Fortis(FTS) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Reported earnings per common share for Q4 2025 were CAD 0.83, an increase of CAD 0.04 compared to Q4 2024 [11] - Reported EPS for 2025 was CAD 3.40, up CAD 0.16 from 2024, while adjusted EPS was CAD 3.53, an increase of CAD 0.25 [13][16] - The company achieved a one-year total shareholder return of nearly 24% and average annual total shareholder returns of approximately 10% over the past 20 years [6] Business Line Data and Key Metrics Changes - Western Canadian utilities contributed a CAD 0.10 increase in EPS, driven by rate base growth, including FortisBC's investment in the Eagle Mountain Pipeline Project [13] - U.S. electric and gas utilities delivered an eight-cent increase in EPS, with Central Hudson's growth attributed to rate base growth and cost rebasing [14] - ITC's continued capital investments and related rate base growth increased EPS by CAD 0.04, moderated by higher stock-based compensation and finance costs [15] Market Data and Key Metrics Changes - In Arizona, the energy supply agreement for a planned data center was approved, supporting a 300 MW capacity with a 75% minimum billing requirement [8] - The company is negotiating for an additional 300 MW capacity at the same site and a second site in the range of 500-700 MW [9] - The BCUC's approval of the Tilbury LNG storage expansion project provides up to CAD 300 million of potential incremental capital [9] Company Strategy and Development Direction - The company rolled out a CAD 28.8 billion five-year capital plan, focusing on regulated investments primarily in transmission and distribution assets [6][7] - The plan is expected to drive a 7% average annual rate base growth and support a 4%-6% annual dividend growth guidance through 2030 [20] - The company is focused on incremental growth opportunities, including customer connections and MISO LRTP projects [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the regulatory environment and the potential for improved earnings guidance as clarity increases [75] - The company is committed to addressing affordability concerns while ensuring reliable service and maintaining strong shareholder returns [6][65] - Management highlighted the importance of executing the capital plan to support long-term growth and shareholder value [20] Other Important Information - The company maintained a strong liquidity position with CAD 2.7 billion of long-term debt issued in 2025 and nearly CAD 4 billion available on credit facilities [16] - S&P confirmed the company's A- issuer and BBB+ senior unsecured debt ratings, revising the outlook from negative to stable [17] Q&A Session Summary Question: Data center opportunity in Arizona - Management explained that the energy supply agreement is structured to ensure affordability and cost recovery without requiring additional investments [22][23] Question: Updates from FERC - Management noted that while there has been chatter about FERC developments, no specific updates have been received [28][30] Question: UNS Gas rate case - Management indicated that the upcoming ACC open meeting could provide clarity on the formulaic rate structure [69][70] Question: Customer affordability feedback - Management acknowledged that affordability is a significant concern across jurisdictions and emphasized the company's commitment to addressing it [62][65]