Fortis Inc. Earnings Call Highlights Strong Growth

Fortis ((TSE:FTS)) has held its Q4 earnings call. Read on for the main highlights of the call.

Fortis Inc. has concluded its latest earnings call on a high note, with an overwhelmingly positive sentiment prevailing throughout the discussion. The company showcased record capital investments, significant dividend growth, and robust financial performance. While regulatory challenges and foreign exchange fluctuations were mentioned as potential hurdles, the overall tone remained optimistic, with highlights far outweighing concerns.

Record Capital Investment

Fortis has demonstrated its commitment to growth by investing a record $5.2 billion in capital during 2024. This investment aligns with the company’s regulated growth strategy, underscoring Fortis’ consistent execution and dedication to enhancing its infrastructure and services.

Dividend Growth and Governance Recognition

In a remarkable feat, Fortis has increased its dividend for the 51st consecutive year, reflecting the company’s financial strength and stability. Additionally, Fortis received top honors in governance, ranking number one among 215 companies in the S&P/TSX Composite Index according to the Globe and Mail.

Strong Financial Performance

Fortis reported a notable 6% growth in adjusted earnings per share (EPS) for 2024, coupled with a one-year total shareholder return of approximately 14%. This performance underscores the company’s ability to deliver value to shareholders consistently.

Significant Reduction in Emissions

Demonstrating its commitment to sustainability, Fortis achieved a 34% reduction in Scope 1 emissions compared to 2019 levels. This reduction is part of the company’s broader strategy to minimize its environmental impact and transition towards cleaner energy solutions.

MISO Board Approval

The MISO Board’s approval of Tranche 2.1 LRTP projects, encompassing 24 projects totaling US$21.8 billion, marks a significant milestone for Fortis. These projects are poised to bolster the company’s infrastructure and expand its operational capabilities.

Potential Growth in Arizona

Fortis’ subsidiary, TEP, is negotiating for over 300 megawatts of new customer load, which could lead to a 20% increase in TEP’s retail sales. This potential growth in Arizona highlights Fortis’ ability to capitalize on emerging market opportunities.

Regulatory Challenges

Despite its successes, Fortis faces regulatory challenges, particularly with the UNS Gas rate case and potential tariffs. The specific impacts of these challenges are still being evaluated, necessitating cautious navigation in the regulatory landscape.

Foreign Exchange Impact

Fortis has modified its hedging program in response to the strengthening U.S. dollar. This adjustment may influence the company’s five-year capital plan, requiring strategic financial management to mitigate potential adverse effects.

Higher Operating Costs

TEP experienced higher operating costs in 2024, driven by increased labor expenses and planned generation maintenance. These costs highlight the operational challenges Fortis must manage to maintain its financial health.

Forward-Looking Guidance

Fortis provided comprehensive guidance for the future, emphasizing its strategic initiatives and financial projections. The company plans to invest $26 billion over the next five years, aiming to increase its rate base by approximately $14 billion by 2029. Fortis maintains its annual dividend growth guidance of 4% to 6% through 2029, leveraging its regulated growth strategy and commitment to sustainable returns.

In conclusion, Fortis Inc.’s earnings call reflected a strong positive sentiment, driven by record capital investments, consistent dividend growth, and solid financial performance. Despite facing regulatory and foreign exchange challenges, the company remains well-positioned to achieve its growth objectives and deliver value to its shareholders.