Fortis Inc. · TSX:FTS
Fortis — FY2015 Earnings Presentation
32 slides from Fortis's earnings presentation, Feb 18, 2016
Slide 1: 2015 Earnings Call
2015 Earnings Call February 18, 2016
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. The purpose of the forward-looking information is to provide management’s expectations regarding the Corporation’s future growth, resu
Slide 3: Forward-Looking Statement (continued)
Forward-Looking Statement (continued) Forward-looking statements involve significant risk, uncertainties and assumptions. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. These factors or assumptions are subject to inhe
Slide 4: Important Information
Important Information Additional Information about the Acquisition and Where to Find It. Fortis will file an SEC registration statement on Form F-4, including a proxy statement of ITC and a prospectus of Fortis, and other documents in connection with the proposed Acquisition. The proxy statement/pro
Slide 5: Barry Perry, President and CEO
Barry Perry President and CEO 5
Slide 6: Fortis – Quick Facts
Fortis – Quick Facts Based in St. John’s, NL Fortis’ Operations in Canada, U.S., 9 companies and Caribbean 278.6 C$11.7 BC AB million billion weighted average shares market cap ON PEI (Fiscal 2015) (as of Feb 8, 2016) NL C$6.7 C$16.4 NY billion billion(1) AZ Revenue 2015 midyear (Fiscal 2015) rate b
Slide 7: Transformation and Growth Continue
Transformation and Growth Continue • Focus on core utility business • Focused strategy for growth - Successful integration of - Largest capital plan to date: UNS Energy $2.2B invested in 2015 - Sale of non-core assets - Management of large capital - Settlement of Belize expropriation projects reinfo
Slide 8: 2015 Underscores the Strength of Our Strategy
2015 Underscores the Strength of Our Strategy • Significant EPS growth relative to 2014 mostly due to UNS Energy acquisition and strong U.S. dollar • Contribution from Waneta Expansion • FortisAlberta growth and capital tracker resolution • New rates at Central Hudson • FortisBC Energy - AFUDC and o
Slide 9: $9 Billion Capital Program Drives Rate Base Growth
$9 Billion Capital Program Drives Rate Base Growth(1) 2016-2020 Average $1.8 Billion $2.2 $1.9 $1.9 $1.9 $1.7 $1.7 ($ billions) 2015A 2016F 2017F 2018F 2019F 2020F Sustaining Growth Other (2) (1) US dollar denominated CAPEX converted at a USD/CAD exchange rate of 1.28 for 2015 and 1.38 for 2016 thro
Slide 10: Rate Base Growth Comes from All Areas of Business
Rate Base Growth Comes from All Areas of Business (1) (2) $20.9 $20.4 $19.6 $18.9 $17.8 $16.4 ($ billions) 2015A 2016F 2017F 2018F 2019F 2020F Regulated Gas Canada Regulated Electric & Gas US Regulated Electric Canada & Caribbean Waneta Expansion (1) Midyear Rate Base. US dollar denominated Midyear
Slide 11: Many Opportunities for Upside to Rate Base Growth
Many Opportunities for Upside to Rate Base Growth FortisAlberta: FortisOntario: Rural Electrification Wataynikaneyap Project Associations & Municipal Utility Consolidation FortisBC: Tilbury, Woodfibre, LNG, Gas Central Hudson: Infrastructure REV Demonstration Projects & NY Transco LLC, Gas Infrastru
Slide 12: Dividend Guidance Supported by Confidence in Business
Dividend Guidance Supported by Confidence in Business $2.00 $1.80 $1.60 • A record 42 $1.40 consecutive years of $1.40 Annual dividend growth annual dividend $1.28 through 2020 targeted at 6% increases $1.24 $1.20 $1.20 $1.16 • Two dividend increases in 2015 $1.00 2011 2012 2013 2014 2015 2016F 2017
Slide 13: Karl Smith, Chief Financial Officer
Karl Smith Executive VP, Chief Financial Officer 13
Slide 14: 2015 Results Driven by Strong Performance of All Utilities
2015 Results Driven by Strong Performance of All Utilities 2015 Financial Highlights Adjusted Earnings 50% 750 • Adjusted earnings 50% higher than $589 ($ millions) 2014 500 $394 • Adjusted EPS increased by 20% 250 $142 $115 • Cash flow from operations $1.7B, 0 2014 2015 2014 2015 70% higher than 20
Slide 15: Multiple Drivers of EPS Growth – Q4
Multiple Drivers of EPS Growth – Q4 0.60 $0.01 ($0.02) $0.02 0.55 $0.02 ($0.05) $2.11 $0.02 0.50 $ $0.03 $0.51 $0.03 0.45 $0.45 0.40 0.35 Adjusted EPS Foreign Central Waneta FortisBC FortisBC FortisAlberta Non-Utility Corporate Adjusted EPS Q4 2014 Exchange Hudson Expansion Energy (Regulatory Q4 201
Slide 16: Multiple Drivers of EPS Growth - 2015
Multiple Drivers of EPS Growth - 2015 2.25 2.15 $0.02 ($0.01) ($0.03) $0.04 $0.04 2.05 $0.05 $0.08 $ 1.95 $0.08 $2.11 1.85 $0.09 1.75 $1.75 1.65 Adjusted FortisAlberta UNS Energy Waneta Foreign FortisBC Central Other Corporate Non-Utility Adjusted EPS 2014 (including Expansion Exchange Energy Hudson
Slide 17: Ample Liquidity and Investment-Grade Credit Ratings
Ample Liquidity and Investment-Grade Credit Ratings Investment-Grade Credit Ratings (1) Cash Flow from Operating Activities 2.0 Fortis Inc. $1.7 1.5 S&P A- / BBB+ ($ billions) $1.0 DBRS A(low) 1.0 $0.9 0.5 0.0 2013 2014 2015 (1) In February 2016, after the announcement by Fortis that it had entered
Slide 18: Regulatory Update
Regulatory Update Decisions Received in 2015 • UNS Energy: Clean Power Plan; on track with compliance • Central Hudson: 3-year rate plan commenced July 1, 2015 • FortisAlberta: Capital Tracker and Generic Cost of Capital resolution Significant Filings and Applications Regulated Utility Application/P
Slide 19: Tucson Electric Power General Rate Application
Tucson Electric Power General Rate Application 2012 Rate Case 2015 Rate Case ($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 20: Barry Perry, President and CEO
Barry Perry President and CEO 20
Slide 21: Acquisition of ITC Holdings Corp.
Acquisition of ITC Holdings Corp.
Slide 22: Proven Acquisition Track Record
Proven Acquisition Track Record Delivering Superior Growth Through Disciplined Strategy • Fortis has substantial experience in integrating newly acquired enterprises US$4.5 billion in EV C$3.7 billion in EV (1) Announced Dec 2013, closed Aug 2014 Announced Feb 2007, closed May 2007 (2) US$1.5 billio
Slide 23: Fortis' Acquisition of ITC
Fortis’ Acquisition of ITC • ITC shareholders will receive a combination of US$22.57 in cash and 0.7520 of a Fortis common share − Equity purchase price of US$6.9 billion (C$9.7 billion)(1) Consideration − Enterprise value of US$11.3 billion (C$15.8 billion)(1), including ITC debt • Fortis will appl
Slide 24: Strong Strategic Fit For Fortis
Strong Strategic Fit For Fortis Fortis Strategic Initiatives Growth Prospects Execute organic capex plan and new investment opportunities Expand non-regulated long-term contracted energy Potential Accretive to Partnerships EPS infrastructure Increase exposure to renewables Customer rates and regulat
Slide 25: Strategic Rationale for Acquisition of ITC
Strategic Rationale for Acquisition of ITC Premier Pure-Play Accretive to EPS Increases Electric Transmission Diversification Utility 5% Accretion in First Full Year Following Pro Forma 39% FERC- Fully Regulated Close Regulated Earnings Supportive FERC Long-Term Rate Base Proven Management Regulatio
Slide 26: Achieves Scale and EPS Accretion
Achieves Scale and EPS Accretion • Following the acquisition, Fortis will be among the top 15 North American public utilities by enterprise value(1) • Expected to be accretive to Fortis EPS by approximately 5% in the first full year following the close of the acquisition(2) • Earnings accretion and
Slide 27: Key Questions
«i 4 \ = \ i” FORTIS. Gee Key Questions
Slide 28: Strong Platform for Sustained Growth
Strong Platform for Sustained Growth • Well-Run Utilities • Low Risk and Diversified • Financial Strength • Predictable Dividend Growth 2015 Earnings Call 28
Slide 29: Leader in Electric and Gas Utilities in North America
Leader in Electric and Gas Utilities in North America 29
Slide 30: 2015 Earnings Call
2015 Earnings Call February 18, 2016
Slide 31: Appendix
«i 4 \ = \ i” FORTIS. Gee Appendix
Slide 32: Strategic Rationale for Acquisition of ITC
Strategic Rationale for Acquisition of ITC A Premier Pure-Play Acquisition of the largest independent pure-play fully-regulated electric transmission utility in the U.S. with rates regulated by FERC Fully-Regulated Establishes scale and an additional platform for growth in electric transmission