Slide 1: Q1/2015 Investor Presentation
Q1/2015 Investor Presentation 1
Slide 2: Forward-Looking Statement
Fortis Inc. (the "Corporation") includes forward-looking information in this presentation within the meaning of applicable securities laws in Canada (“forward-looking information”). The purpose of the forward-looking information is to provide management’s expectations regarding the Corporation’s fut
Slide 3: Leader in Electric & Gas Utilities in North America
Leader in Electric & Gas Utilities in North America 3
Slide 4: Significant organic growth with 6.5% rate base CAGR
Fortis is entering a period of significant organic growth, with a 5-year CAGR in rate base through 2019 estimated at 6.5%. Fortis is also pursuing two new projects in British Columbia – further expansion of the Tilbury LNG facility and the Woodfibre gas pipeline expansion – these projects could
Slide 5: Leader in Electric & Gas Utilities in North America
Regulated Utilities o 9 utilities serving 3.1 million customers (1.9 million electric, 1.2 million gas) Leader in o 7,700 employees Electric & Gas 2015F midyear rate base $16 billion * Utilities in Market cap ~$11 billion North America S&P/TSX 60 Index member * Includes approximately $0.8 bi
Slide 6: Total Assets $26.6 Billion
Business Segment Regulated Assets Regulated Electric 67% Canada 55% Total Assets $26.6 Billion Regulated Gas 26% United States 41% Non-Utility Hydroelectric Generation Caribbean 3% 4% 4% 6
Slide 7: Strategic Review of Non-Utility Business: Fortis Properties
Announced review in September 2014 Strategic Successful high-performing business Review of Owns and operates 23 hotels and 2.8 million square feet of Non-Utility commercial real estate Business: In 2014 revenue was ~$250 million and EBITDA was ~$80 million Fortis Strategic options could in
Slide 8: 5-Year Capital Expenditures
$B 2.5 $2.2 5-Year 2.0 $1.7 $1.8 $1.7 Average $1.8 Billion Capital 1.5 $1.5 Expenditures 1.0 ~$9 Billion 0.5 0.0 '15F '16F '17F '18F '19F NOTE: US dollar-denominated forecast capital expenditures are translated at a forecast exchange rate of US$1.00=CDN$1.20. 8
Slide 9: Non-Regulated Waneta Expansion Project
2 Unit 335-MW Hydroelectric Plant ~$900 million (51% FTS) Supported by 40-year PPAs with BC Hydro and Non-Regulated FortisBC Electric Earnings commence Q2/2015 Waneta (upon completion) Expansion Ongoing testing and commissioning Project First unit completed mechanical test run in Q4/2014
Slide 10: LNG – FortisBC Strategic Advantage
Existing infrastructure Brownfield sites Proximity to Asia/Hawaii Scalable LNG – FortisBC Alignment with provincial Strategic energy objectives Constructive First Nations Advantage relationships Low-risk tolling model No commodity risk Local and export demand 10
Slide 11: Tilbury LNG Phase 1A
Operating since 1971 600,000 GJ storage and 5,000 GJ/day liquefaction Phase 1A expansion to add a 1,000,000 GJ storage Tilbury LNG tank and up to 36,000 GJ/day liquefaction capacity Phase 1A Construction started Estimated cost $400 million (included in current forecast) Approved in regul
Slide 12: Tilbury LNG Potential Expansion
35-acre site zoned for LNG Ocean access Tilbury Phase 1B adds 140,000 GJ/day of liquefaction at an estimated rate base addition of Tilbury LNG $450 million (not in forecast) Conditional contract with Potential Hawaiian Electric Expansion Site suitable for further staged expansion Full bu
Slide 13: Woodfibre LNG Pipeline Expansion
Woodfibre LNG Pipeline Opportunity to expand compression and pipeline from Eagle Mountain to the Woodfibre LNG site near Squamish Expansion Privately owned LNG processing and export facility expected to be operational in 2018 o Brownfield development – subject to various approvals 2.1 million
Slide 14: 5-Year Capital Expenditures plus Potential LNG Projects
$B 5-Year 2.5 $2.3 $2.4 Capital 2.0 $2.0 Average $2.0 Billion $1.8 Expenditures $1.5 1.5 + Potential LNG Projects Potential 1.0 Current 5-Year Capital Expenditures Forecast LNG Projects 0.5 ~$10 Billion 0.0 '15F '16F '17F '18F '19F NOTE: US dollar-denominated forecast capital expenditures are transl
Slide 15: Financial Highlights
2014 2013 Change Revenue ($M) 5,401 4,047 1,354 Financial Adjusted Net Earnings ($M) (1) 407 344 63 Highlights Adjusted Basic Earnings per Common Share ($) (1) 1.81 1.70 0.11 (1) Adjusted to exclude interest on convertible debentures, acquisition-related expenses, Part VI.1 tax impacts and Exploits
Slide 16: Financial Strength
Strong credit ratings: S&P: A- DBRS: A(low) Ample consolidated credit facilities o $3.9B total; $2.2B unused (as at December 31, 2014) Financial Low consolidated debt maturities & repayments $240M average annual over next 5 years, excluding credit facility Strength o borrowings (as at December
Slide 17: Funding
Target 'A-' credit rating Debt primarily at operating company level Common equity: Dividend Reinvestment Plan ~$100 million annually Funding Non-core asset divestitures Financing non-regulated energy infrastructure opportunities 17
Slide 18: Regulatory Environment: Significant Proceedings
FortisAlberta Capital Tracker Proceeding Regulatory Generic Cost of Capital Proceeding Environment: Central Hudson Significant General Rate Application / Joint Settlement Proposal Proceedings Generic Proceeding: Reforming the Energy Vision (REV) UNS Energy Clean Power Plan 18
Slide 19: Rate Base Growth
$B 25 Rate Base 20 $17.0 $17.8 $18.5 $19.1 $16.0 Growth 15 & 10 Waneta 5 Investment 0 '15F '16F '17F '18F '19F NOTE: US dollar-denominated midyear rate base is translated at a forecast exchange rate of US$1.00=CDN$1.20. 19
Slide 20: Rate Base Growth with Potential LNG Projects
Rate Base $B 25 Growth $18.8 $20.1 20 $18.0 & $16.0 $17.0 15 Waneta Potential LNG Projects 10 Investment Current 5-Year Capital Expenditures Forecast + 5 Potential 0 '15F '16F '17F '18F '19F LNG Projects NOTE: US dollar-denominated midyear rate base is translated at a forecast exchange rate of US$1.
Slide 21: Why Invest in Fortis?
Focus on regulated utility business and long-term contracted energy infrastructure Mix of electric and gas infrastructure Why Invest Geographic and regulatory diversity in Fortis? Strong organic earnings growth Strong balance sheet and credit ratings 42 years of consecutive dividend incr
Slide 22: A Year of Strong Shareholder Returns
1-Year Average Annualized Total Return (as at December 31, 2014) Fortis ($CDN) 32.2% A Year of Strong S&P 500 Utilities Sector ($US) 29.0% Shareholder Returns S&P/TSX Capped Utilities Index ($CDN) 16.1% 22
Slide 23: A Decade of Strong Shareholder Returns
10-Year Average Annualized Total Return (as at December 31, 2014) Fortis ($CDN) 12.0% A Decade of Strong S&P 500 Utilities Sector ($US) 9.6% Shareholder Returns S&P/TSX Capped Utilities Index ($CDN) 8.4% 23
Slide 24: Dividend Growth
42 consecutive years of annual dividend increases Longest record of a public corporation in Canada $ 1.40 $1.36 1.20 1.00 Dividend 0.80 Growth 0.60 0.40 0.20 $0.09 0.00 '72 '75 '78 '81 '84 '87 '90 '93 '96 '99 '02 '05 '08 '11 '14 '15F 24
Slide 25: Leader in Electric & Gas Utilities in North America
Leader in Electric & Gas Utilities in North America 25
Slide 26: Appendix A: Adjusted Earnings
Appendix A ($M) 2014 2013 Change Net Earnings Attributable to Common Shares 317 353 (36) Adjusted items: Adjusted Interest on convertible debentures 51 - 51 Earnings Acquisition-related expenses 39 34 5 Part VI.1 tax impacts - (23) 23 Exploits River Hydro Partnership extraordinary gain - (20) 20 Adj
Slide 27: Appendix B: Executive Team
Appendix B Barry Perry President and CEO Karl Smith John Walker Earl Ludlow Executive Vice President Executive Vice President Executive Vice President Chief Financial Officer Western Canadian Operations Eastern Canadian & Caribbean Operations David Hutchens James Laurito President and CEO President