Slide 1: 2016 Earnings Call
2016 Earnings Call February 16, 2017
Slide 2: Forward-Looking Statement
Forward-Looking Statement Fortis Inc. (“Fortis” or, the “Corporation”) includes forward-looking statements in this presentation within the meaning of applicable securities laws including the Private Securities Litigation Reform Act of 1995. Forward-looking statements included in this presentation re
Slide 3: Barry Perry
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Slide 4: Fortis Delivers Strong Results in 2016
Fortis Delivers Strong Results in 2016 Transformative Acquisition Completed Execution of Growth Strategy Closed the acquisition of ITC in a Invested $2.1 billion in 2016 transaction valued at ~$16 billion Major capital projects progressing on closing Pursuing additional opportunities Liste
Slide 5: ITC Accretive to EPS with Integration on Track
ITC Accretive to EPS with Integration on Track • ITC Immediately Accretive to EPS in 2016 (1) • Integration On Track • Minimal impact on day-to-day operations at ITC • ITC’s new board of directors formed • Linda Blair appointed President and CEO of ITC during Q4 2016 • Joe Welch to be nominated for
Slide 6: Capital Plan Grows Rate Base to $30 Billion in 2021
Capital Plan Grows Rate Base to $30 Billion in 2021 ~$13B Five-Year Capital Program 2016 – 2021 Midyear Rate Base (2) $3.0 $2.9 $28.9 $29.6 $28.3 $27.1 $2.4 $2.4 $25.7 $2.3 $24.3 ($ billions ) (1) ($ billions ) (1) (3) 2017F 2018F 2019F 2020F 2021F 2016A 2017F 2018F 2019F 2020F 2021F (4) Regulated -
Slide 7: Progress on Major Capital Projects
Progress on Major Capital Projects Actual Forecast Forecast $millions(1) (2) 2016 2017 2018-2021 ITC Multi-Value Regional Transmission Projects (3) 57 354 96 ITC 34.5 kV to 69 kV Conversion Project (3) 11 89 369 UNS Energy Springerville Unit 1 Purchase 112 - - Central Hudson Gas Main Replacement Pro
Slide 8: Opportunities Beyond Base Plan
Opportunities Beyond Base Plan ITC: Lake Erie Connector Prince Newfoundland Edward Alberta Island British Columbia Prince Edward FortisOntario: Island Wataynikaneyap Project & British Columbia Municipal Utility Consolidation Ontario Minnesota Ontario FortisBC: New York State Tilbury, Woodfibre LNG,
Slide 9: Development Project Update
Development Project Update • Potential pipeline expansion to the Woodfibre LNG export site • Earliest expected in service date is late 2020 Woodfibre LNG • Project estimate of up to $600 million, not currently in forecast • Proposed 1,000 MW, bi-directional, high-voltage direct current transmission
Slide 10: Karl Smith
Karl Smith Executive Vice President, Chief Financial Officer
Slide 11: Diversified Portfolio of Utilities Continues to Deliver Strong Performance
Diversified Portfolio of Utilities Continues to Deliver Strong Performance Adjusted Earnings Adjusted EPS $2.33 300 750 0.75 2.30 $721 $0.64 $246 250 $2.11 ($ millions) $0.51 200 650 0.50 2.05 ($) $142 $589 150 100 550 0.25 1.80 2015 2016 2015 2016 2015 2016 2015 2016 Q4 YTD Q4 YTD 11
Slide 12: Multiple Drivers of EPS Growth – Q4
Multiple Drivers of EPS Growth – Q4 0.70 0.65 0.01 0.02 $2.11 0.02 0.60 0.02 0.02 0.02 0.55 ($) 0.04 0.64 0.50 0.45 0.51 0.40 (1) 2015 ITC Central FortisBC FortisBC Regulated Aitken Creek WA Share 2016 Adjusted Hudson Energy Electric Utilities Impact (2) Adjusted Actual EPS Actual EPS (1) Inclusive
Slide 13: Multiple Drivers of EPS Growth – Full Year 2016
Multiple Drivers of EPS Growth– Full Year 2016 2.45 2.40 0.02 0.05 0.04 2.35 0.04 0.04 2.30 0.04 2.25 0.05 2.20 0.06 ($) 2.15 0.06 2.33 2.10 2.05 2.00 2.11 1.95 1.90 (1) 2015 ITC UNS Foreign FortisBC Regulated Aitken Waneta Fortis WA Share 2016 (2) Adjusted Energy Exchange Energy Utilities Creek Exp
Slide 14: Liquidity and Credit Ratings
Liquidity and Credit Ratings Credit Ratings(1) Credit Facilities 7.0 6.0 Fortis Inc. 5.0 2.2 3.7 ($ billions) 4.0 S&P A- / BBB+ 3.0 DBRS BBB (high) 2.4 2.0 Moody’s Baa3 2.2 1.0 1.2 0.0 (2) Dec 31/15 Dec 31/16 Utilized Remaining Capacity (1) In October 2016, following the completion of the acquisitio
Slide 15: Continued Regulatory Stability
Continued Regulatory Stability Summary of Recent Regulatory Outcomes Agreement/Decision Regulated Utility Application/Proceeding Outcome Timing Initial MISO Base ROE ‒ 10.32% base ROE with a high-end zone of ITC September 2016 Complaint reasonableness of 11.35% 2016 Application: ROE and ‒ Maintained
Slide 16: Reiterating Average Annual Dividend Growth Target of 6% through 2021
Reiterating Average Annual Dividend Growth Target of 6% through 2021 $1.53 $1.40 $1.20 $1.24 $1.28 $1.12 $1.16 $1.00 $1.04 $0.82 $0.67 Average annual dividend growth through 2021 targeted at 6% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F Dividend paid per com
Slide 17: U.S. Tax Reform
U.S. Tax Reform Key Assumptions in Fortis Sensitivity Analysis Corporate Tax Rate Stress tested corporate tax rates at 20% and assumed remeasurement of existing deferred tax liabilities would be offset by a regulatory deferral mechanism 100% Deductibility of Assumes deductibility is required rather
Slide 18: Barry Perry
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Slide 19: Outlook Remains Strong
Outlook Remains Strong • Highly diversified; regulated utility, focused on wires and gas businesses • Highly executable base capital plan • Regulatory stability • Consistent dividend growth • 43 years of consecutive dividend increases • 6% average annual dividend growth guidance through 2021 • Stron
Slide 20: 2016 Earnings Call
2016 Earnings Call February 16, 2017
Slide 21: Expected Upcoming Events
Expected Upcoming Events Expected Earnings Release Dates Q1 – 2017 May 2, 2017 Q2 – 2017 July 28, 2017 Q3 – 2017 November 3, 2017 Save the Date - 2017 Investor Day Toronto October 16, 2017 New York October 18, 2017 21
Slide 22: Q4 Results by Segment
Q4 Results by Segment Q4 Variance Analysis By Segment Q4 Q4 2016 Q4 Q4 2015 Q4 (Adjusted) (Millions excluding EPS) 2016 Adjustments (Adjusted) 2015 Adjustments (Adjusted) Variance Regulated- Independent Electric Transmission (ITC) ITC Holdings 59 22 81 - - - 81 Regulated - US Electric & Gas UNS Ener
Slide 23: Full Year Results by Segment
Full Year Results by Segment Annual Variance Analysis By Segment Annual Annual 2016 Annual Annual 2015 Annual (Adjusted) (Millions excluding EPS) 2016 Adjustments (Adjusted) 2015 Adjustments (Adjusted) Variance Regulated- Independent Electric Transmission (ITC) ITC Holdings 59 22 81 - - - 81 Regulat