Fortis Inc. · TSX:FTS
Fortis — CIBC 18th Annual Whistler Institutional Conference (January 2015)
26 slides from Fortis's conference presentation, Jan 21, 2015
Slide 1: CIBC 18th Annual Whistler Institutional Conference
Karl Smith Executive Vice President & Chief Financial Officer CIBC 18th Annual Whistler Institutional Conference January 21, 2015 1
Slide 2: Forward-Looking Statement
Fortis includes forward-looking information in this material 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 regarding the Corporation’s future growth, results of operat
Slide 3: Leader in Electric & Gas Utilities in North America
Leader in Electric & Gas Utilities in North America 3
Slide 4: Fortis entering a period of significant organic growth
Fortis is entering a period of significant organic growth, with a 4-year CAGR in rate base through 2018 estimated at 7%. Fortis is also pursuing two new projects in British Columbia – further expansion of the Tilbury LNG facility and the Woodfibre gas pipeline expansion – these projects could in
Slide 5: Leader in Electric & Gas Utilities in North America
Regulated Utilities o 9 utilities serving 3.1 million customers (1.9 million electric, 1.2 million gas) Leader in o 7,600 employees Electric & Gas 2014F midyear rate base $14 billion Utilities in Market cap $11 billion North America S&P/TSX 60 Index member 5
Slide 6: Total Assets $25.5 Billion
Business Segment Regulated Assets Regulated Electric Canada 66% 57% Total Assets $25.5 Billion (1) Regulated Gas 26% United States 39% Non-Utility Hydroelectric Generation Caribbean 4% 4% 4% (1) As at September 30, 2014, excluding $1.2 billion installment receivable 6
Slide 7: Strategic Review of Non-Utility Business: Fortis Properties
Strategic Announced review on September 29, 2014 Review of Successful high-performing business Non-Utility Owns and operates 23 hotels and 2.8 million square feet of commercial real estate Business: In 2013 revenue was ~$250 million and EBITDA was ~$80 million Fortis Strategic options coul
Slide 8: Non-Regulated Waneta Expansion Project
2 Unit 335-MW Hydroelectric Plant $900 million (51% FTS) Non-Regulated Supported by 40-year PPAs with BC Hydro and Waneta FortisBC Electric Expansion Earnings commence Q2/2015 (upon completion) Project Ongoing unit assembly and commissioning First unit water-up completed in Q4/2014 8
Slide 9: LNG – FortisBC Strategic Advantage
Existing infrastructure Brownfield sites Proximity to Asia/Hawaii Scalable LNG – FortisBC Alignment with provincial Strategic energy objectives Constructive First Nations Advantage relationships Low-risk tolling model No commodity risk Local and export demand 9
Slide 10: Tilbury LNG Phase 1A
Operating since 1971 600,000 GJ storage and 5,000 GJ/day liquefaction Phase 1A expansion to add a 1,000,000 GJ storage Tilbury LNG tank and up to 36,000 GJ/day liquefaction capacity Phase 1A Construction started Estimated cost $400 million (included in current forecast) Approved in regul
Slide 11: 5-Year Capital Expenditures
30 3.0 $B 25 5-Year 2.5 $2.2 Capital 20 2.0 $1.7 $1.7 $1.7 $1.7 Average $1.8 Billion Expenditures 15 1.5 10 1.0 $9 Billion 0.55 0 '14F (1) '15F '16F '17F '18F (1) includes forecast capital expenditures for UNS Energy from the date of acquisition, August 15, 2014 11
Slide 12: Tilbury LNG Potential Expansion
35-acre site zoned for LNG Ocean access Tilbury Phase 1B adds 140,000 GJ/day of liquefaction at an estimated rate base addition of Tilbury LNG $450 million (not in forecast) Conditional contract with Potential Hawaiian Electric Expansion Site suitable for further staged expansion Full bu
Slide 13: Woodfibre LNG Pipeline Expansion
Woodfibre LNG Pipeline Opportunity to expand compression and pipeline from Expansion Eagle Mountain to the Woodfibre LNG site near Squamish Privately owned LNG processing and export facility expected to be operational by Q1/2017 o Brownfield development – subject to various approvals 2.1 milli
Slide 14: 5-Year Capital Expenditures
$B 5-Year 30 3.0 Capital 25 2.5 $2.5 $2.4 Expenditures 20 2.0 Average $2.0 Billion $1.7 $1.7 $1.7 + 15 1.5 Potential LNG Projects Potential 10 Current 5-Year Capital Expenditures Forecast 1.0 LNG Projects 0.55 $10 Billion 0 '14F (1) '15F '16F '17F '18F (1) includes forecast capital expenditures for
Slide 15: A Decade of Strong Shareholder Returns
10-Year Average Annualized Total Return (as at December 31, 2014) Fortis ($CDN) 12.0% A Decade of Strong S&P 500 Utilities Sector ($US) 9.6% Shareholder Returns S&P/TSX Capped Utilities Index ($CDN) 8.4% 15
Slide 16: Dividend Growth
42 consecutive years of annual dividend increases Longest record of a public corporation in Canada $ 1.40 $1.36 1.20 1.00 Dividend 0.80 Growth 0.60 0.40 0.20 $0.09 0.00 '72 '75 '78 '81 '84 '87 '90 '93 '96 '99 '02 '05 '08 '11 '14 '15F 16
Slide 17: Earnings
Year-to-Date September 30 2014 2013 Change Revenue ($M) 3,708 2,818 890 Earnings Adjusted Net Earnings ($M) (1) 284 243 41 Adjusted Basic Earnings per Common Share ($) (1) 1.32 1.22 0.10 (1) Adjusted to exclude interest on convertible debentures, acquisition-related expenses, Part VI.1 tax impacts,
Slide 18: Financial Strength
Strong credit ratings: S&P: A- DBRS: A(low) Ample consolidated credit facilities (excluding acquisition facilities) o $3.5B total; $2.6B unused (as at September 30, 2014) Financial Low consolidated debt maturities & repayments Strength o $340M average annual over next 5 years (as at September
Slide 19: Funding
Target 'A-' credit rating Debt primarily at operating company level Common equity: Dividend Reinvestment Plan ~$100 million annually Funding Non-core asset divestitures Financing non-regulated energy infrastructure opportunities 19
Slide 20: Regulatory Environment: Significant
FortisAlberta Capital Tracker Proceeding Regulatory Generic Cost of Capital Proceeding Environment: Significant UNS Energy Clean Power Plan Proceedings Central Hudson General Rate Application Generic Proceeding: Reforming the Energy Vision (REV) 20
Slide 21: Rate Base Growth & Waneta Investment
$B 20 $18.2 $17.6 $16.7 Rate Base 15 $14.0 $15.8 Growth & 10 Waneta 5 Investment 0 '14F '15F '16F '17F '18F 21
Slide 22: Rate Base Growth & Waneta Investment with Potential LNG Projects
Rate Base $B $19.2 20 $18.3 Growth $15.8 $16.7 & 15 $14.0 Waneta 10 Potential LNG Projects Investment Current 5-Year Capital Expenditures Forecast 5 + Potential 0 '14F '15F '16F '17F '18F LNG Projects 22
Slide 23: Why Invest in Fortis?
Focus on regulated utility business and long-term contracted energy infrastructure Mix of electric and gas infrastructure Why Invest Geographic and regulatory diversity in Fortis? Strong organic earnings growth Strong balance sheet and credit ratings 42 years of consecutive dividend incr
Slide 24: Leader in Electric & Gas Utilities in North America
Leader in Electric & Gas Utilities in North America 24
Slide 25: Appendix A: Adjusted Earnings
Appendix A Year-to-Date September 30 ($M) 2014 2013 Change Net Earnings Attributable to Common Shares 204 253 (49) Adjusted items: Adjusted Interest on convertible debentures 47 - 47 Earnings Acquisition-related expenses 38 32 6 Part VI.1 tax impacts - (23) 23 Exploits River Hydro Partnership extrao
Slide 26: Appendix B: Barry Perry and Management Team
Appendix B Barry Perry President and CEO Karl Smith John Walker Earl Ludlow Executive Vice President Executive Vice President Executive Vice President Chief Financial Officer Western Canadian Operations Eastern Canadian & Caribbean Operations David Hutchens James Laurito President and CEO President
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