- Fortis (TSX:FTS), a profitable multinational utility stock, posted another value-accretive performance in Q2 2024
- Net earnings attributable to common stock investors came to C$331 million or C$0.67 per common share, up by C$37 million or C$0.06 per share year-over-year
- Fortis is a well-diversified electric and gas utility company active in Canada, the United States and the Caribbean
- Fortis stock has added 1.62 per cent year-over-year and 9.09 per cent since 2019
Fortis (TSX:FTS), a profitable multinational utility stock, posted another value-accretive performance in Q2 2024.
Net earnings
Net earnings attributable to common stock investors came to C$331 million or C$0.67 per common share, up by C$37 million or C$0.06 per share year-over-year, driven by rate base growth across utilities, new cost of capital parameters instituted at FortisBC in 2023, as well as strong earnings in Arizona thanks to new customer rates at Tucson Electric Power effective Sept. 1, 2023, and higher retail electricity sales associated with warmer weather.
Year-to-date, net earnings total C$790 million or C$1.60 per common share, up from C$59 million or C$0.09 per share year-over-year, thanks to higher earnings in Arizona, rate base growth and the new cost of capital parameters at FortisBC.
Over the past five years, net earning have also been positive, coming in at C$1.72 billion in 2019, C$1.27 billion in 2020, C$1.29 billion in 2021, C$1.39 billion in 2022 and C$1.57 billion in 2023, in addition to C$477 million in Q1 2024.
Capital expenditures
Capital expenditures are estimated at C$4.8 billion for the year and on track with C$2.3 billion invested during the first half of 2024. Projects in focus include the Tilbury Marine Jetty project, which supports further expansion of FortisBC’s Tilbury liquefied natural gas facility, and the now completed 1,800-kilometre Wataynikaneyap power transmission project – majority-owned by 24 First Nations, with Fortis holding a 39 per cent stake – that will reduce greenhouse gas emissions from diesel-fired generation previously used in these remote communities.
Regulatory updates
Regulatory updates include the New York State Public Service Commission’s July 2024 approval of a one-year rate plan for Central Hudson, Fortis’ gas and electric provider in New York state’s Mid-Hudson River Valley, with retroactive application to July 1, 2024, including an allowed return on common stock of 9.5 per cent, up from 9 per cent previously.
Also in July 2024, the Iowa Supreme Court granted a stay of the Iowa District Court’s injunction regarding the construction of the Midcontinent Independent System Operator Long-Range Transmission Plan tranche 1 projects in the state. The stay allows Fortis’ ITC, the largest independent electricity transmission company in the United States, to advance construction of all Iowa tranche 1 projects originally awarded in 2022.
Fortis outlook
Fortis’ outlook is centred on a five-year C$25 billion capital plan designed to increase mid-year rate base from C$37 billion in 2023 to C$49.4 billion by 2028, representing a five-year compound annual growth rate of 6.3 per cent. This added cash flow should support dividend growth of 4-6 per cent annually through the period.
According to Wednesday’s news release, the company sees additional opportunities to grow beyond this plan through continued electrification and load growth, investments in climate adaptation and grid resiliency, and further expansion of the U.S. electric transmission grid to facilitate the distribution of clean energy.
Leadership insights
“Our regulated utility businesses continued to deliver on their financial and operational plans in the first half of 2024,” David Hutchens, Fortis’ president and chief executive officer, said in a statement. “We are executing our annual C$4.8 billion capital plan, and remain confident in our C$25 billion five-year capital plan. We also released our 2024 Sustainability Report today, highlighting progress on our key sustainability initiatives. This is an exciting time for our company as we pursue growth opportunities and deliver a cleaner energy future.”
About Fortis
Fortis is a well-diversified electric and gas utility company. Its approximately 9,600 employees serve more than 3.5 million customers across five Canadian provinces, 10 U.S. states and three Caribbean countries.
Fortis stock (TSX:FTS) last traded at C$57.12 per share. The stock has added 1.62 per cent year-over-year and 9.09 per cent since 2019.
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(Top photo: FortisBC)
