Earnings Per Share (EPS): $1, a $0.07 increase over the same quarter last year. Net Earnings: $499 million for the quarter. Capital Investment: $1.4 billion invested in utility systems during the quarter. Rate Base Growth: Expected to increase by approximately $14 billion to $53 billion by 2029, supporting an average annual growth of 6.5%. US Electric and Gas Utilities EPS Contribution: $0.02 increase. Central Hudson EPS Contribution: $0.05 increase due to rate-based growth and conclusion of the 2024 general rate application. UNS Energy EPS Impact: $0.03 decrease due to lower margins on wholesale sales and higher costs. ITC EPS Contribution: $0.01 increase reflecting rate-based growth. Western Canadian Utilities EPS Contribution: $0.01 increase driven by rate-based growth. Foreign Exchange Impact on EPS: $0.03 increase due to a higher average US to Canadian dollar exchange rate. Debt Issuance: Over $1 billion issued in the first quarter to repay borrowings and fund the capital program. Credit Ratings: Moody's confirmed Baa3, DBRS confirmed A (low), and S&P reaffirmed Fortis Alberta's A- with a stable outlook.

Warning! GuruFocus has detected 11 Warning Signs with FTS.

Release Date: May 07, 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 start to 2025 with earnings per share of $1, a $0.07 increase over the same quarter last year. The company successfully executed its capital plan, investing $1.4 billion in utility systems during the quarter. Fortis Inc (NYSE:FTS) received a constructive regulatory outcome in British Columbia on FortisBC's multi-year rate framework. The company's five-year capital plan remains on track, with a focus on transmission investments and infrastructure strengthening. Fortis Inc (NYSE:FTS) has a long track record of increasing dividends for 51 consecutive years, with a commitment to annual dividend growth guidance of 4% to 6% through 2029.

Negative Points

UNS Energy experienced a $0.03 decrease in EPS due to lower margins on wholesale sales and higher costs not yet reflected in customer rates. Higher stock-based compensation and finance costs partially offset rate-based growth at ITC. The expiration of a PBR efficiency carryover mechanism at Fortis Alberta tempered growth quarter-over-quarter. Potential higher costs from government tariffs could impact customer affordability, although regulatory mechanisms are expected to mitigate shareholder impacts. The legislative session in Iowa is ongoing, with uncertainty around the passage of ROFR legislation as part of the Governor's energy bill.

Story Continues

Q & A Highlights

Q: Can you elaborate on the potential impact of tariffs on Fortis' 2025 capital plan? A: David Hutchens, President and CEO, explained that the impact is minimal due to a combination of having inventory on hand and a domestic supply chain. The focus is on cost management rather than supply chain constraints, ensuring affordability for customers.

Q: How are negotiations progressing with large customers in Arizona, particularly data centers? A: David Hutchens noted that negotiations are progressing well, with a focus on one large customer and a queue of others. The pace is slower due to macroeconomic factors, but the team is making good progress.

Q: Will formula rate plans at ITC and potentially TEP help offset higher costs from government policies? A: David Hutchens confirmed that regulatory mechanisms will pass higher costs through to customers, focusing on affordability. The impact on shareholders is minimal, with mechanisms in place to manage costs.

Q: What are the potential impacts of the Inflation Reduction Act repeal on Fortis? A: David Hutchens stated that the company is in a good position, with most tax credits already safe-harbored or received. The focus is on maintaining affordability for customers, with no significant impact expected in the near term.

Q: Are there any new opportunities for Fortis in British Columbia due to BC Hydro's plans for firm base load generation? A: Roger DallAntonia, CEO of FortisBC, mentioned that while immediate impacts are unclear, there are long-term opportunities for infrastructure development, including capacity and transmission, driven by population and load growth.

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

This article first appeared on GuruFocus.

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