Fortis(FTS) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) for Q3 2025 of CAD 0.87, an increase of CAD 0.02 compared to Q3 2024 [15] - Reported earnings for the quarter were CAD 409 million, or CAD 0.81 per common share, with year-to-date reported earnings of CAD 1.3 billion, or CAD 2.57 per common share [14] - Adjusted EPS for the year-to-date period was CAD 2.63, up CAD 0.18 compared to the same period last year [15] Business Line Data and Key Metrics Changes - U.S. Electric and Gas Utilities contributed a CAD 0.03 increase in EPS, driven by higher transmission revenue and AFUDC from major capital projects [15] - EPS for Western Canadian utilities increased by CAD 0.01, primarily due to rate-based growth, although tempered by regulatory changes [17] - ITC's continued capital investments and related rate-based growth increased EPS by CAD 0.02, despite higher stock-based compensation [16] Market Data and Key Metrics Changes - The company expects to invest approximately CAD 5.6 billion for the full year, with CAD 4.2 billion invested through September [3] - The new five-year capital plan totals CAD 28.8 billion, up CAD 2.8 billion from the previous plan, supporting a rate-based growth of 7% [4][6] - Consolidated rate base is projected to increase by CAD 16 billion from approximately CAD 42 billion in 2025 to CAD 58 billion in 2030 [6] Company Strategy and Development Direction - The company has shifted to a 100% regulated asset portfolio following the sale of Fortis TCI and investments in Belize [3] - The five-year capital plan emphasizes maintaining customer affordability and includes significant investments in transmission and distribution [4][5] - The company aims for annual dividend growth guidance of 4%-6% through 2030, with a recent dividend increase of approximately 4% [4][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the execution of the capital plan and the potential for additional growth opportunities beyond the base plan [12][21] - The company is focused on safety, reliability, affordability, and cleaner energy delivery for customers [21] - Management acknowledged the challenges in securing agreements and regulatory approvals for new projects but remains optimistic about future growth [25][26] Other Important Information - The company raised over CAD 2 billion in debt, including a hybrid issuance of CAD 750 million at 5.1% [19] - The New York State Public Service Commission approved Central Hudson's three-year rate plan, which includes a continuation of an allowed ROE of 9.5% [20] Q&A Session Summary Question: Timing and likelihood of incremental generation opportunities - Management highlighted the complexities involved in securing agreements and building necessary infrastructure, indicating that while opportunities exist, they require careful negotiation and regulatory processes [25][26] Question: Thoughts on further asset sales - Management stated that the focus is on executing the five-year capital plan and that the recent asset sales do not indicate a strategy to divest further [27][28] Question: Timing for securing capital for new generation in Arizona - Management indicated that while customers desire quick connections, practical realities such as permitting and infrastructure development will dictate timelines [32][33] Question: EPS CAGR initiation - Management is evaluating the potential for earnings guidance but is currently focused on rate-based growth and capital plan clarity [39][40] Question: Buyer appetite for Caribbean assets - Management noted that interest in Caribbean assets fluctuates and that recent sales do not indicate a broader exit strategy from the region [41][42] Question: Friction points for higher spending - Management emphasized that customer affordability is not a concern, but equipment availability and permitting are critical factors [45][46] Question: Approval processes for new data center loads - Management confirmed that the Arizona Corporation Commission approval is the primary requirement for the first 300 megawatts, with further approvals needed for additional capacity [50][51] Question: Funding plan and hybrid issuances - Management clarified that while no further hybrid issuances are currently planned, they remain open to exploring this option depending on market conditions [54][55]