Fortis Inc. (FTS:CA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Capital Investments $5.6 billion invested in 2025, representing a significant increase aimed at strengthening systems, enhancing resilience, and supporting long-term customer needs.
Dividends Paid Per Common Share Increased by 4% compared to 2024, marking 52 consecutive years of increases. This reflects the company's commitment to its growth strategy.
Total Shareholder Return Achieved nearly 24% for 2025, with a 20-year average annual return of approximately 10%, exceeding benchmark indices.
Earnings Per Share (EPS) Reported EPS for 2025 was $3.40, a $0.16 increase from 2024. Adjusted EPS was $3.53, a $0.25 increase, driven by rate base growth and favorable foreign exchange impacts.
Rate Base Growth Achieved approximately 6.5% average annual growth over the past 3 years, supported by $28.8 billion in planned capital investments over the next 5 years.
Liquidity Position Maintained a strong liquidity position with $2.7 billion of long-term debt issued in 2025 and nearly $4 billion available on credit facilities.
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Operating Highlights
Capital Investments: Fortis invested $5.6 billion in capital in 2025, strengthening systems, enhancing resilience, and supporting long-term customer needs.
Energy Supply Agreement: Approved a 10-year energy supply agreement for 300 MW to support a data center in Tucson Electric Power service territory, with potential for an additional 300 MW.
Market Expansion in Arizona: Negotiations for an additional 500-700 MW capacity at a second site in Arizona, with rezoning approved for over 600 acres of land.
Tilbury LNG Storage Expansion: BCUC approved the Tilbury LNG storage expansion project, providing up to $300 million of potential incremental capital.
Operational Efficiencies: Implemented grid-enhancing technology and AI for vegetation management and equipment inspections, reducing costs and improving reliability.
Energy Efficiency Programs: Utilities offer programs to help customers lower bills, including low-income discounts and bill assistance programs.
5-Year Capital Plan: Rolled out a $28.8 billion 5-year capital plan, focusing on transmission and distribution assets, with 21% allocated to major projects.
Incremental Growth Opportunities: Pursuing additional customer connections and MISO LRTP projects, with investments of $3.3-$3.8 billion expected post-2030.
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Risk or Challenges
Cost and Supply Chain Pressures: The company has experienced cost and supply chain pressures over the past few years, which could impact operational efficiency and financial performance.
Regulatory Lag: Lower earnings at UNS Energy were attributed to regulatory lag associated with over USD 700 million of rate base not yet included in rates, which could delay revenue realization.
Milder Weather Impact: Lower retail sales at UNS Energy were due to milder weather, which negatively impacted revenue from energy consumption.
Higher Finance Costs: Higher holding company finance costs and higher finance costs at ITC could strain financial resources and reduce profitability.
Disposition of Investments: Losses associated with the disposition of investments in Belize and Turks and Caicos negatively impacted reported earnings.
Regulatory Risks: The UNS Gas general rate application faced objections to revisions in the formula, and the TEP rate application is still under review, creating uncertainty in revenue adjustments.
Wildfire Risks: Utilities are mitigating physical risks such as wildfires, but these remain a potential operational and financial challenge.
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Guidance & Outlook
Capital Plan: Fortis has rolled out a $28.8 billion 5-year capital plan, the largest to date, focused on regulated investments in transmission and distribution assets. This plan is expected to drive a $16 billion increase in rate base over the next five years, supporting an average annual rate base growth of 7%.
Incremental Growth Opportunities: Fortis is pursuing additional customer connections and MISO LRTP projects at ITC, with investments between USD 3.3 billion and USD 3.8 billion expected post-2030. ITC is also evaluating competitive bidding opportunities for further growth.
Arizona Retail Load Growth: The Arizona Corporation Commission approved an energy supply agreement for 300 megawatts to support a planned data center in Tucson Electric Power's service territory, with ramp-up beginning in 2027 and continuing through 2029. Negotiations are ongoing for an additional 300 megawatts and a second site with 500-700 megawatts of capacity, potentially requiring USD 1.5 billion to USD 2 billion in new generation through 2030.
Tilbury LNG Storage Expansion: FortisBC received approval for the Tilbury LNG storage expansion project, with up to $300 million of potential incremental capital, subject to environmental assessment approvals.
Dividend Growth Guidance: Fortis remains committed to 4% to 6% annual dividend growth through 2030, supported by the execution of its growth strategy.
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Shareholder Return Plan
Dividend Growth: In 2025, Fortis increased its dividends paid per common share by 4% compared to 2024, marking 52 consecutive years of increases in dividends paid.
Dividend Growth Guidance: Fortis remains committed to its 4% to 6% annual dividend growth guidance through 2030.
Shareholder Returns: Fortis achieved a 1-year total shareholder return of nearly 24% in 2025 and has delivered average annual total shareholder returns of approximately 10% over a 20-year time frame.
Dividend Reinvestment Plan: Fortis has successfully reduced its adjusted dividend payout ratio to approximately 70% and continues to utilize its dividend reinvestment plan as part of its funding strategy.
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Key Q&A
Q:Why does the company believe the energy supply agreement for data centers in Arizona works well?
A:The agreement is based on existing capacity and energy, requiring no additional infrastructure investment. The customer covers interconnection costs, and the 75% minimum billing demand ensures cost recovery. This setup spreads costs over a larger base, making it a model for affordability.
Q:What are the gating items for the remaining 300 megawatts in the Arizona data center project?
A:Additional capacity needs to be added, and contractual details must be finalized to ensure protection for the company and customers.
Q:Have there been any updates from FERC regarding ongoing matters?
A:No specific updates have been received. However, the new FERC Chair is focused on cleaning up old dockets and ensuring decisions have staying power with bipartisan support.
Q:What is the company's view on the ALJ decision regarding formula mechanisms in Arizona?
A:The company sees the decision as a pilot program opportunity to adjust the design. They are hopeful to revert some changes, such as post-test year plant recovery and maintaining a 9.77% ROE. They filed an amendment to align with staff recommendations.
Q:What is the status of LNG projects in British Columbia?
A:The company received approval for an LNG tank last year but has no new announcements. They see potential opportunities in large projects and investments in the Okanagan region.
Q:Is there any risk to the Arizona data center project due to comments from the Attorney General?
A:The company does not see significant risk. They believe the AG's concerns stem from misunderstandings and are addressing them publicly. The contract is fully approved by the Arizona Corporation Commission.
Q:What are the company's top opportunities for incremental upside to their plan?
A:Opportunities include ITC-related projects like MTEP 26, Arizona data centers, LNG investments in British Columbia, and investments in the Okanagan region.
Q:Can the Arizona commission rule on the annual formula mechanism with a pending Court of Appeals case?
A:Yes, the company believes the commission can rule as the case is procedural and does not impact the ability to litigate formula rates in a rate case.
Q:How is the company addressing customer affordability across its jurisdictions?
A:The company is focused on affordability in all jurisdictions, ensuring consistent efforts to provide affordable service while addressing political and customer concerns.
Q:What is the company's perspective on potential investments in Ontario?
A:The company is interested in investing more in Ontario, leveraging its experience with utilities and projects like Wataynikaneyap. They see opportunities in the province's energy plan.
Q:How does the company view the potential for issuing earnings guidance?
A:Improved regulatory mechanisms in Arizona provide better clarity, but issuing earnings guidance depends on multiple factors beyond regulatory clarity.
Q:What is the status of the integrated resource plan (IRP) in Arizona?
A:The IRP process is in early stages with public meetings and stakeholder involvement. The company plans to file the IRP in August, which will outline additional generation and transmission investments needed for growing load.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or lacked clarity on the following: 1. Updates from FERC on ongoing matters, as they only expressed optimism without specifics. 2. LNG projects in British Columbia, where no concrete plans were shared beyond general opportunities. 3. The potential for issuing earnings guidance, as the response was vague and did not commit to a timeline or decision.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Annual
Belize
CEO ITC
FortisTCI
Results Conference
USD
agreement
base track
capital structure
commitment people
component capital
cost benefit
customer bill
discount
energy supply
equity component
exchange increase
finance contribution
foundation
future
investment rate
land
loss disposition
milder weather
month
need
order
practice
rate application
rating
reliability
retirement
revision formula
safety
shareholder return
site
year rate
FTS Transcript
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.
Fortis Inc. (FTS) Q1 2025 Earnings Call Transcript
Unknown5-7
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.
FTS Slides
FTS Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
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.
