FTS — Fortis Inc.

Fortis Inc. Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Reported Earnings: $409 million or $0.81 per share for Q3 2025; year-to-date earnings of $1.3 billion or $2.57 per share.
• Adjusted Earnings: Q3 adjusted EPS was $0.87, up $0.02 year-over-year; year-to-date adjusted EPS was $2.63, up $0.18.
• Investment: Utilities invested $4.2 billion year-to-date, with a full-year expectation of $5.6 billion.
• Dividend: A fourth-quarter dividend of $0.64 was declared, representing a 4.1% increase, marking 52 consecutive years of dividend increases.

2. Strategic Updates and Business Highlights

• Asset Sales: Completed the sale of FortisTCI and assets in Belize, transitioning to a 100% regulated asset portfolio, which strengthens the balance sheet and reduces risk.
• 5-Year Capital Plan: Announced a new capital plan of $28.8 billion, up $2.8 billion from the previous plan, supporting a rate base growth of 7% and annual dividend growth of 4% to 6% through 2030.
• Investment Focus: Emphasis on transmission and distribution investments, with 77% of the capital plan directed towards these areas, primarily driven by ITC and UNS Energy projects.

3. Forward Guidance and Outlook

• Rate Base Growth: Expected to increase from approximately $42 billion in 2025 to $58 billion by 2030, supporting average annual growth of 7%.
• Future Opportunities: Potential incremental investments of $1.5 billion to $2 billion in Arizona's generation capacity and $300 million for LNG storage expansion in British Columbia, contingent on customer agreements and regulatory approvals.
• Dividend Growth: Continued guidance for 4% to 6% annual dividend growth through 2030.

4. Bad News, Challenges, or Points of Concern

• Regulatory Lag: UNS Energy faces regulatory lag with over $700 million of rate base not yet reflected in rates, impacting earnings.
• Operational Risks: Challenges in securing agreements with customers for new generation projects and navigating regulatory processes could delay potential growth.
• Market Conditions: The company is cautious about future asset sales and market conditions, indicating a lack of immediate plans for further divestitures after recent sales.

5. Notable Q&A Insights

• Funding Plan: The funding strategy remains focused on cash from operations and utility debt, with no immediate plans for further hybrid issuances unless new growth opportunities arise.
• Large Load Growth: There is optimism around data center demand, but the timing for new connections and generation resources remains uncertain due to permitting and infrastructure challenges.
• Customer Affordability: Management emphasized the importance of structuring agreements with large customers to ensure that growth does not negatively impact overall customer rates.
• Regulatory Approvals: Upcoming regulatory approvals, particularly for Arizona's energy supply agreements, are critical for future growth and capital investments.

Overall, Fortis Inc. reported solid financial results and outlined a robust capital plan while navigating challenges related to regulatory processes and market conditions. The focus remains on maintaining customer affordability and executing a disciplined growth strategy.