• Capital Investment: Record $5.2 billion invested in 2024.
• Adjusted EPS Growth: Approximately 6% increase in 2024.
• Dividend Increase: Dividends paid per common share increased to $2.39, marking 51 consecutive years of increases.
• Rate Base Growth: Expected to increase by approximately $14 billion to $53 billion by 2029, supporting average annual rate base growth of 6.5%.
• Fourth Quarter Reported EPS: $0.79, $0.01 higher than the previous year.
• Fourth Quarter Adjusted EPS: $0.83, $0.11 higher than Q4 2023.
• Annual Reported EPS: $3.24, $0.14 higher than the prior year.
• Annual Adjusted EPS: $3.28, $0.19 higher than 2023.
• ITC Capital Investments: $1.5 billion in 2024, the largest annual capital plan to date.
• Debt Issuance: Over $3 billion issued in 2024 to repay borrowings and fund capital program.
• Dividend Reinvestment Plan: Contributed approximately $430 million in equity in 2024.
• Total Shareholder Return: Approximately 14% for 2024.

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Release Date: February 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fortis Inc (NYSE:FTS) reported a strong financial year with a 6% growth in adjusted EPS and a record $5.2 billion in capital investments.
• The company increased its dividend for the 51st consecutive year, highlighting its commitment to returning value to shareholders.
• Fortis Inc (NYSE:FTS) was ranked number one in corporate governance among 215 companies in the S&P TSX Composite Index by the Globe and Mail.
• The company achieved a 34% reduction in scope 1 emissions compared to 2019 levels, demonstrating progress in its climate impact reduction efforts.
• Fortis Inc (NYSE:FTS) delivered a one-year total shareholder return of approximately 14%, outperforming benchmark indices over a 20-year period with an average annual return of 10%.

Negative Points

• The company faces potential regulatory challenges and uncertainties, particularly in Arizona, where new rate cases and formulaic rates are being explored.
• Higher operating and maintenance costs at Tucson Electric Power (TEP) impacted earnings, reflecting increased labor costs and planned generation maintenance.
• Unrealized losses on foreign exchange derivatives and total return swaps affected financial results, indicating exposure to currency fluctuations.
• The strengthening of the US dollar poses potential risks to Fortis Inc (NYSE:FTS)'s capital plan, with a $0.05 change in the exchange rate impacting annual EPS by about $0.05.
• Fortis Inc (NYSE:FTS) continues to engage with S&P regarding its A- issuer rating, which currently has a negative outlook due to concerns about physical and climate risks.

Q & A Highlights

Q: What is the plan for new rates and ensuring timely returns on new investments in Arizona, considering the potential for significant demand increases? A: David Hutchens, President and CEO, stated that Tucson Electric Power (TEP) plans to file their next rate case this summer, aiming to implement formula rates to ensure timely recovery of investments. For large projects associated with big customers, recovery will be integrated into contractual agreements.

Q: With the BC government's efforts to expedite permits, is there potential to accelerate projects or introduce new ones in British Columbia? A: Roger DallAntonia, CEO of FortisBC, explained that while the expedited permitting process may not create new projects, it provides clarity on timelines, potentially allowing projects to come online sooner. The focus is on improving efficiency in the provincial permitting process.

Q: What are the implications of the new FERC Chair's priorities, and how might they affect Fortis? A: David Hutchens noted that it's early to determine the new Chair's priorities, but there is interest in advancing colocation discussions, which could positively impact sector growth. Fortis is monitoring developments closely to ensure fair cost allocation for grid upgrades.

Q: Can you provide insights into the joint proposal for new nuclear projects in Arizona and how Fortis plans to manage associated risks? A: David Hutchens emphasized that discussions are in preliminary stages, focusing on site selection and early permits. The initiative aims to replace coal plants with nuclear options, driven by load growth and the need for clean energy. Risk management and funding will be key considerations.

Q: How is Fortis addressing the potential impacts of foreign exchange rate changes on its funding plan? A: Jocelyn Perry, CFO, stated that while foreign exchange rate changes impact cash flow distributions, they do not materially affect the five-year funding plan. Fortis will reassess its capital program and funding strategy as needed, but no immediate changes are anticipated.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.