Fortis Inc. · TSX:FTS
Fortis — Q1 2023 Earnings Presentation
24 slides from Fortis's earnings presentation, May 3, 2023
Slide 1: Q1 2023 Earnings Conference Call
Q1 2023 Earnings Conference Call May 3, 2023
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, President and CEO
David Hutchens President and CEO
Slide 4: Q1 Business Highlights
Q1 BUSINESS HIGHLIGHTS Safe & Reliable 2023 Capital Plan of Strong EPS Service $4.3B On Track Growth Regulatory Applications Announced Sale of Progressing Aitken Creek 44
Slide 5: Sale of Aitken Creek Announced for ~$400M
SALE OF AITKEN CREEK ANNOUNCED FOR ~$400M Transaction Highlights • Agreement with Enbridge to sell Fortis’ interest(1) in its unregulated investment of the Aitken Creek Natural Gas Storage Facility for ~$400M(2) • Proceeds expected to be used to repay Corporate credit facilities and support our regu
Slide 6: Highly Executable Capital Plan Supports Low-Risk Rate Base Growth of ~6%
HIGHLY EXECUTABLE CAPITAL PLAN SUPPORTS LOW-RISK RATE BASE GROWTH OF ~6% 2023 Capital Capital Plan Rate Base Plan On Track 35% • $1B of capital expenditures in Q1 $46.1B Transmission ▪ 23% of $4.3B annual capital $34.1B plan executed $22.3B • Major capital projects progressing Capital Plan ▪ FortisB
Slide 7: Dividend Guidance Supported by Long-Term Growth Strategy
DIVIDEND GUIDANCE SUPPORTED BY LONG-TERM GROWTH STRATEGY 49 YEARS of Consecutive Dividend Increases 4-6% Annual Dividend Growth Guidance through 2027 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 7
Slide 8: Jocelyn Perry, Executive Vice President and CFO
Jocelyn Perry Executive Vice President and CFO
Slide 9: First Quarter Results
FIRST QUARTER RESULTS Reported EPS $0.90 EPS Drivers $0.74 • Rate base growth • Higher earnings at UNS Energy, partially driven by timing of long-term Q1 2022 Q1 2023 wholesale sales and FERC transmission revenue Adjusted EPS • Favourable foreign exchange • Higher holding company finance charges and
Slide 10: First Quarter EPS Drivers
FIRST QUARTER EPS DRIVERS $0.03 ($0.03) $0.02 ($0.01) $0.02 $0.02 $0.08 $0.91 $0.78 Q1 2023 Adjusted EPS $0.13 Q1 2022 U.S. Electric & U.S. Western Energy Foreign Corporate & Weighted Q1 2023 Adjusted Gas (2) Transmission Canadian Infrastructure Exchange(4) Other Average Adjusted EPS(1) (ITC) Electr
Slide 11: Liquidity & Credit Ratings
LIQUIDITY & CREDIT RATINGS Active in Debt Credit Credit Markets Facilities Ratings $3.6B • Over $600M in long-term debt raised in Q1 2023 A-(2) • UNS Energy ▪ US$375M 30-year 5.50% notes $2.2B Baa3 • Central Hudson Mar. 31, 2023 ▪ US$90M notes(1) A (low) Remaining capacity Utilized (1) Includes US$4
Slide 12: Q1 Regulatory Highlights
Q1 REGULATORY HIGHLIGHTS Iowa Transmission Right of First Refusal (ROFR) – In March 2023, the Iowa Supreme Court granted certain parties standing to challenge the Iowa ROFR statute, issued a temporary injunction staying enforcement of the ROFR statute, and remanded the matter to the district court t
Slide 13: Why Invest in Fortis?
WHY INVEST IN FORTIS? WHY INVEST IN FORTIS? Focused on Geographic & 4-6% SAFE, ENERGY Regulatory ANNUAL DIVIDEND WELL-RUN DELIVERY DIVERSITY Growth Guidance Local Utilities LOW-RISK Virtually ESG Growth All Innovative REGULATED Leader Profile 13
Slide 14: Upcoming Events
UPCOMING EVENTS Expected Earnings Release Dates Save the Date • Q2 2023 – August 2, 2023 • Investor Day – September 19, 2023 (Event hosted in St. John’s, NL with webcast) • Q3 2023 – October 27, 2023 14
Slide 15: Q1 2023 Earnings Conference Call
Q1 2023 Earnings Conference Call May 3, 2023
Slide 16: Non-U.S. GAAP Reconciliation
NON-U.S. GAAP RECONCILIATION ($MILLIONS, EXCEPT EPS) Q1 2023 Q1 2022 VARIANCE Adjusted Net Earnings Net Earnings 437 350 87 Adjusting Item: Unrealized loss on mark-to-market of derivatives(1) 2 19 (17) Adjusted Net Earnings 439 369 70 Adjusted Net Earnings per Share $0.91 $0.78 $0.13 Capital Expendi
Slide 17: First Quarter Results by Business Unit
FIRST QUARTER RESULTS BY BUSINESS UNIT First Quarter Earnings Variance Analysis by Business Unit ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES ADJUSTED ADJUSTED Q1 2023 ADJUSTMENT (1) Q1 2022 ADJUSTMENT (1) VARIANCE AND EPS) Q1 2023 Q1 2022 Regulated – Independent Electric Transmission ITC 126 - 126 10
Slide 18: 2022-2027 Rate Base by Business Unit
2022-2027 RATE BASE BY BUSINESS UNIT Rate Base 5-YEAR CAGR to ($BILLIONS, EXCEPT FOR CAGR) 2022A 2023F 2024F 2025F 2026F 2027F 2027 Regulated – Independent Electric Transmission ITC(1) 10.5 11.1 11.9 12.5 13.2 14.1 6.1% Regulated – U.S. Electric & Gas UNS Energy 6.7 7.0 7.4 7.8 8.5 9.1 6.3% Central
Slide 19: 2023-2027 Capital Plan by Business Unit
2023-2027 CAPITAL PLAN BY BUSINESS UNIT Capital Plan(1) 2023-2027 ($MILLIONS) 2023F 2024F 2025F 2026F 2027F TOTAL Regulated – Independent Electric Transmission ITC 1,103 1,177 1,137 1,180 1,220 5,817 Regulated – U.S. Electric & Gas UNS Energy 1,006 690 986 1,027 891 4,600 Central Hudson 384 343 418
Slide 20: Major Capital Projects
MAJOR CAPITAL PROJECTS Major Capital ESTIMATED Projects 2023-2027 COMPLETION 17% ($ Millions) PLAN DATE ITC MISO Long-Range Transmission Plan(1) 923 Post-2027 UNS Energy Renewable Generation(2) UNS Energy Vail-to-Tortolita Transmission Project 417 378 Various 2027 $22.3B FortisBC Tilbury LNG Storage
Slide 21: ESG Leadership
ESG LEADERSHIP Environmental Social • 2050 net-zero direct emissions goal, with • Focus on Indigenous partnerships and interim targets to reduce GHG emissions business 50% by 2030 and 75% by 2035 • 1,800 KM Wataynikaneyap transmission line • Progress: More than halfway to achieving our connecting 17
Slide 22: Q1 Sales Trends
Q1 SALES TRENDS CHANGE IN RETAIL Q1 2023 vs. Q1 2022 ELECTRIC SALES TRENDS SALES • Peak load down 2% due to milder weather and N/A economic conditions • Increase primarily due to higher heating load +2% associated with cooler temperatures and customer (1) growth; excluding weather impacts, retail sa
Slide 23: Debt Maturities
DEBT MATURITIES 10-Year Average: $1.1B $3.0 $2.5 $2.0 billions $1.5 $1.0 $0.5 $- 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F 2032F Non-Regulated (1) Regulated Note: Debt as at March 31, 2023 and excludes any new debt issuances during the forecast period. Excludes repayments of finance leas
Slide 24: Investment-Grade Credit Ratings
INVESTMENT-GRADE CREDIT RATINGS COMPANY Fortis Inc. A-(1) Baa3 A (low) ITC Holdings Corp. A-(1) 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 Power n/a A2