FTS — Fortis Inc.

Fortis Inc. Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

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

2. Strategic Updates and Business Highlights

• Leadership Transition: Linda Apsey, CEO of ITC, will retire, with Krista Tanner succeeding her.
• Capital Plan: Launched a $28.8 billion 5-year capital plan focused on regulated investments, expecting a $16 billion increase in rate base and 7% average annual rate base growth.
• Climate Resiliency: Released a 2026 climate resiliency report detailing responses to climate risks.
• Operational Efficiency: Implemented innovative technologies to manage costs effectively, keeping controllable operating costs at or below inflation.
• Regulatory Achievements: Recognized for governance excellence and strong safety and reliability metrics.

3. Forward Guidance and Outlook

• Dividend Growth: Committed to 4% to 6% annual dividend growth through 2030.
• Rate Base Growth: Anticipates a 7% increase in rate base driven by the new capital plan.
• Arizona Growth: Expected to ramp up energy supply agreements for data centers, with initial phases starting in 2027.

4. Bad News, Challenges, or Points of Concern

• Regulatory Lag: Lower earnings at UNS Energy due to regulatory lag and milder weather impacting retail sales.
• Dispositions Impact: Losses from the disposition of investments in Belize and Turks and Caicos affected reported EPS.
• Cost Pressures: Ongoing cost and supply chain pressures, although controllable costs have been managed effectively.
• Regulatory Uncertainty: Pending regulatory decisions in Arizona regarding formula rates and potential impacts from the Attorney General's comments on the data center agreements.

5. Notable Q&A Insights

• Data Center Agreements: Management expressed confidence in the Arizona data center agreements, emphasizing affordability and cost recovery mechanisms. They are actively engaging with stakeholders to clarify any misconceptions.
• Regulatory Developments: Discussions around the Arizona Corporation Commission's (ACC) upcoming decisions on rate applications and formula mechanisms, with expectations for clarity in the near term.
• ITC Regulatory Matters: Optimism regarding potential movement on FERC matters under new leadership, though no specific updates were provided.
• Integrated Resource Plan (IRP): Fortis is engaged in early discussions on the IRP process in Arizona, which could lead to additional generation and transmission investments.

Overall, Fortis Inc. reported strong financial results and strategic initiatives while navigating regulatory challenges and market pressures. The company remains focused on growth and operational efficiency, with a positive outlook for shareholder returns and dividend growth.