Core Viewpoint - Fortis Inc. will release its third quarter 2025 financial results and a new five-year capital outlook for 2026-2030 on November 4, 2025, with a teleconference scheduled for the same day [1] Group 1: Financial Results and Outlook - The teleconference will feature discussions led by David Hutchens, President and CEO, and Jocelyn Perry, Executive Vice President and CFO, regarding the third quarter financial results and the five-year capital outlook [1] - Fortis reported a revenue of $12 billion for 2024 and total assets of $73 billion as of June 30, 2025 [5] Group 2: Participation Details - Shareholders, analysts, and media can listen to the teleconference via a live webcast on the company's website [2] - North American participants can join the call toll-free at 1.833.821.0229, while international participants can call 1.647.846.2371, with a recommendation to dial in 10 minutes prior to the start [3] - A live and archived audio webcast will be available on the company's website, with a replay accessible two hours after the call until December 4, 2025 [4]

Core Viewpoint - A revival of "That '70s Show" is anticipated, but it may not meet the entertainment standards of the original series [1] Group 1 - The revival is expected to attract fans of the original show, indicating a potential market interest [1] - Concerns are raised regarding the quality and entertainment value of the new series compared to the original [1]

Core Points - Fortis Inc. has successfully closed a private placement offering of $750 million in subordinated notes with a fixed interest rate of 5.100% due on December 4, 2055 [2] - The offering was facilitated by a syndicate of agents, including major financial institutions such as BMO Nesbitt Burns Inc. and Scotia Capital Inc. [2] - Fortis is a leading player in the North American regulated electric and gas utility sector, reporting revenues of $12 billion and total assets of $73 billion as of June 30, 2025 [4] Company Overview - Fortis operates in five Canadian provinces, ten U.S. states, and the Caribbean, employing approximately 9,700 individuals [4] - The company's shares are publicly traded on the Toronto Stock Exchange under the symbol FTS [4]

Economic Overview - U.S. consumer confidence dropped to 97.4 in August from 98.7 in July, indicating a decline of 1.3 points, with short-term expectations for income, business conditions, and employment also falling to 74.8 [4][5] - Concerns about the economy have been exacerbated by tariffs imposed by President Trump, which have raised inflation fears and impacted consumer confidence [5][6] - A weak labor market, characterized by slow job additions, has further fueled recession fears, despite low layoffs and unemployment rates [7] Investment Recommendations - Given the economic uncertainty, it is advisable to invest in low-beta defensive stocks from the utility and consumer staples sectors, which include Atmos Energy Corporation (ATO), Fortis, Inc. (FTS), Northwest Natural Holding Company (NWN), Ingredion Incorporated (INGR), and Carriage Services, Inc. (CSV) [2][10] - These stocks are characterized by a beta greater than 0 but less than 1, indicating lower volatility, and they also offer high dividend yields [3] Company Profiles - **Atmos Energy Corporation (ATO)**: Engaged in regulated natural gas distribution and storage, serving approximately 3.3 million customers across eight states. Expected earnings growth rate is 7.2% for the current year, with a beta of 0.75 and a dividend yield of 2.09% [8][9] - **Fortis, Inc. (FTS)**: Operates in the electric and gas utility sector, primarily in Canada and the Caribbean. Expected earnings growth rate is 4.6% for the current year, with a beta of 0.48 and a dividend yield of 3.57% [10][11] - **Northwest Natural Holding Company (NWN)**: Focuses on natural gas distribution systems and pipeline projects, serving residential, commercial, and industrial customers. Expected earnings growth rate is 25.3% for the current year, with a beta of 0.59 and a dividend yield of 4.72% [12][13] - **Ingredion Incorporated (INGR)**: Provides ingredient solutions specializing in nature-based sweeteners and starches, serving various sectors. Expected earnings growth rate is 6.7% for the current year, with a beta of 0.77 and a dividend yield of 2.47% [14] - **Carriage Services, Inc. (CSV)**: A leading provider of death care services in the U.S., offering a range of funeral and burial services. Expected earnings growth rate is 23.4% for the current year, with a beta of 0.86 and a dividend yield of 1.03% [15][16]

Core Points - Fortis Inc. has announced a private placement offering of $750 million in 5.100% fixed-to-fixed rate subordinated notes due December 4, 2055 [1] - The offering is being conducted through a syndicate of agents and is expected to close on September 4, 2025 [1][2] - The net proceeds from the offering will be used to reduce borrowings under the corporation's revolving corporate credit facility and for general corporate purposes [2] - Fortis reported 2024 revenue of $12 billion and total assets of $73 billion as of June 30, 2025 [4] - The corporation serves utility customers across five Canadian provinces, ten U.S. states, and the Caribbean with a workforce of 9,700 employees [4]

Company Overview - ENGIE - Sponsored ADR (ENGIY) is part of the Utilities sector, which consists of 108 individual stocks and currently holds a Zacks Sector Rank of 3, indicating its relative strength among sector groups [2] - The Zacks Rank system identifies stocks with characteristics likely to outperform the market over the next one to three months, with ENGIE currently holding a Zacks Rank of 2 (Buy) [3] Performance Metrics - Over the past quarter, the Zacks Consensus Estimate for ENGIE's full-year earnings has increased by 5.7%, reflecting improved analyst sentiment and a stronger earnings outlook [4] - Year-to-date, ENGIE has returned approximately 40%, significantly outperforming the Utilities sector average return of 13.5% [4] - Within the Utility - Electric Power industry, which includes 59 stocks, ENGIE is also performing well, as this group has gained about 13.1% year-to-date [6] Comparative Analysis - Another Utilities stock, Fortis (FTS), has also outperformed the sector with a year-to-date increase of 22.1% and holds a Zacks Rank of 2 (Buy) [5] - Both ENGIE and Fortis are expected to continue their strong performance, making them noteworthy for investors interested in Utilities stocks [7]

Industry Overview - The Utility – Electric Power industry is transitioning to cleaner fuel sources and reducing carbon emissions, supported by government policies promoting sustainable power generation [1] - Utilities are investing in grid upgrades and improving transmission and distribution infrastructure to enhance resilience against severe weather events [1][3] - The industry is experiencing stable demand across economic cycles, with increased electricity consumption during extreme weather [3] Trends Impacting the Industry - Interest rates have declined from 5.25-5.50% to 4.25-4.50%, benefiting capital-intensive utilities by lowering borrowing costs for infrastructure investments [4] - Electricity production is projected to increase by 2.2% in 2025 and 2.3% in 2026, reaching 4,340 billion kilowatt-hours, driven by demand from commercial and industrial sectors [5] - The share of electricity generation from renewable sources is expected to rise from 23% in 2024 to 26% in 2026, aided by the Inflation Reduction Act [6] Company Highlights - CenterPoint Energy Inc. plans to invest $53 billion over the next 10 years to expand operations and meet rising electricity demand [19] - Fortis Inc. expects to invest $26 billion from 2025 to 2029, focusing on strengthening regulated electric and gas operations [23] - NiSource Inc. projects an investment of $19.4 billion for 2025-2029 to enhance its existing operations [27] Financial Performance and Valuation - The Utility Electric Power industry has gained 16.9% over the past 12 months, outperforming its sector's 14.2% increase but lagging behind the S&P 500's 22.7% gain [10] - The industry is currently trading at an EV/EBITDA of 14.37X, lower than the S&P 500's 17.02X and the Utility sector's 15.75X [13] - Long-term earnings growth estimates for CenterPoint Energy, Fortis, and NiSource are 7.8%, 5.13%, and 7.88% respectively, with respective dividend yields of 2.3%, 3.53%, and 2.58% [20][24][28]

Core Viewpoint - Fortis has demonstrated strong stock performance, with a 5.2% increase over the past month and a 20% gain since the beginning of the year, outperforming both the Zacks Utilities sector and the Zacks Utility - Electric Power industry [1][2]. Group 1: Stock Performance - Fortis shares reached a new 52-week high of $50.56 recently [1]. - The stock has consistently beaten earnings estimates, with the latest EPS reported at $0.55 against a consensus of $0.51 [2]. Group 2: Earnings Projections - For the current fiscal year, Fortis is projected to achieve earnings of $2.49 per share on revenues of $9.02 billion, reflecting a 4.18% increase in EPS and a 7.36% increase in revenues [3]. - The next fiscal year forecasts earnings of $2.58 per share on revenues of $9.34 billion, indicating year-over-year changes of 3.77% and 3.57%, respectively [3]. Group 3: Valuation Metrics - Fortis trades at 20 times the current fiscal year EPS estimates, which is above the peer industry average of 18.9 times [7]. - The stock's trailing cash flow multiple is 9.6 times, compared to the peer group's average of 8.1 times, and it has a PEG ratio of 3.91 [7]. Group 4: Zacks Rank and Style Scores - Fortis holds a Zacks Rank of 2 (Buy), supported by a positive earnings estimate revision trend [8]. - The stock has a Value Score of C, a Growth Score of B, and a Momentum Score of C, resulting in a combined VGM Score of B [6][8].

Group 1 - ENGIE - Sponsored ADR (ENGIY) is currently outperforming its peers in the Utilities sector with a year-to-date return of 42.1%, compared to the sector average of 11.5% [4] - The Zacks Rank for ENGIE is 2 (Buy), indicating a positive outlook based on earnings estimates and revisions, with a 4.2% increase in the consensus estimate for full-year earnings over the past three months [3] - The Utility - Electric Power industry, which includes ENGIE, has an average year-to-date return of 12%, showing that ENGIE is performing better than the industry average [6] Group 2 - Fortis (FTS) is another Utilities stock that has outperformed the sector with a year-to-date return of 17.8% and also holds a Zacks Rank of 2 (Buy) [4][5] - The Utilities sector is ranked 3 in the Zacks Sector Rank, which evaluates 16 different sector groups based on the average Zacks Rank of individual stocks [2] - Investors in the Utilities sector should monitor ENGIE and Fortis for their continued strong performance [7]

Financial Data and Key Metrics Changes - The company reported second quarter earnings per share (EPS) of $0.76, a $0.09 increase compared to the same period last year [5][13] - Year-to-date EPS was $1.76, reflecting a $0.16 increase over the same period last year [13] - Net earnings for the quarter were $384 million [13] - Capital expenditures for the first half of the year were nearly $3 billion [5][7] Business Line Data and Key Metrics Changes - Central Hudson contributed a $0.04 increase in EPS, driven by rate-based growth and a higher allowed return on equity (ROE) effective July 1, 2024 [14] - EPS at UNS Energy remained unchanged from the previous year, with increased transmission revenue offset by regulatory lag [14] - Western Canadian Utilities saw a $0.30 increase in EPS, primarily due to rate base growth [14] - EPS for Fortis Alberta was tempered by the expiration of a PVR efficiency mechanism and a lower allowed ROE of 8.97% effective January 1, 2025 [14] Market Data and Key Metrics Changes - Tucson Electric Power (TEP) filed a general rate application seeking new retail rates effective September 1, 2026, with a proposed rate base of $4.3 billion, an increase of approximately $750 million since the last rate case [20][21] - The company achieved a 34% reduction in Scope 1 greenhouse gas emissions compared to 2019 levels through 2024 [6] Company Strategy and Development Direction - The company is focused on delivering safe and reliable energy while advancing its growth strategy, with a projected rate base increase of approximately $14 billion to $53 billion by 2029, supporting average annual growth of 6.5% [7][8] - The company plans to convert approximately 800 megawatts of coal-fired generation at the Springerville generating station to natural gas by 2030, aiming to be coal-free by 2032 [9][10] - The company remains committed to annual dividend growth guidance of 4% to 6% through 2029 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong results for the first half of the year and progress on regulatory fronts, positioning the company well for the remainder of 2025 and beyond [23] - The company is preparing for its next integrated resource plan in Arizona, which will address changing load curves and resource needs [62] Other Important Information - Fitch assigned Fortis a first-time BBB+ credit rating, enhancing its credit profile and supporting cost-effective capital market funding options [19] - The company is pursuing various opportunities to support load growth and improve grid resilience [11] Q&A Session Summary Question: Regarding data center opportunity in Arizona - Management confirmed that the first 300 megawatts will utilize existing and planned capacity, with the second 300 megawatts expected to be in service by 2030 to 2031 [26][28] Question: Upside potential in Arizona and ITC - Management acknowledged significant upside potential in Arizona and ITC, with ongoing opportunities across the entire portfolio [29][30] Question: Springerville conversion costs - Management indicated that the costs of conversion are being evaluated in the context of the integrated resource plan, emphasizing affordability for customers [34][35] Question: Gas infrastructure outlook in BC - Management noted positive developments in LNG opportunities and ongoing regulatory processes for gas connections in BC [40][41] Question: Impact of recent legislation on Fortis - Management stated that while there are limited short-term impacts from recent legislation, longer-term implications on renewable energy and storage development will be assessed [50][54] Question: Need for interstate pipeline capacity into Arizona - Management confirmed discussions regarding gas supply for the Springerville repowering project, indicating a growing need for infrastructure in the long term [60][62]