Fortis Inc. · TSX:FTS
Fortis — Q3 2024 Earnings Presentation
29 slides from Fortis's earnings presentation, Nov 5, 2024
Slide 1: Q3 2024 Earnings Conference Call
Q3 2024 EARNINGS CONFERENCE CALL November 5, 2024
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 and Jocelyn Perry
David Hutchens Jocelyn Perry President and Chief Executive Officer, EVP and Chief Financial Officer, Fortis Inc. Fortis Inc.
Slide 4: Q3 2024 Business Highlights
Q3 2024 BUSINESS HIGHLIGHTS Delivered Safe & Reliable Service Top quartile safety and reliability relative to industry peers Q3 2024 EPS of $0.85 EPS supported by underlying regulated rate base growth Annual 2024 Capital Forecast of $5.2B $3.6B spent through YTD September Announced New $26B 2025-202
Slide 5: Highly Executable $26B Capital Plan Supports Low-Risk Rate Base Growth
HIGHLY EXECUTABLE $26B CAPITAL PLAN SUPPORTS LOW-RISK RATE BASE GROWTH OF ~6.5% 2024 Annual 2025 -2029 Consolidated Capital Program Capital Plan Rate Base $53.0B Major $3.6B Capital expenditures through YTD September Capital Projects $38.8B 23% $26B $5.2B Annual capital forecast Smaller Projects Maj
Slide 6: Key Transmission Investments
KEY TRANSMISSION INVESTMENTS MISO LRTP Tranche 2.1 • In September 2024, MISO released its final Tranche 2.1 portfolio of projects which includes 24 projects totaling US$21.8B • At least US$3B of capital investment expected at ITC for projects in Michigan and Minnesota where ROFRs are in effect; majo
Slide 7: Opportunities to Expand and Extend Growth Beyond the Plan
OPPORTUNITIES TO EXPAND AND EXTEND GROWTH BEYOND THE PLAN • MISO LRTP Tranche 2.1 • 2023 IRP • Tilbury LNG Expansion • Transmission Investments At least US$3B expected in Investment opportunity of Marine bunkering Supporting delivery of offshore Michigan and Minnesota where ~US$2.5-$5.0B through 203
Slide 8: Dividend Guidance Supported by Long-Term Growth Strategy
DIVIDEND GUIDANCE SUPPORTED BY LONG-TERM GROWTH STRATEGY ~4% Increase in Q4 2024 Dividend 51 Years of Consecutive Increases in Dividends Paid 4-6% Annual Dividend Growth Guidance through 2029 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 24F 8
Slide 9: Third Quarter Results
THIRD QUARTER RESULTS Reported EPS Adjusted EPS Key Q3 Adjusted EPS Drivers $0.85 $0.85 $0.84 • Rate base growth $0.81 • Strong earnings in Arizona, including new customer rates • Timing of GCOC decision at FortisBC in 2023 of $0.05 Q3 2023 Q3 2024 Q3 2023 Q3 2024 • Disposition of Aitken Creek in No
Slide 10: Q3 2024 EPS Drivers
Includes ($0.05) associated with retroactive impact of Q3 2024 EPS DRIVERS the September 2023 GCOC decision at FortisBC Includes ($0.02) associated with the disposition of Aitken Creek; on an annual basis Aitken Creek will be $0.02 ($0.04) neutral to EPS, net of finance cost savings $0.05 ($0.02) $0
Slide 11: Year-to-Date September 2024 EPS Drivers
YEAR-TO-DATE SEPTEMBER 2024 EPS DRIVERS Includes ($0.05) associated with disposition of Aitken Creek; on an annual basis Aitken Creek will be neutral to EPS, net of finance cost savings $0.04 ($0.09) $0.06 $0.10 $0.01 ($0.04) $2.45 $2.37 YTD 2023 U.S. U.S. Western Corporate & Foreign Weighted YTD 20
Slide 12: Liquidity & Credit Ratings
LIQUIDITY & CREDIT RATINGS Q3 2024 Long-Term Preference Share Credit Ratings & Debt Issuances Dividends Outlooks • Fortis Inc. – $500M 7-year notes at 4.17% • Preference share dividend rate resets • UNS Energy – US$400M 10-year notes at ▪ Series M – $600M (Q4 2024)(1) ▪ Series H – $192M (Q2 2025) Ba
Slide 13: Recent Regulatory Activity
RECENT REGULATORY ACTIVITY MISO Base ROE Transmission ROFR ACC Generic 2025 General Regulatory Lag Docket Rate Application • In 2022, the U.S. Court of Appeals for the D.C. • In 2023, the Iowa District Court ruled that the • In October 2024, the ACC held a workshop • In August 2024, Central Hudson f
Slide 14: Why Invest in Fortis?
SUSTAINABLE GROWTH WHY INVEST IN FORTIS? Focused on Executing Strong Robust Transparent Rate Base Growth Transmission Funding Plan Investment Pipeline Cleaner 4-6% Annual Investment-Grade Energy Transition Dividend Growth Credit Ratings LOW-RISK Safe, Well-Run Utilities Regulatory & Constructive Str
Slide 15: Upcoming Events
UPCOMING EVENTS Expected Earnings Other Investor Release Dates Events • Q4 2024 – February 14, 2025 • EEI Financial Conference – November 11-12, 2024 • Q1 2025 – May 7, 2025 • Wells Fargo Midstream, Energy & Utilities Symposium – December 11, 2024 • CIBC Western Institutional Investor Conference – J
Slide 16: Q3 2024 Earnings Conference Call
Q3 2024 EARNINGS CONFERENCE CALL November 5, 2024
Slide 17: Non-U.S. GAAP Reconciliation
NON-U.S. GAAP RECONCILIATION YTD Sept. YTD Sept. ($MILLIONS, EXCEPT EPS) Q3 2024 Q3 2023 VARIANCE 2024 2023 VARIANCE Adjusted Net Earnings Net Earnings 420 394 26 1,210 1,125 85 Adjusting items: Unrealized loss on mark-to-market of derivatives at Aitken Creek(1) - 8 (8) - 18 (18) Revaluation of defe
Slide 18: Third Quarter Results by Segment
THIRD QUARTER RESULTS BY SEGMENT Third Quarter Earnings Variance Analysis by Business Unit ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES ADJUSTED ADJUSTED Q3 2024 ADJUSTMENT (1) Q3 2023 ADJUSTMENT (1) VARIANCE AND EPS) Q3 2024 Q3 2023 Regulated – Independent Electric Transmission ITC 138 - 138 119 9 12
Slide 19: Year-to-Date September Results by Segment
YEAR-TO-DATE SEPTEMBER RESULTS BY SEGMENT Year-to-Date September Earnings Variance Analysis by Business Unit ADJUSTED ADJUSTED ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES YTD SEPT. YTD SEPT. ADJUSTMENT YTD SEPT. ADJUSTMENT YTD SEPT. VARIANCE AND EPS) 2024 (1) 2023 (1) 2024 2023 Regulated – Independen
Slide 20: 2025-2029 Capital Plan by Business Unit
2025-2029 CAPITAL PLAN BY BUSINESS UNIT Capital Plan 2025-2029 ($MILLIONS) 2025F 2026F 2027F 2028F 2029F TOTAL Regulated – Independent Electric Transmission ITC 1,403 1,488 1,523 1,600 1,573 7,587 Regulated – U.S. Electric & Gas UNS Energy 1,276 1,087 1,201 1,138 581 5,283 Central Hudson 462 480 440
Slide 21: Major Capital Projects
MAJOR CAPITAL PROJECTS 2025- Estimated Completion ($ Millions) 2024F 2029F Date Major Capital ITC MISO LRTP(1) 27 1,739 Post-2029 Projects 23% UNS IRP Related Generation(2) - 1,621 Various UNS Roadrunner Reserve Battery Storage Project 1 313 23 2025 UNS Roadrunner Reserve Battery Storage Project 2 U
Slide 22: 2024-2029 Rate Base by Business Unit
2024-2029 RATE BASE BY BUSINESS UNIT Rate Base 5-YEAR CAGR to ($BILLIONS, EXCEPT FOR CAGR) 2024F 2025F 2026F 2027F 2028F 2029F 2029 Regulated – Independent Electric Transmission ITC(1) 12.3 12.8 13.9 14.8 15.7 16.5 7.0% Regulated – U.S. Electric & Gas (2) UNS Energy 7.6 7.7 8.3 8.8 9.8 10.7 6.7% Cen
Slide 23: Sensitivity Exposure
SENSITIVITY EXPOSURE Foreign Exchange • Assumed forecast USD:CAD FX rate of 1.30 for 2025-2029 • 65% of regulated earnings(1) / 60% of capital plan in USD at U.S. & Caribbean utilities • +/- $0.05 change in USD:CAD ▪ EPS: ~$0.06 ▪ Five-year capital plan: $600M ROE & Equity Ratio ROE Equity +/- 25 bp
Slide 24: Ongoing Regulatory Proceedings
ONGOING REGULATORY PROCEEDINGS MISO Base ROE In 2022, the U.S. Court of Appeals for the D.C. Circuit vacated certain FERC orders that established the methodology used to calculate the MISO base ROE; matter dates back to complaints filed at FERC in 2013 and 2015; D.C. Circuit noted FERC did not adequ
Slide 25: Sustainability Leadership
SUSTAINABILITY LEADERSHIP Climate and Innovation Community and Indigenous Relations • 2050 net-zero direct emissions goal with interim targets to reduce GHG emissions • Building on our strong record of mutually beneficial partnerships with 50% by 2030 and 75% by 2035 Indigenous peoples • Progress: M
Slide 26: Q3 2024 Sales Trends
Q3 2024 SALES TRENDS CHANGE IN Q3 2024 vs. Q3 2023 RETAIL ENERGY SALES TRENDS SALES • Peak load down 3% primarily due to cooler weather and decreased N/A economic activity (1) • Decrease primarily due to lower air conditioning load associated with -1% milder temperatures; absent weather impacts, ret
Slide 27: Debt Maturities & Preference Share Dividends
DEBT MATURITIES & PREFERENCE SHARE DIVIDENDS Debt Maturities Preference Share Dividend Rate Resets & Conversions 10-Year Debt Maturities 2024 $2.5 $2.0 billions $1.5 Series M - $600M December 1, 2024(2) $1.0 $0.5 Series H - $192M Series I - $58M $- June 1, 2025 2025F 2026F 2027F 2028F 2029F 2030F 20
Slide 28: Strong Investment-Grade Credit Ratings
STRONG INVESTMENT-GRADE CREDIT RATINGS (1) Company Fortis Inc. A-(2) Baa3 A (low) ITC Holdings Corp. A-(2) 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 Po
Slide 29: Glossary
GLOSSARY ACC Arizona Corporation Commission GHG greenhouse gas AMI Advanced Metering Infrastructure GWh Gigawatt hours ATM At-the-market equity program IRP Integrated Resource Plan AUC Alberta Utilities Commission IT Information technology BC British Columbia ITC Investment Holdings Inc., an indirec