tucson Electric Power (1) BBB+ n/a A3 Central Hudson A n/a A2 FortisBC (Gas) n/a A A3 FortisAlberta A‐ A (low) n/a FortisBC (Electric) n/a A (low) Baa1 Newfoundland Power n/a A A2 (1) Fitch rating A‐; S&P Positive Outlook Strong Platform for Growth 23
Slide 24: Operational Highlights
Operational Highlights REGULATED (as at September 30, 2015) 2014 2015F Customers Total Peak Demand Volumes Sales Operating Midyear Capital Electric Gas Employees Assets Gas Electric Gas Electric Earnings Rate Base Program UTILITY (#) (#) (#) ($B) (TJ) (MW) (PJ) (GWh) ($M) ($B) ($M) UNS Energy (1) 51