Fortis Inc. · TSX:FTS
Fortis — Investor Presentation (June 2015)
27 slides from Fortis's investor presentation, June 2015
Slide 1: June 2015 Investor Presentation
June 2015 Investor Presentation
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 (“forward-looking information”). The purpose of the forward-looking information is to provide management’s expectations regar
Slide 3: Leader in Electric and Gas Utilities in North America
Leader in Electric and Gas Utilities in North America 3
Slide 4: 2014 Highlights
2014 Highlights • Adjusted EPS grew to $1.81 • Annualized dividend increased to $1.36 • US$4.5 billion acquisition of UNS Energy • $1.8 billion common equity issue • $600 million preferred equity issue 4
Slide 5: 2014 Highlights
2014 Highlights • New organizational structure • Record $1.7 billion capital program • Strategic review of Fortis Properties • Waneta Expansion online (April 2015) • Total shareholder return of 32% 5
Slide 6: Company Overview
Company Overview • Utilities in 9 jurisdictions Arizona, New York British Columbia, Alberta Newfoundland & Labrador, Ontario, Prince Edward Island Grand Cayman, Turks and Caicos • Serving 3.1 million customers 1.9 million electric 1.2 million gas 6
Slide 7: Total Assets ~$28 Billion
Total Assets ~$28 Billion (unaudited, as at March 31, 2015) 93% Regulated Assets Electric 67% Gas 26% Hydro Generation 4% Fortis Properties 3% 7
Slide 8: Regulated Assets ~$26 Billion
Regulated Assets ~$26 Billion (unaudited, as at March 31, 2015) New York State 12% British Columbia 30% Arizona 31% Alberta 14% Eastern Canadian 9% Caribbean 4% 8
Slide 9: Financial Metrics
Financial Metrics 2012A 2013A 2014A 2014 Pro-forma Earnings to Common Shareholders ($M) 327 344 407 482 Basic EPS ($) 1.72 1.70 1.81 1.76 EBITDA ($B) 1.3 1.4 1.8 2.1 FFO ($B) 0.9 0.9 1.2 1.5 Market Cap (Dec 31) ($B) 6.6 6.5 10.8 n/a Enterprise Value (Dec 31) ($B) 14.3 15.8 24.3 n/a EV/EBITDA (x) 11.
Slide 10: 2015 Allowed Returns & Equity
2015 Allowed Returns & Equity Weighted Average (%) Canada U.S. Combined Allowed ROE 8.72 9.87 9.13 Common Equity Thickness 39.9 44.6 41.6 10
Slide 11: 1-Year Total Shareholder Return
1-Year Total Shareholder Return (1) Fortis 32.2% S&P/TSX Capped Utilities Index 16.1% S&P/TSX Composite Index 10.6% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% (1) 1-year total return as at December 31, 2014 11
Slide 12: 10-Year Total Shareholder Return
10-Year Total Shareholder Return (1) Fortis 12.0% S&P/TSX Capped Utilities Index 8.4% S&P/TSX Composite Index 7.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% (1) 10-year average annualized total return as at December 31, 2014 12
Slide 13: Dividend Growth
Dividend Growth $ per common share 1.50 • 42 consecutive years of annual dividend increases 1.30 1.10 • Record for a public corporation in Canada 0.90 0.70 • Dividend per common share 10-Year CAGR ~9% 0.50 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15F 13
Slide 14: Annual EPS
Annual EPS 2014 2013 Change Basic Earnings per Common Share $1.41 $1.74 ($0.33) Adjusting items: Acquisition-related costs 0.40 0.17 0.23 Part VI.1 tax adjustment - (0.11) 0.11 Exploits Partnership gain - (0.10) 0.10 Adjusted Basic Earnings per Common Share $1.81 $1.70 $0.11 14
Slide 15: Market Capitalization
Market Capitalization $B #M 12 1.5 10.8 10 8 1.0 6.6 6.5 6.3 5.9 6 4 0.5 2 0 0.0 10 11 12 13 14 Market Capitalization ($B) Avg. Daily Trading Volume All Exchanges (M) 15
Slide 16: Dividend Payout Ratio
Dividend Payout Ratio 2014 2013 Adjusted Basic EPS ($) 1.81 1.70 Dividend ($) 1.28 1.24 Payout Ratio (%) 71 73 16
Slide 17: Capital Structure
Capital Structure % Dec 31/14 Dec 31/13 Debt 57 56 Preferred 9 9 Common 34 35 Total 100 100 17
Slide 18: Quarter 1 EPS
Quarter 1 EPS Q1/2015 Q1/2014 Change Basic Earnings per Common Share $0.72 $0.67 $0.05 Adjusting items: Acquisition-related costs - 0.05 (0.05) Capital Tracker true-up (0.04) - (0.04) F/X gain Belize Electricity (0.03) (0.02) (0.01) Griffith earnings - (0.02) 0.02 Adjusted Basic Earnings per Common
Slide 19: Looking Forward
Looking Forward • Fortis has entered a period of significant growth, with a 5-year compound annual growth rate in rate base through 2019 estimated at ~6.5%. • Two natural gas infrastructure investments – Tilbury 1B and the pipeline expansion to the Woodfibre LNG site – would increase the 5-year comp
Slide 20: 5-Year Capital Expenditures $9.0 Billion
5-Year Capital Expenditures (1) $9.0 Billion $B 2.5 2.2 2.0 1.8 1.8 1.7 Average $1.8 Billion 1.5 1.5 (2) Other Sustaining 1.0 Growth 0.5 0.0 15F 16F 17F 18F 19F (1) US Utilities CAPEX converted at a USD/CAD exchange rate of 1.27 (2) Capital expenditures related to facilities, equipment, vehicles, in
Slide 21: Major Capital Projects
Major Capital Projects $M 2015 2016 2017 2018 2019 Total Tilbury Phase 1A 170 158 - - - 328 UNS Springerville 151 - 48 - - 199 FortisAlberta Pole Management 41 43 27 20 20 151 UNS Pinal Transmission 97 - - - - 97 CUC Generation Expansion 60 32 - - - 92 Waneta Expansion 45 13 2 21 1 82 Other Capital
Slide 22: Rate Base Growth
Rate Base Growth (1) (2) $B 19.3 20 18.1 18.7 16.3 17.1 15 14.0 10 Rate Base reflecting 5-year Capital Expenditures forecast 5 0 14A 15F 16F 17F 18F 19F (1) Rate base reflects midyear amounts and includes Waneta Expansion (2) US Utilities rate base converted at a USD/CAD exchange rate of 1.27 22
Slide 23: Tilbury LNG
Tilbury LNG Tilbury 1A (under construction) • Adds 950,000 mmBtu of storage and 34,000 mmBtu/day liquefaction capacity • Expected in service by end of 2016 • FortisBC rate base addition of ~$440 million Tilbury 1B • Adds 133,000 mmBtu/day of liquefaction and increases FortisBC rate base by ~$450 mil
Slide 24: Pipeline Expansion to Woodfibre LNG
Pipeline Expansion to Woodfibre LNG • Gas pipeline expansion to proposed 3rd party-owned LNG export site • Final investment decision by site owner expected by the end of 2015 • Pipeline expansion represents FortisBC rate base addition of ~$600 million • Investment approved by the Province; Environme
Slide 25: Rate Base Growth including LNG Opportunities
Rate Base Growth including LNG Opportunities (1) (2) $B 25 20.3 19.3 20 18.1 Rate Base reflecting potential 16.3 17.1 LNG Projects: Tilbury 1B & Pipeline Expansion to Woodfibre LNG site 14.0 15 Rate Base reflecting 5-Year Capital Expenditures forecast 10 5 0 14A 15F 16F 17F 18F 19F (1) Rate base ref
Slide 26: Regulatory Matters
Regulatory Matters FortisBC • 2016 Generic Cost of Capital Proceeding FortisAlberta • Capital Tracker Filing for 2016 and 2017 • 2016 Generic Cost of Capital Proceeding Central Hudson • General Rate Application / Joint Settlement Proposal • Generic Proceeding: Reforming the Energy Vision UNS Energy
Slide 27: Investment Thesis
Investment Thesis • Focus on low-risk regulated utility business and long-term contracted energy infrastructure • Geographic and regulatory diversity • Strong organic rate base growth • Proven utility acquisition model • Strong balance sheet and credit ratings • 42 years of consecutive dividend incr