FTS — Fortis Inc.

Summary of Fortis Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Q4 2025 Earnings: Reported earnings per common share (EPS) were $0.83, up $0.04 year-over-year. Adjusted EPS rose by $0.07 compared to Q4 2024.
• Annual Earnings: Reported EPS for 2025 was $3.40, an increase of $0.16 from 2024. Adjusted EPS was $3.53, up $0.25 year-over-year.
• Capital Investments: Fortis invested $5.6 billion in capital during 2025, contributing to strong rate base and earnings growth.
• Dividends: Increased by 4% in 2025, marking 52 consecutive years of dividend growth.
• Total Shareholder Return: 1-year total shareholder return was nearly 24%, with a 20-year average annual return of approximately 10%.

2. Strategic Updates and Business Highlights:

• Leadership Transition: Linda Apsey, CEO of ITC, will retire, with Krista Tanner set to succeed her.
• Capital Plan: Launched a $28.8 billion 5-year capital plan focusing on regulated investments, primarily in transmission and distribution assets, expecting a rate base growth of $16 billion (7% annually).
• Safety and Reliability: 2025 was noted as one of the best years for safety and reliability, exceeding industry averages.
• Climate Resiliency: Released a climate resiliency report outlining strategies to address climate risks.
• Innovative Practices: Implementing AI and grid-enhancing technologies to manage costs and improve reliability.

3. Forward Guidance and Outlook:

• Dividend Growth: Committed to 4% to 6% annual dividend growth through 2030.
• Rate Base Growth: Anticipated average annual rate base growth of 7% over the next five years.
• Incremental Growth Opportunities: Focus on customer connections and projects in the MISO region, as well as potential expansions in Arizona.

4. Bad News, Challenges, or Points of Concern:

• Regulatory Lag: Lower earnings at UNS Energy due to regulatory lag on over $700 million of rate base not yet included in rates.
• Weather Impact: Milder weather affected retail sales and earnings at UNS Energy.
• Dispositions: Losses from the sale of investments in Belize and Turks and Caicos impacted earnings by $0.13 per share.
• Pending Regulatory Decisions: Uncertainty surrounding upcoming decisions from the Arizona Corporation Commission regarding rate applications and formula mechanisms.

5. Notable Q&A Insights:

• Data Center Contracts: Management expressed confidence in the Arizona data center agreements, emphasizing their structure supports customer affordability and cost recovery.
• Regulatory Developments: Discussion on the Arizona rate cases highlighted ongoing negotiations and the potential for improved regulatory mechanisms, with expectations for clarity from upcoming ACC meetings.
• FERC Updates: Optimism regarding potential movement on FERC matters under new leadership, although no specific updates were available.
• Customer Affordability: Management acknowledged the heightened focus on affordability across jurisdictions and emphasized their commitment to addressing these concerns responsibly.

Overall, Fortis Inc. reported solid financial performance in 2025, with strategic investments and a focus on reliability and safety, while navigating regulatory challenges and external pressures.