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01/11 11:07
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
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.
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.
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.
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.
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.
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.
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.
The earnings report shows a mix of positive and negative factors. Positive elements include consistent dividend growth, strong credit ratings, and capital investments. However, concerns arise from regulatory uncertainties, potential impacts of tariffs, and lack of clear guidance on some issues. The Q&A session did not reveal significant new information to alter the sentiment. While EPS and net earnings increased, the absence of a share repurchase program and regulatory risks balance the outlook, resulting in a neutral sentiment.
The earnings call summary and Q&A indicate strong financial performance, with record capital investment and adjusted EPS growth. Shareholder returns are robust, with consistent dividend increases. Despite some regulatory and operational risks, the strategic focus on infrastructure and rate base growth, along with a solid dividend policy, suggests a positive sentiment. The Q&A revealed some uncertainties, but overall, the company's proactive strategies and financial health are likely to lead to a positive stock price movement.
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