Fortis Inc. · TSX:FTS
Fortis — Q3 2019 Earnings Presentation
27 slides from Fortis's earnings presentation, Nov 1, 2019
Slide 1: Working Together, Powering Growth
WORKING TOGETHER POWERING GROWTH Third Quarter 2019 Earnings Conference Call November 1, 2019
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: Barry Perry, President & CEO
BARRY PERRY FORTIS INC. PRESIDENT & CEO
Slide 4: Third Quarter Business Highlights
THIRD QUARTER BUSINESS HIGHLIGHTS Q3 Earnings Aligned With Expectations Invested $2.6B in Capital Through September Q4 2019 Dividend Increased 6.1% 2019 Investor Day Held in Novi, MI 4
Slide 5: Delivering Energy as Clean as We Can, as Fast as We Can
DELIVERING ENERGY AS CLEAN AS WE CAN, AS FAST AS WE CAN Connecting First Nations to Cleaner Energy 20MW Utility-Scale -------------------------------------------------------------------------- Battery Storage Project Financial Close and Notice to Proceed Issued in October 2019 Approved TEP Approachi
Slide 6: FortisBC's Clean Growth Pathway
FORTISBC’s CLEAN GROWTH PATHWAY Energy Efficiency Renewable LNG Bunkering Zero & Low-Carbon Natural Gas Transportation Positioning BC as a Conservation & Efficiency Currently Operate Five Domestic & International FortisBC Will Operate 19 Programs Increased to RNG Facilities(1) Bunkering Hub Charging
Slide 7: Our New Five-Year Plan
OUR NEW FIVE-YEAR PLAN $18.3B ~7% ~6% CAPITAL RATE BASE DIVIDEND PLAN GROWTH GROWTH GUIDANCE 7
Slide 8: Low Risk, Highly Executable $18.3B Capital Plan
LOW RISK, HIGHLY EXECUTABLE $18.3B CAPITAL PLAN Regulated 99% Smaller Projects 80% U.S. 54% Canada 41% Non-Regulated 1% Major Projects(1) 20% Caribbean 5% (1) Capital projects with a total project cost of $200 million or greater and excludes ongoing capital maintenance projects. 8
Slide 9: 2020-2024 Rate Base: $10B to $38.4B
2020-2024 RATE BASE (1) $38.4 $36.8 $34.5 $30.7 $32.5 Rate base grows over $10B $28.0 to $38.4B during 5-year period 2019F 2020F 2021F 2022F 2023F 2024F Regulated - Canadian & Caribbean Electric & Gas Regulated - U.S. Electric & Gas Regulated - Independent Electric Transmission (ITC) (1) Rate base i
Slide 10: Dividend Guidance Supported by Growth Strategy
DIVIDEND GUIDANCE SUPPORTED BY GROWTH STRATEGY $2.5 6% 46 YEARS $2.0 AVERAGE ANNUAL OF CONSECUTIVE $1.5 DIVIDEND DIVIDEND INCREASES GROWTH GUIDANCE $1.0 EXTENDED TO 2024 $0.5 7273 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20F 22F 24F Dividend Payments Forecast Dividend Pay
Slide 11: Jocelyn Perry, EVP & CFO
JOCELYN PERRY FORTIS INC. EVP & CFO
Slide 12: Third Quarter Results
THIRD QUARTER RESULTS Reported EPS $3.02 Q3 Reflects Rate Base Growth Tempered by $1.98 Lower Rainfall in Belize $0.65 $0.64 YTD Results Impacted by Weather at UNS in Q2 and Q3 2018 Q3 2019 YTD 2018 YTD 2019 Drought Conditions in Belize Adjusted EPS(1) $1.95 $1.93 $484M Net Gain $0.65 $0.66 Recogniz
Slide 13: EPS Drivers: Third Quarter
EPS DRIVERS: THIRD QUARTER Includes weather- related impacts of ($0.01) $0.01 ($0.01) Increase in Quarterly $0.02 ($0.01) EPS Tempered by $0.66 Weather And Higher $0.65 Common Shares UNS Weather in Q3 Comparable to 2018 Q3 2018 U.S. Transmission UNS Energy Energy Corporate & Q3 2019 (1) (2) (3) (1)
Slide 14: EPS Drivers: September Year-to-Date
EPS DRIVERS: SEPTEMBER YEAR-TO-DATE Includes weather- related impacts of ($0.07) $0.01 $0.01 ($0.06) $0.04 $0.05 ($0.05) ($0.02) $1.95 $1.93 Q3 YTD 2018 U.S. Transmission Foreign Central Western Canadian Energy UNS Corporate & Q3 YTD 2019 (1) (2) (3) (4) (5) (6) (1) Adjusted EPS (ITC) Exchange Hudso
Slide 15: Current Regulatory Outlook
CURRENT REGULATORY OUTLOOK • Final decision pending from FERC on MISO Base ROE • TEP rate case filed with the ACC on April 1, 2019 using a December 31, 2018 test year • Notices of Inquiry issued by FERC in 2019 on incentive policies for transmission investment and • Requested 10.35% ROE & 53% equity
Slide 16: Strengthening Credit Metrics
STRENGTHENING CREDIT METRICS FUNDING PLAN Cash From Operations(1) RECOVERING FROM U.S. TAX REFORM 73% 2018 2019F CFO/Debt(4) ~10.5% ~11% 5-Year Holdco Debt/Total Debt (4) ~39% ~36% Capital Plan of $18.3B Debt(2) 2020-2024 Business Plan 24% Average CFO/Debt(4) ~12% 2024 Holdco Debt/Total Debt(4) ~32%
Slide 17: Why Invest in Fortis?
WHY INVEST IN FORTIS? WELL-RUN HIGHLY FOCUSED ON STRONG VIRTUALLY SUSTAINABILITY 6% INNOVATIVE BUSINESSES DIVERSIFIED ENERGY GROWTH ALL LEADER DIVIDEND DELIVERY PROFILE REGULATED GUIDANCE 17
Slide 18: Expected Upcoming Events
EXPECTED UPCOMING EVENTS Upcoming Events EEI – 54th Financial Conference November 10-12, 2019 Expected Earnings Release Dates Q4 2019 February 13, 2020 Q1 2020 May 6, 2020 18
Slide 19: Working Together, Powering Growth
WORKING TOGETHER POWERING GROWTH Third Quarter 2019 Earnings Conference Call November 1, 2019
Slide 20: Appendix
WORKING TOGETHER POWERING GROWTH Appendix
Slide 21: Q3 2019 Results by Segment
Q3 2019 RESULTS BY SEGMENT Third Quarter Variance Analysis by Segment ($millions, excluding weighted Adjusted Adjusted Adjusted Q3 2019 Adjustment (1) Q3 2018 Adjustment (1) average shares and EPS) Q3 2019 Q3 2018 Q3 Variance Regulated – Independent Electric Transmission ITC 107 - 107 97 - 97 10 Reg
Slide 22: September Year to Date 2019 Results by Segment
SEPTEMBER YEAR TO DATE 2019 RESULTS BY SEGMENT September YTD Variance Analysis by Segment Adjusted Adjusted Adjusted ($millions, excluding weighted September September Adjustment September Adjustment September September average shares and EPS) YTD 2019 (1) YTD 2018 (1) YTD 2019 YTD 2018 YTD Variance
Slide 23: Adjusted Earnings Reconciliation
ADJUSTED EARNINGS RECONCILIATION Non-US GAAP Reconciliation September September ($millions, except for common share data) Q3 2019 Q3 2018 Variance Variance YTD 2019 YTD 2018 Net Earnings Attributable to Common Equity Shareholders 278 276 2 1,309 839 470 Adjusting Items: Unrealized loss on mark-to-ma
Slide 24: 2019-2024 Rate Base by Segment
2019-2024 RATE BASE BY SEGMENT (1) Rate Base 3-Year CAGR 5-Year CAGR ($billions) 2019F 2020F 2021F 2022F 2023F 2024F to 2022 to 2024 Regulated - Independent Electric Transmission (2) ITC 8.8 9.5 10.2 10.8 11.4 12.0 7.2% 6.4% Regulated - US Electric & Gas UNS Energy 5.0 5.8 6.1 6.4 6.8 6.9 8.6% 6.5%
Slide 25: 2020-2024 Capital Plan by Segment
2020-2024 CAPITAL PLAN BY SEGMENT Capital Forecast(1) 2020-2024 ($millions) 2020F 2021F 2022F 2023F 2024F TOTAL Regulated - Independent Electric Transmission ITC 976 987 1,043 1,018 922 4,946 Regulated - US Electric & Gas UNS Energy 1,160 677 575 526 441 3,379 Central Hudson 292 309 359 306 292 1,55
Slide 26: Major Capital Projects
MAJOR CAPITAL PROJECTS(1) Expected to be Total 2020- Expected Year of ($Millions) Incurred to the 2024 Plan Completion End of 2019 ITC Multi-Value Regional Transmission Projects 646(2) 276 2023 ITC 34.5 kV to 69 kV Transmission Conversion Project 345(2) 268 Post-2024 UNS Southline Transmission Proje
Slide 27: Regulated Utilities Have Strong Investment-Grade Credit Ratings
REGULATED UTILITIES HAVE STRONG INVESTMENT-GRADE CREDIT RATINGS Company ITC Regulated Subsidiaries A A1 n/a TEP A- A3 n/a Central Hudson A- A3 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 A 27