Fortis Inc. (FTS:CA) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed outlook. Positive aspects include the capital plan execution and potential growth in Arizona and BC. However, concerns arise from decreased EPS, higher finance costs, and vague management responses regarding project timelines and growth opportunities. The Q&A section reveals uncertainties about key projects and funding, tempering overall sentiment. Without a market cap, a neutral prediction accounts for both growth potential and current financial challenges.
Key Financial Performance
Adjusted Earnings Per Share (EPS) for Q3 2025 $0.87, up $0.02 year-over-year. The increase was driven by strong performance across all regulated utilities.
Reported Earnings for Q3 2025 $409 million or $0.81 per common share. Includes income taxes and closing costs of approximately $0.06 per share associated with the disposition of FortisTCI.
Year-to-Date Reported Earnings (up to September 2025) $1.3 billion or $2.57 per common share. Includes the impact of the FortisTCI disposition.
Year-to-Date Adjusted EPS (up to September 2025) $2.63, up $0.18 per common share year-over-year. Reflects strong performance across all regulated utilities.
U.S. Electric and Gas Utilities EPS Contribution Increased by $0.03. Higher earnings at UNS due to increased transmission revenue and higher AFUDC from ongoing major capital projects.
ITC EPS Contribution Increased by $0.02. Driven by continued capital investments and related rate base growth, partially offset by higher stock-based compensation and holding company finance costs.
Western Canadian Utilities EPS Contribution Increased by $0.01. Driven by rate base growth, including FortisBC Energy's investment in the Eagle Mountain Pipeline Project. Tempered by expiration of a PBR efficiency mechanism and a lower allowed ROE at FortisAlberta.
Corporate and Other Segment EPS Contribution Decreased by $0.03. Reflects higher holding company finance costs, unrealized losses on foreign exchange contracts, and lower unrealized gains on total return swaps.
Weighted Average Shares Impact on EPS Decreased EPS by $0.02. Driven by shares issued under the dividend reinvestment plan.
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Operating Highlights
5-year capital plan: Unveiled a new $28.8 billion 5-year capital plan, up $2.8 billion from the prior plan, supporting rate base growth of 7% and annual dividend growth guidance of 4% to 6% through 2030.
Dividend increase: Announced a fourth quarter dividend increase of approximately 4%, marking 52 consecutive years of increases.
Springerville Generating Station: Planned conversion from coal to natural gas, which is more economical compared to prior energy resources.
Sale of FortisTCI and Belize assets: Completed the sale of FortisTCI and investments in Belize, transitioning to 100% regulated assets and reducing risk profile.
ITC growth opportunities: ITC's capital plan of $9.8 billion includes investments in MISO's long-range transmission plan, customer connections, and grid security, with potential post-2030 growth of $3.3 billion to $3.8 billion.
Capital investments: Invested $4.2 billion in systems through September 2025, with a full-year expectation of $5.6 billion.
Operational efficiencies: Focused on customer affordability by prioritizing cost-saving capital investments and finding efficiencies through innovation and process improvements.
Regulated growth strategy: Shifted to 100% regulated assets, emphasizing low-risk, stable returns.
Dividend growth guidance: Extended 4% to 6% annual dividend growth guidance through 2030.
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Risk or Challenges
Regulatory Lag at UNS Energy: Earnings at UNS Energy are tempered by regulatory lag, driven largely by over USD 700 million of rate base not reflected in rates, which could impact financial performance.
Customer Affordability: The new 5-year capital plan emphasizes maintaining customer affordability, but rising investments and rate base growth could pressure customer rates, potentially leading to affordability concerns.
Environmental Assessment for LNG Storage Expansion: The Tilbury LNG Storage Expansion project is contingent on an environmental assessment, which introduces uncertainty and potential delays.
Regulatory Approvals for Energy Supply Agreements: TEP's energy supply agreement for 300 megawatts awaits Arizona Corporation Commission (ACC) approval and other contractual contingencies, posing a risk to planned capacity expansions.
Foreign Exchange Rate Assumptions: The capital plan includes a higher assumed foreign exchange rate, which could introduce financial variability if exchange rates fluctuate.
Regulatory and Competitive Risks at ITC: ITC's growth opportunities include projects subject to competitive bidding processes, which may not be awarded to ITC, impacting growth projections.
Debt and Financing Costs: Higher holding company finance costs and unrealized losses on foreign exchange contracts could strain financial performance.
Economic and Load Growth Uncertainty: Future opportunities at ITC and UNS Energy depend on economic development and load growth, which may not materialize as expected, affecting investment returns.
Environmental and Regulatory Risks in British Columbia: FortisBC's LNG and advanced metering infrastructure projects face regulatory and environmental hurdles, which could delay or limit project execution.
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Guidance & Outlook
5-Year Capital Plan: Fortis announced a new $28.8 billion 5-year capital plan, an increase of $2.8 billion compared to the prior plan. This plan supports a 7% rate base growth and annual dividend growth guidance of 4% to 6% through 2030. Approximately 77% of the plan is directed towards transmission and distribution investments, with a focus on maintaining customer affordability and achieving stable, predictable returns.
Rate Base Growth: Consolidated rate base is expected to increase by $16 billion, from approximately $42 billion in 2025 to $58 billion in 2030, supporting an average annual rate base growth of 7%, up from 6.5% in the prior plan.
ITC Capital Plan: ITC's capital plan of $9.8 billion is the largest in the company's history, supporting strong rate base growth of 8%. Key investments include base infrastructure, MISO's long-range transmission plan, customer connections, and grid security. Additional growth opportunities include $3.3 billion to $3.8 billion post-2030 for tranche 2.1 projects and customer connections for over 8,000 megawatts of load growth.
UNS Energy Capital Plan: UNS Energy's $5.6 billion capital plan supports average annual rate base growth of approximately 7%. Investments include the coal-to-natural gas conversion of 800 megawatts at the Springerville Generating Station and the Black Mountain generation project. Additional opportunities include new generation investments of $1.5 billion to $2 billion through 2030 to support data center and load growth.
FortisBC Capital Plan: FortisBC's $4.9 billion capital plan focuses on system reliability, LNG projects, and advanced metering infrastructure. Additional opportunities include a $300 million upside from the Tilbury LNG Storage Expansion project and potential LNG expansion for marine bunkering.
Dividend Growth Guidance: Fortis extended its 4% to 6% annual dividend growth guidance through 2030, supported by its regulated growth strategy and capital investment plan.
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Shareholder Return Plan
Dividend Increase: The Board of Directors declared a fourth quarter dividend increase of approximately 4%, bringing the dividend to $0.64 per share. This marks 52 consecutive years of dividend increases.
Dividend Growth Guidance: The company extended its 4% to 6% annual dividend growth guidance through 2030.
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Key Q&A
Q:What is the timing and likelihood of incremental generation opportunities at TEP and LNG Tilbury storage expansion?
A:David Hutchens explained that while there is optimism about the projects, there are many steps to complete, including agreements with counterparties, infrastructure building, regulatory processes, and customer protections. The projects are not included in the capital plan until agreements are finalized.
Q:What are the thoughts on asset sales and funding plans?
A:David Hutchens stated that the focus is on executing the 5-year capital plan and additional opportunities. The portfolio is 100% regulated, and there are no plans for further asset sales. The funding plan includes DRIP as the only equity source, with no discrete equity needed.
Q:What is the timing for securing the $1.5 billion to $2 billion new generation in Arizona?
A:David Hutchens mentioned that customers want the generation as soon as possible, but it takes time for siting, permitting, and building. The first 300 MW is expected online in 2027, with ramp-up over the next year. The timeline for other projects is similar, aiming for completion within the next 5 years.
Q:What is the status of ITC's 8 GW of potential load growth?
A:Linda Blair stated that there is ongoing planning and conversations with customers, but it is premature to speculate on specific projects or timelines. The queue of prospective projects continues to grow, and they remain optimistic.
Q:What are the thoughts on initiating an EPS CAGR guidance?
A:David Hutchens explained that they are evaluating the possibility but are currently focused on providing detailed rate base growth and funding plans. The variability in earnings, especially in Arizona, is a factor in delaying guidance.
Q:What are the trends in buyer appetite for Caribbean assets?
A:David Hutchens noted that interest in Caribbean assets varies over time and by buyer. The recent transactions do not indicate an exit from the Caribbean market, and there are no plans for further sales.
Q:What are the friction points for higher spending and customer affordability?
A:David Hutchens highlighted that affordability is not a friction point as large customers can pay for infrastructure growth. Challenges include permitting, siting, and ensuring community support. The shift to air cooling for data centers in Arizona is an example of addressing resource concerns.
Q:What approvals are needed for the initial 300 MW data center load in Arizona?
A:Susan Gray stated that the main approval needed is from the Corporation Commission, expected by year-end. The data center also requires a state permit for a well. Future projects will need additional generation resources and extended timelines.
Q:Does the funding plan for the next 5 years include hybrid issuances?
A:Jocelyn Perry confirmed that no further hybrid issuances are included but noted they have capacity and may explore the hybrid market depending on growth and market conditions.
Q:What is the timing of connection requests for ITC's large load growth?
A:Linda Blair explained that most requests are for the latter part of the 5-year plan (2028-2030). Timing depends on infrastructure availability and MISO approval processes.
Q:What is the timing for including large load growth in Arizona's IRP?
A:David Hutchens stated that the IRP process will include different load growth scenarios, and updates can be made as needed. Additional investments for data centers can be treated as separate mini-IRPs.
Q:What are the growth opportunities for Alberta and BC utilities?
A:David Hutchens mentioned opportunities in the Okanagan region and LNG investments in BC. Political tailwinds and potential projects could support growth, but these utilities currently lag the portfolio average.
Q:What is the target cash flow to debt ratio for the funding plan?
A:Jocelyn Perry stated that the plan targets a 12.4% average over 5 years, with a cushion of 75-100 basis points above S&P's threshold. This provides flexibility for additional projects and market conditions.
Q:Review of Unclear Management Responses
A:Management avoided providing specific timelines or details for ITC's 8 GW load growth and Arizona's large load growth in the IRP. Responses were vague about the timing and specifics of customer requests and approvals, as well as the potential for hybrid issuances.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Belize
Capital Outlook
Central Hudson
Directors dividend
Expansion project
FERC transmission
FortisTCI sale
Generating Station
Hudson rate
ITC plan
LNG
New Capital
Outlook Conference
Springerville Generating
Tilbury
Today
UNS Electric
USD
agreement
asset
base basis
base plan
capital investment
capital project
coal gas
disposition FortisTCI
distribution investment
gas conversion
issuance
plan rate
plan transmission
point plan
process
profile
project UNS
project capital
reliability
sale FortisTCI
FTS Transcript
Fortis Inc. (FTS:CA) Q1 2026 Earnings Call Transcript
Positive5-6
Despite the absence of operational and strategic updates, the financial performance shows solid growth in revenue, net earnings, operating cash flow, and EPS, all indicating a positive outlook. The increase in capital expenditures suggests continued investment in growth. The commitment to dividend growth further supports a positive sentiment. However, the cautionary note on forward-looking information introduces some risk, but the overall financial health and growth potential outweigh these concerns, leading to a positive sentiment.
Fortis Inc. (FTS:CA) Q4 2025 Earnings Call Transcript
Positive2-12
The earnings call summary highlights strong financial performance with EPS growth, a significant capital plan, and consistent dividend increases. The Q&A section addresses potential risks but shows management's confidence in handling them. Positive factors include a new energy supply agreement and strong shareholder returns. Some concerns arise from unclear management responses on regulatory matters, but overall, the sentiment is positive due to robust financial metrics and strategic growth plans.
Fortis Inc. (FTS:CA) Q3 2025 Earnings Call Transcript
Unknown11-4
The earnings call presents a mixed outlook. Positive aspects include the capital plan execution and potential growth in Arizona and BC. However, concerns arise from decreased EPS, higher finance costs, and vague management responses regarding project timelines and growth opportunities. The Q&A section reveals uncertainties about key projects and funding, tempering overall sentiment. Without a market cap, a neutral prediction accounts for both growth potential and current financial challenges.
Fortis Inc. (FTS) Q2 2025 Earnings Call Transcript
Positive8-1
The earnings call summary and Q&A indicate strong financial performance with EPS growth driven by rate base investments and subsidiary performance. The company's capital expenditures align with growth strategies, and there are promising opportunities in Arizona and BC. The Q&A section revealed management's positive outlook on energy infrastructure, despite some vague responses. The announcement of a dividend growth plan and EPS increase suggests investor confidence. Overall, the company's strategic investments and optimistic guidance contribute to a positive sentiment, likely leading to a stock price increase of 2% to 8% over the next two weeks.
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Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
