Slide 1: 2017 Fourth Quarter Earnings Conference Call
2017 Fourth Quarter Earnings Conference Call February 15, 2018 2017 INVESTOR DAY 1
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 U.S. Private Securities Litigation Reform Act of 1995, collectively referred to as "forw
Slide 3: Barry Perry, President & CEO
Barry Perry President & CEO 2017 INVESTOR DAY 3
Slide 4: Executed Well in 2017
Executed Well in 2017 Reinforcing the Strength of Fortis as a North American Utility Leader Successful integration of ITC Constructive rate case settlement in Arizona Safe and timely restoration of Exceeded $1B in electricity on Turks and Caicos adjusted earnings following Hurricane Irma 6.25% $3.0B
Slide 5: Highly-Executable Capital Plan
Highly-Executable Capital Plan 2018-2022 Capital Expenditure Program of ~$14.5 Billion Reaffirmed Capital Expenditures(1) Forecast Forecast (billions) Significant Projects(2) Forecast 2019- Total $14.5 Five-Year Capital Plan ($millions)(1) 2018 2022 2018- 2022 ITC Multi-Value Regional $3.2 169 194 3
Slide 6: Additional Opportunities Beyond the Forecast
Additional Opportunities Beyond the Forecast Continuing to Advance the Wataynikaneyap Transmission Power Project • Partnership with First Nations to connect remote communities in Northern Ontario to the grid via 1,800 kilometers of transmission line • Estimated total capital project cost of ~$1.35B,
Slide 7: Additional Opportunities Beyond the Forecast
Additional Opportunities Beyond the Forecast Newfoundland and Labrador Prince MECL & NP: Edward Grid Alberta Island Modernization Ontario British Columbia FortisOntario: Wataynikaneyap Project & Municipal Utility Consolidation Minnesota FortisBC: New York Tilbury, LNG, Gas Infrastructure Iowa Michig
Slide 8: Strong Track Record of Rate Base and EPS Growth
Strong Track Record of Rate Base and EPS Growth Historical Rate Base Growth Aligned with EPS Growth Over the Past 5 Years 2012 – 2017 Rate Base Adjusted Earnings Per Share ($ billions)(1) 3-Year 5-Year $25.4 CAGR CAGR $24.3 Rate base ~22% ~24% Rate base excluding ~8% ~7% $7.2 $6.9 acquisitions of U.
Slide 9: 44 Years of Consecutive Annual Dividend Growth
44 Years of Consecutive Annual Dividend Growth Average annual dividend 73% 73% growth through 2022 70% 66% 66% targeted at ~6% 64% 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F 2021F 2022F Dividend payout ratio (1) (1) Dividend payout ratio adjusted for non-operating items. 2017 INVESTOR DAY 9
Slide 10: Karl Smith, Executive Vice President, Chief Financial Officer
Karl Smith Executive Vice President, Chief Financial Officer 2017 INVESTOR DAY 10
Slide 11: Fortis Delivers Strong Results in 2017
Fortis Delivers Strong Results in 2017 Adjusted Earnings Adjusted EPS 1300 300 0.70 2.60 1100 $1,053 $2.53 0.65 $0.63 900 $0.62 2.50 ($ millions) $259 $715 700 0.60 ($) 250 $243 2.40 500 0.55 $2.31 300 2.30 0.50 200 100 0.45 2.20 2016 2017 2016 2017 2016 2017 2016 2017 Q4 Annual Q4 Annual 2017 INVES
Slide 12: EPS Variances – Q4
EPS Variances – Q4 0.70 0.01 0.65 (0.02) 0.02 (0.01) (0.01) 0.60 0.55 ($) 0.63 0.62 0.50 0.45 0.40 Q4 2016 Adjusted Aitken UNS Foreign Other Regulated WA Share Q4 2017 Adjusted (4) Actual EPS Creek(1) Energy Exchange(2) Utilities(3) Impact Actual EPS (1) Includes variance related to unrealized gains
Slide 13: Multiple Drivers of EPS Growth – Full Year 2017
Multiple Drivers of EPS Growth – Full Year 2017 2.70 2.60 0.06 (0.04) (0.03) (0.02) 0.09 2.50 2.40 0.16 ($) 2.30 2.53 2.20 2.10 2.31 2.00 1.90 2016 Adjusted UNS Aitken ITC (2) WA Share Foreign Other Regulated 2017 Adjusted (3) (4) Actual EPS Energy Creek(1) Impact Exchange Utilities(5) Actual EPS (1
Slide 14: U.S. Tax Reform Benefits Customers Immediately and Shareholders Over the Long Term
U.S. Tax Reform Benefits Customers Immediately and Shareholders Over the Long Term Lower Corporate Tax Rate Bonus Depreciation Interest Expense (From 35% to 21%) Exemption Deductibility Preserved • One-time remeasurement of • Regulated utilities exempt from • Fortis view: U.S. utility business defer
Slide 15: U.S. Tax Reform Affects Near-Term Cash Flow
U.S. Tax Reform Affects Near-Term Cash Flow U.S. Tax Reform Cash Flow Impacts • Provides opportunity to reduce customer rates at ITC, UNS Energy and Central Hudson • Lower corporate tax rate reduces cash from operations from U.S. utilities in the near-term • Provides opportunity to invest further to
Slide 16: U.S. Tax Reform Improves Rate Base Growth
U.S. Tax Reform Improves Rate Base Growth 3 & 5-Year Rate Base CAGRs Improve by 70bps & 50bps, Respectively Pre-Tax Reform Rate Base(1) Post-Tax Reform Rate Base(2) (billions) (billions) +70bps 3-year CAGR +50bps 5-year CAGR $31.7 $32.4 $30.4 $31.2 $29.6 $30.3 $28.5 $28.9 $26.8 $26.8 $25.4 $25.4 201
Slide 17: Investment-Grade Credit Ratings and Ample Liquidity
Investment-Grade Credit Ratings and Ample Liquidity Consolidated Credit Facilities 7.0 Credit Ratings 6.0 5.0 Fortis Inc. 4.0 3.7 ($ billions) S&P A- / BBB+ 3.0 3.9 2.0 DBRS BBB (high) (1) 1.0 2.2 Moody’s Baa3 1.1 - 0.0 Dec 31/16 Dec 31/17 Utilized Remaining Capacity (1) Included $500 million non-re
Slide 18: Regulatory Stability
Regulatory Stability Recent regulatory outcomes Agreement/ Regulated Utility Application/Proceeding Outcome Decision Timing ‒ Decision issued approving settlement agreement on revenue requirement TEP 2017 General Rate Application February 2017 ‒ 9.75% ROE and common equity thickness of 50% Remaining
Slide 19: Barry Perry, President & CEO
Barry Perry President & CEO 2017 INVESTOR DAY 19
Slide 20: Our Strategy – Simple, Effective, Proven
Our Strategy – Simple, Effective, Proven Strategy Leverage the operating model, footprint of our utilities, operating expertise, reputation and financial strength to develop growth opportunities Dividend Growth Dividend Target: Growth Target: Investment-Grade 6% Average Annual 6% Average Annual Cred
Slide 21: Expected Upcoming Events
Expected Upcoming Events Expected Upcoming Earnings Release Dates Q1 – 2018 May 1, 2018 Q2 – 2018 July 31, 2018 Q3 – 2018 November 2, 2018 Q4 – 2018 February 14, 2019 Save the Date – 2018 Investor Days Toronto October 15, 2018 New York October 16, 2018 2017 INVESTOR DAY 21
Slide 22: 2017 Fourth Quarter Earnings Conference Call
2017 Fourth Quarter Earnings Conference Call February 15, 2018 2017 INVESTOR DAY 22
Slide 23: Q4 2017 Results by Segment
Q4 2017 Results by Segment Fourth Quarter Variance Analysis by Segment Q4 2017 Q4 2016 Q4 (Adjusted) ($ in millions, excluding EPS) Q4 2017 Adjustment Q4 2016 Adjustment (Adjusted) (Adjusted) Variance Regulated – Independent Electric Transmission ITC Holdings Corp. (1) 91 90 59 22 81 9 Regulated – U
Slide 24: Annual 2017 Results by Segment
Annual 2017 Results by Segment Annual Variance Analysis by Segment Annual Annual Annual 2017 Annual Annual 2016 ($ in millions, excluding EPS) Adjustment Adjustment (Adjusted) 2017 (Adjusted) 2016 (Adjusted) Variance Regulated – Independent Electric Transmission ITC Holdings Corp. 272 91 363 59 22 8
Slide 25: 2018-2022 Capital Forecast by Segment
2018-2022 Capital Forecast by Segment Fortis 2018F 2018 Capital Forecast (1) ($ millions) Rate Base(1) Regulated–Independent Transmission (ITC) ~$26.8 Billion ITC 863 Regulated-U.S. Electric & Gas UNS Energy 686 Regulated- Central Hudson 275 Regulated- Independent Regulated-Canadian & Caribbean Elec
Slide 26: Capital Expenditures Exceeding Expectations
Capital Expenditures Exceeding Expectations 2013-2017 Business Plan Capex 2014-2018 Business Plan Capex 2015-2019 Business Plan Capex $ Millions $ Millions $ Millions 3,300 3,300 3,300 3,000 3,000 3,000 2,700 2,700 2,700 2,400 2,400 2,400 2,100 2,100 2,100 1,800 1,800 1,800 1,500 1,500 1,500 1,200 1