Slide 1: Q2 2023 Earnings Conference Call
Q2 2023 Earnings Conference Call August 2, 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: Q2 Business Highlights
Q2 BUSINESS HIGHLIGHTS Safe & YTD June Capital EPS Reliable Service Expenditures of $2.0B Growth 2023 Sustainability Regulatory Proceedings Sale of Aitken Creek on Update Report Released Progressing Track to Close in 2023 44
Slide 5: Released 2023 Sustainability Update Report
RELEASED 2023 SUSTAINABILITY UPDATE REPORT Highlights • 29% reduction in Scope 1 greenhouse gas (GHG) emissions through 2022 compared to 2019 levels • Completed limited third-party assurance on select 2022 GHG emissions data and board diversity metrics • Achieved Board of Directors diversity targets
Slide 6: 2023 Capital Plan on Track
2023 CAPITAL PLAN ON TRACK HIGHLY EXECUTABLE CAPITAL PLAN SUPPORTS LOW-RISK RATE BASE GROWTH OF ~6% Capital Plan Rate Base 2023 Capital Plan on Track $46.1B $34.1B $22.3B Capital Plan 2023-2027 $5.9B Cleaner Energy Investments(1) Transmission Renewable energy(2) Transmission supporting cleaner energ
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: Second Quarter Results
SECOND QUARTER RESULTS Reported EPS Adjusted EPS Q2 Adjusted EPS Drivers $0.62 • Rate base growth $0.61 $0.59 $0.57 • Timing of operating expenses at Central Hudson and FortisAlberta • Higher margins on gas sold at Aitken Creek Q2 2022 Q2 2023 Q2 2022 Q2 2023 • Milder weather in Arizona and timing o
Slide 10: Second Quarter 2023 EPS Drivers
SECOND QUARTER 2023 EPS DRIVERS $0.02 $0.01 ($0.01) ($0.02) $0.02 ($0.01) $0.02 $0.02 $0.62 $0.57 Q2 2023 Adjusted EPS $0.05 Q2 2022 Western Other Energy U.S. U.S. Electric Corporate & Foreign Weighted Q2 2023 Adjusted Canadian Electric Infrastructure Transmission & Gas (3) Other Exchange(4) Average
Slide 11: Year-to-Date June 2023 EPS Drivers
YEAR-TO-DATE JUNE 2023 EPS DRIVERS $0.02 ($0.04) $0.05 ($0.02) $0.03 $0.03 $0.04 $1.53 $0.08 $1.34 YTD June 2023 Adjusted EPS $0.19 YTD June 2022 U.S. Electric Western U.S. Energy Other Corporate & Foreign Weighted YTD June 2023 (2) (4) Adjusted & Gas Canadian Transmission Infrastructure Electric Ot
Slide 12: Liquidity & Credit Ratings
LIQUIDITY & CREDIT RATINGS Active in Debt Credit Credit Markets Facilities Ratings • ~$1.9B in long-term debt raised YTD June A-(3) • ITC ▪ US$800M notes(1) $4.3B Baa3 • UNS Energy ▪ US$375M 30-year 5.50% notes A (low) • FortisAlberta $1.7B ▪ $200M 30-year 4.86% debentures June 30, 2023 • Central Hu
Slide 13: Q2 Regulatory Highlights
Q2 REGULATORY HIGHLIGHTS TEP ACC Rate Case – Administrative Law Judge issued a recommended opinion and order in TEP’s general rate application in July 2023, recommending a non-fuel revenue increase of US$102M, an allowed ROE of 9.4% and 54.32% common equity ratio, with new rates on or after Septembe
Slide 14: Why Invest in Fortis?
WHY INVEST IN FORTIS? WHY INVEST IN FORTIS? Focused on Geographic & 4-6% SAFE, ENERGY Regulatory ANNUAL DIVIDEND WELL-RUN DELIVERY DIVERSITY Growth Guidance Local Utilities LOW-RISK Virtually ESG Growth All Innovative REGULATED Leadership Profile 14
Slide 15: Upcoming Events
UPCOMING EVENTS Expected Earnings Release Dates Save the Date • Q3 2023 – October 27, 2023 • Investor Day – September 19, 2023 (Event hosted in St. John’s, NL with webcast) • Q4 2023 – February 9, 2024 15
Slide 16: Q2 2023 Earnings Conference Call
Q2 2023 Earnings Conference Call August 2, 2023
Slide 17: Non-U.S. GAAP Reconciliation
NON-U.S. GAAP RECONCILIATION YTD June YTD June ($MILLIONS, EXCEPT EPS) Q2 2023 Q2 2022 VARIANCE VARIANCE 2023 2022 Adjusted Net Earnings Net Earnings 294 284 10 731 634 97 Adjusting Item: Unrealized loss (gain) on mark-to-market of derivatives(1) 8 (12) 20 10 7 3 Adjusted Net Earnings 302 272 30 741
Slide 18: Second Quarter Results by Business Unit
SECOND QUARTER RESULTS BY BUSINESS UNIT Second Quarter Earnings Variance Analysis by Business Unit ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES ADJUSTED ADJUSTED Q2 2023 ADJUSTMENT (1) Q2 2022 ADJUSTMENT (1) VARIANCE AND EPS) Q2 2023 Q2 2022 Regulated – Independent Electric Transmission ITC 127 - 127
Slide 19: YTD June Results by Business Unit
YTD JUNE RESULTS BY BUSINESS UNIT Year-To-Date June Earnings Variance Analysis by Business Unit ADJUSTED ADJUSTED ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES YTD June YTD June ADJUSTMENT YTD June ADJUSTMENT YTD June VARIANCE AND EPS) 2023 (1) 2022 (1) 2023 2022 Regulated – Independent Electric Transm
Slide 20: 2022-2027 Rate Base by Business Unit
2022-2027 RATE BASE BY BUSINESS UNIT Rate Base 5-YEAR CAGR to ($BILLIONS, EXCEPT FOR CAGR) 2022A 2023F 2024F 2025F 2026F 2027F 2027 Regulated – Independent Electric Transmission ITC(1) 10.5 11.1 11.9 12.5 13.2 14.1 6.1% Regulated – U.S. Electric & Gas UNS Energy 6.7 7.0 7.4 7.8 8.5 9.1 6.3% Central
Slide 21: 2023-2027 Capital Plan by Business Unit
2023-2027 CAPITAL PLAN BY BUSINESS UNIT Capital Plan(1) 2023-2027 ($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 22: 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 23: 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 24: Q2 Sales Trends
Q2 SALES TRENDS CHANGE IN RETAIL Q2 2023 vs. Q2 2022 ELECTRIC SALES TRENDS SALES • Peak load down 9% due to milder weather and N/A economic conditions • Decrease primarily due to lower air conditioning load -7% associated with milder temperatures; excluding (1) weather impacts, retail sales were fla
Slide 25: 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 June 30, 2023 and excludes any new debt issuances during the forecast period. Excludes repayments of finance lease
Slide 26: 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