Fortis Inc. Q3 FY2025 earnings call

• David Hutchens highlighted a solid quarter with strong execution, $4.2 billion invested through September, full-year expected investment of ~$5.6 billion. Completed sale of FortisTCI and Belize assets, unveiled a $28.8 billion 5-year capital plan up $2.8 billion, with 7% rate base growth and 4%-6% annual dividend growth through 2030. Emphasized capital investments for customer affordability, including coal to natural gas conversion at Springerville Generating Station.
• Jocelyn Perry discussed Q3 financial results, adjusted EPS ($0.87 for Q3, up $0.02 from prior year), impact of asset sales and exchange rate, debt issuance ($2 billion raised, including hybrid issuance), and regulatory approvals for Central Hudson's 3-year rate plan.

For the third quarter, adjusted earnings per share was $0.87. The company's segments include ITC with a $9.8 billion capital plan supporting 8% rate base growth, UNS Energy with a $5.6 billion plan supporting ~7% rate base growth (transmission, generation, and distribution investments), and FortisBC with a $4.9 billion plan focusing on system reliability, LNG, and advanced metering infrastructure. Reported earnings for the quarter were $409 million or $0.81 per common share, and year-to-date reported earnings were $1.3 billion or $2.57 per common share. The sale of FortisTCI and Belize assets strengthened the balance sheet, and the company now has 100% regulated assets.

The company announced a new $28.8 billion 5-year capital plan, up $2.8 billion, supporting 7% rate base growth and 4%-6% annual dividend growth through 2030. ITC's capital plan of $9.8 billion supports 8% rate base growth. UNS Energy's $5.6 billion plan supports ~7% rate base growth. FortisBC's $4.9 billion plan focuses on system reliability, LNG, and advanced metering infrastructure. The board declared a 4.1% increase in the fourth quarter dividend.

• Uncertainty in finalizing agreements for generation and transmission projects related to data centers and LNG expansions. Regulatory approvals, such as environmental assessments for BC projects, are still pending. Execution of additional opportunities above the base plan involves multiple steps including customer agreements and regulatory processes.

Q: Maurice Choy asked about the timing and likelihood of opportunities over and above the base plan, and thoughts on further asset sales.

A: David Hutchens said there are many steps between current state and finalizing projects, like getting counterparty agreements, regulatory approvals. Funding plan is focused on executing the 5-year capital plan and additional opportunities, with DRIP as the main equity source.

Q: Robert Hope inquired about the timing of generation in Arizona and sanctioning of ITC load growth.

A: David Hutchens and Linda Blair mentioned ongoing conversations with customers, ongoing planning studies, but premature to speculate on exact timelines, with activity growing but not definitive timelines.

Q: Ben Pham asked about EPS CAGR initiation and asset sale trends.

A: David Hutchens said they're waiting for outcomes like Tucson Electric Power rate case for more earnings visibility; asset sales were past transactions, portfolio is strong with 100% regulated assets now.

Q: Mark Jarvi discussed data center approvals and funding.

A: David Hutchens and Susan Gray talked about Corporation Commission approval needed for Arizona projects, water permits for data centers, and need to analyze grid impact and resource mix for additional load.

Q: John Mould asked about ITC load connection pacing and Arizona IRP timing.

A: David Hutchens and Linda Blair said load connection requests are varied, majority looking at later years of the 5-year plan; IRP filing in August 2026, with ongoing adjustments for additional load.

Q: Patrick Kenny asked about BC/Alberta growth and funding cushion.

A: David Hutchens mentioned Okanagan opportunities in BC, political tailwinds for LNG investments; Jocelyn Perry said the 5-year average cash flow to debt ratio is 12.4%, providing dry powder for additional projects and Canadian dollar weakness.