Fortis Inc. · TSX:FTS
Fortis — Q1 2024 Earnings Presentation
26 slides from Fortis's earnings presentation, May 1, 2024
Slide 1: Q1 2024 Earnings Conference Call
Q1 2024 EARNINGS CONFERENCE CALL May 1, 2024
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 and Jocelyn Perry
DAVID HUTCHENS President & Chief Executive Officer JOCELYN PERRY EVP & Chief Financial Officer 3
Slide 4: Q1 2024 Business Update
Q1 2024 BUSINESS UPDATE Safe & Reliable Service 2024 Capital Plan of $4.8B On Track Right of First Refusal in Iowa MISO LRTP Tranche 2 Progressing 2024 Climate Report Released 4
Slide 5: Highly Executable Capital Plan Supports Low-Risk Rate Base Growth of ~6%
HIGHLY EXECUTABLE CAPITAL PLAN SUPPORTS LOW-RISK RATE BASE GROWTH OF ~6% $1.1B Capital Expenditures in Q1 2024 annual capital plan of $4.8B on track with major projects progressing $25B 2024-2028 Capital Plan ~20% major capital projects; ~$7B in cleaner energy capital $49B 6.3% $37B 5-Year Rate Base
Slide 6: Key Developments on Opportunities Beyond the Plan
KEY DEVELOPMENTS ON OPPORTUNITIES BEYOND THE PLAN MISO Long-Range Environmental IRPs at TEP and Approval of Transmission Plan Assessment for UNS Electric RNG Application Tranche 2 Tilbury Marine Jetty • In March 2024, MISO released a • In November 2023, TEP and • In March 2024, the BCUC approved • E
Slide 7: Climate Report Highlights
CLIMATE REPORT HIGHLIGHTS Overview • Climate scenario analysis conducted using low and high emissions scenarios over three time horizons (present day, 2030 and 2050) • Physical climate risks and opportunities were assessed on priority assets using nine climate hazards • Transition risk and opportuni
Slide 8: Dividend Guidance Supported by Long-Term Growth Strategy
DIVIDEND GUIDANCE SUPPORTED BY LONG-TERM GROWTH STRATEGY 4-6% Annual Dividend Growth Guidance through 2028 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 8
Slide 9: First Quarter Results
FIRST QUARTER RESULTS Reported EPS Q1 Adjusted EPS Drivers $0.90 $0.93 • Rate base growth • Timing of GCOC decision at FortisBC in 2023 Q1 2023 Q1 2024 • Higher holding company costs and weighted average shares outstanding Adjusted EPS • Disposition of Aitken Creek $0.91 $0.93 Q1 2023 Q1 2024 Note:
Slide 10: First Quarter 2024 EPS Drivers
FIRST QUARTER 2024 EPS DRIVERS Q1 Adjusted EPS impacted by ($0.03) associated with disposition of Aitken Creek; $0.01 ($0.06) on an annual basis Aitken $0.01 Creek will be neutral to EPS, $0.02 net of finance cost savings $0.06 ($0.02) $0.93 $0.91 Q1 2023 Western U.S. U.S. Other Corporate & Weighted
Slide 11: Liquidity & Credit Ratings
LIQUIDITY & CREDIT RATINGS Raised ~$400M Debt Maturities & Credit Ratings & in Long-Term Debt Preference Share Dividends Outlooks • ITC • Limited near-term non-regulated debt ▪ US$85M 10-year notes at 5.98% maturities ▪ US$75M 5-year bonds at 5.11% ▪ Fortis Inc. – US$190M (2024) ▪ US$75M 10-year bon
Slide 12: Recent Regulatory Activity
RECENT REGULATORY ACTIVITY Iowa Transmission General Rate Right of First Refusal Application • In December 2023, the Iowa District Court ruled that the Iowa ROFR • In July 2023, application filed with PSC legislation is unconstitutional, based on seeking new rates effective July 1, 2024 procedural g
Slide 13: Why Invest in Fortis?
SUSTAINABLE GROWTH Focused on Executing Strong Robust Transmission Transparent Rate Base Growth Investment Pipeline Funding Plan Cleaner 4-6% Annual Investment-Grade Energy Transition Dividend Growth Credit Ratings WHY INVEST IN FORTIS? LOW-RISK Safe, Well-Run Utilities Strong Regulatory & Construct
Slide 14: Upcoming Events
UPCOMING EVENTS Expected Earnings Release Dates Other Investor Events • Q2 2024 – July 31, 2024 • TD Energy & Power Conference (Calgary) – July 9-10, 2024 • Q3 2024 – November 5, 2024 14
Slide 15: Q1 2024 Earnings Conference Call
Q1 2024 EARNINGS CONFERENCE CALL May 1, 2024
Slide 16: Non-U.S. GAAP Reconciliation
NON-U.S. GAAP RECONCILIATION ($MILLIONS, EXCEPT EPS) Q1 2024 Q1 2023 VARIANCE Adjusted Net Earnings: Net Earnings 459 437 22 Adjusting item: Unrealized loss on mark-to-market of derivatives at Aitken Creek(1) - 2 (2) Adjusted Net Earnings 459 439 20 Adjusted Net Earnings per Share $0.93 $0.91 $0.02
Slide 17: First Quarter Results by Business Unit
FIRST QUARTER RESULTS BY BUSINESS UNIT First Quarter Earnings Variance Analysis by Business Unit ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES ADJUSTED ADJUSTED Q1 2024 ADJUSTMENT (1) Q1 2023 ADJUSTMENT (1) VARIANCE AND EPS) Q1 2024 Q1 2023 Regulated – Independent Electric Transmission ITC 138 - 138 12
Slide 18: 2023-2028 Rate Base by Business Unit
2023-2028 RATE BASE BY BUSINESS UNIT Rate Base 5-YEAR CAGR to ($BILLIONS, EXCEPT FOR CAGR) 2023A 2024F 2025F 2026F 2027F 2028F 2028 Regulated – Independent Electric Transmission ITC(1) 11.5 12.0 12.7 13.4 14.4 15.6 7.0% Regulated – U.S. Electric & Gas UNS Energy 7.3 7.6 8.1 8.5 9.0 9.5 6.3% Central
Slide 19: 2024-2028 Capital Plan by Business Unit
2024-2028 CAPITAL PLAN BY BUSINESS UNIT Capital Plan 2024-2028 ($MILLIONS) 2024F 2025F 2026F 2027F 2028F TOTAL Regulated – Independent Electric Transmission ITC 1,252 1,474 1,449 1,477 1,537 7,189 Regulated – U.S. Electric & Gas UNS Energy 1,111 854 912 1,310 973 5,160 Central Hudson 408 421 437 421
Slide 20: Major Capital Projects
MAJOR CAPITAL PROJECTS 2024- Estimated Major Capital ($ Millions) 2028F Completion Date Projects ITC MISO LRTP(1) 1,477 Post-2028 ~20% UNS Roadrunner Reserve Battery Storage Project 345 2025 UNS Vail-to-Tortolita Transmission Project 286 2026 $25B UNS IRP Energy Resources(2) 417 2027 FortisBC Eagle
Slide 21: Sensitivity Exposure
SENSITIVITY EXPOSURE Foreign Exchange • Assumed forecast USD:CAD FX rate of 1.30 for 2024-2028 • 65% of regulated earnings(1) / 60% of capital plan in USD at U.S. & Caribbean utilities • +/- $0.05 change in USD:CAD ▪ EPS: ~$0.06 ▪ Five-year capital plan: $600M ROE & Equity Ratio ROE Equity +/- 25 bp
Slide 22: Ongoing Regulatory Proceedings
ONGOING REGULATORY PROCEEDINGS MISO Base ROE In 2022, the U.S. Court of Appeals for the D.C. Circuit vacated certain FERC orders that established the methodology used to calculate the MISO base ROE; matter dates back to complaints filed at FERC in 2013 and 2015; DC Circuit noted FERC did not adequat
Slide 23: Q1 2024 Sales Trends
Q1 2024 SALES TRENDS CHANGE IN Q1 2024 vs. Q1 2023 RETAIL ENERGY SALES TRENDS SALES N/A • Peak load down 1% primarily due to milder weather • Residential sales down 5% primarily due to lower heating -2% load associated with milder temperatures; C&I sales up (1) 1%; excluding weather impacts, retail
Slide 24: Debt Maturities & Preference Share Dividends
DEBT MATURITIES & PREFERENCE SHARE DIVIDENDS Debt Maturities Preference Share Dividend Rate Resets 10-Year Debt Maturities 2024 $2.5 $2.0 billions $1.5 Series M - $600M December 1, 2024 $1.0 $0.5 Series H - $192M June 1, 2025 $- 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F 2032F 2033F (1) Non-Reg
Slide 25: Strong Investment-Grade Credit Ratings
STRONG INVESTMENT-GRADE CREDIT RATINGS (1) COMPANY Fortis Inc. A-(2) Baa3 A (low) ITC Holdings Corp. A-(2) Baa2 n/a ITC Regulated Subsidiaries A A1 n/a TEP A- A3 n/a Central Hudson BBB+ Baa1 n/a FortisBC Energy n/a A3 A FortisBC Electric n/a Baa1 A (low) FortisAlberta A- Baa1 A (low) Newfoundland Po
Slide 26: Glossary
GLOSSARY ACC Arizona Corporation Commission GHG greenhouse gas Aitken Creek Aitken Creek Gas Storage ULC, formerly a direct 93.8%-owned subsidiary of FortisBC Holdings Inc. IRP Integrated Resource Plan AMI Advanced Metering Infrastructure ITC Investment Holdings Inc., an indirect 80.1%-owned subsidi