ST. JOHN'S - Fortis Inc. ('Fortis' or the 'Corporation') (TSX/NYSE: FTS), a well-diversified leader in the North American regulated electric and gas utility industry, released its third quarter results1 today.
Highlights
Continued to deliver safe and reliable service throughout the pandemic
Delivered third quarter 2020 net earnings of $0.63 per common share and adjusted net earnings2 of $0.65 per common share
Execution of $4.3 billion annual capital plan on track with $2.9 billion invested through September
Released new five-year capital plan of $19.6 billion, up $0.8 billion from prior five-year plan
Announced common share dividend increase of 5.8%, marking 47 years of consecutive increases
Established new corporate-wide carbon emissions reduction target of 75% by 2035
'Our teams have been keeping the health and safety of employees, customers and communities top of mind as we continue to deliver reliable service during the pandemic. The Fortis business model, with its use of local teams and focus on local decision making, has never been more valuable,' said Barry Perry, President and Chief Executive Officer, Fortis. 'With our new five-year capital plan and substantially all of our assets focused on the transmission and distribution of energy, Fortis is in a strong position to continue to grow and deliver on a cleaner energy future. We are excited by the opportunities ahead.'
Net Earnings
The Corporation reported third quarter net earnings attributable to common equity shareholders of $292 million, compared to $278 million for the same period in 2019. The $14 million increase reflects: (i) rate base growth at the regulated utilities; (ii) higher sales at UNS Energy, driven largely by weather and (iii) higher hydroelectric production and equity income in Belize. Fortis delivered this growth despite cost pressure at UNS Energy associated with approximately $1 billion of utility infrastructure investments made by Tucson Electric Power ('TEP') that have not yet been reflected in customer rates. While later than expected due to the pandemic, new rates at TEP that will begin to recover these costs are anticipated to be approved prior to the end of 2020. Third quarter 2020 results were also unfavourably impacted by ITC due to the timing of earnings associated with the return on common equity ('ROE') decisions made by the Federal Energy Regulatory Commission ('FERC'), as well as a lower effective tax rate in 2019. Except for the delay in TEP's general rate application, earnings for the quarter were not materially impacted by the COVID-19 pandemic.
Year-to-date earnings as compared to 2019 reflect significant one-time items: (i) a $484 million gain on the disposition of the Waneta Expansion hydroelectric generating facility ('Waneta Expansion') in April 2019 and (ii) the reversal of a $13 million tax recovery, originally recognized in 2019, due to the finalization in April 2020 of anti-hybrid regulations associated with US tax reform; partially offset by (iii) a $27 million favourable base ROE adjustment at ITC as a result of a May 2020 FERC decision reflecting the reversal of liabilities accrued in prior years.
Notwithstanding these one-time items, earnings grew by $39 million during the first nine months of 2020, reflecting the factors discussed above for the third quarter but further tempered by: (i) lower sales in the Caribbean and higher operational expenses, largely incurred at Central Hudson, associated with the COVID-19 pandemic and (ii) a decline in the market value of certain investments that support retirement benefits caused by financial market volatility.
About Fortis
Fortis is a well-diversified leader in the North American regulated electric and gas utility industry, with 2019 revenue of $8.8 billion and total assets of $56 billion as at September 30, 2020. The Corporation's 9,000 employees serve utility customers in five Canadian provinces, nine U.S. states and three Caribbean countries.
Forward-Looking Information
Fortis includes forward-looking information in this media release within the meaning of applicable Canadian securities laws and forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively referred to as 'forward-looking information'). Forward-looking information reflects expectations of Fortis management regarding future growth, results of operations, performance and business prospects and opportunities. Wherever possible, words such as anticipates, believes, budgets, could, estimates, expects, forecasts, intends, may, might, plans, projects, schedule, should, target, will, would and the negative of these terms and other similar terminology or expressions have been used to identify the forward-looking information, which includes, without limitation: forecast capital expenditures and expected funding sources for 2020 and 2021-2025; targeted average annual dividend growth through 2025; the 2035 carbon emissions reduction target; the expected timing and outcome of regulatory decisions, including the expectation that new customer rates will be approved at TEP prior to the end of 2020; the expectation that there will not be a material change to the 2020 capital plan; the nature, timing, benefits and expected costs of certain capital projects including the Oso Grande Wind Project and Wataynikaneyap Transmission Power Project; TEP's 2035 carbon emissions reduction target; the expectation that execution of the carbon emissions target as well as key industry trends will drive incremental investments beyond the five-year capital plan; forecast rate base and rate base growth for 2020, 2023 and 2025 and the expectation that long-term growth in rate base will support earnings and dividend growth.
Forward-looking information involves significant risks, uncertainties and assumptions. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking information. These factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations generally, including those identified from time to time in the forward-looking information. Such factors or assumptions include, but are not limited to: no material impact from the COVID-19 pandemic; reasonable outcomes for regulatory proceedings and the expectation of regulatory stability; the successful execution of the five-year capital plan; no material capital project and financing cost overrun; sufficient human resources to deliver service and execute the capital plan; the realization of additional opportunities; the impact of fluctuations in foreign exchange; no significant variability in interest rates and the Board exercising its discretion to declare dividends, taking into account the business performance and financial condition of the Corporation. Fortis cautions readers that a number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking information. For additional information with respect to certain risk factors, reference should be made to the continuous disclosure materials filed from time to time by the Corporation with Canadian securities regulatory authorities and the Securities and Exchange Commission. All forward-looking information herein is given as of the date of this media release. Fortis disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
Contact:
Ms. Stephanie Amaimo
Tel: 248.946.3572
Email: investorrelations@fortisinc.com
FORTIS INC. 
