This article first appeared on GuruFocus .
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Net Earnings (Q2):$396 million, or $0.78 per common share, an increase of $0.02 compared to the second quarter of last year.
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Year-to-Date Earnings:$897 million, or $1.76 per common share.
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Capital Investment (H1):$2.7 billion invested in systems through June.
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2026 Capital Plan:On pace to invest $5.6 billion for the full year.
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EPS Drivers (Q2):ITC increased EPS by $0.02; UNS contributed a $0.02 increase; Western Canadian utilities increased EPS by $0.01.
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EPS Headwinds (Q2):Foreign exchange had a $0.01 unfavorable impact; higher weighted average shares impacted EPS by $0.01.
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Year-to-Date EPS Drivers:Central Hudson was up $0.03; UNS EPS was down $0.03.
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Long-Term Debt Issued (H1):$2.1 billion issued by utilities.
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Rate Base Growth Outlook:Average annual rate base growth of 7% expected through 2030.
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Dividend Growth Guidance:4% to 6% annual dividend growth guidance maintained through 2030.
Release Date: July 31, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Fortis Inc ( NYSE:FTS ) delivered second-quarter EPS of $0.78, up $0.02 year-over-year, driven by growth at ITC, UNS, and Western Canadian utilities.
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The company received an order in council for the Tilbury LNG Phase 1B expansion, enabling approximately $2 billion in regulated rate base investment, with potential rate benefits for customers.
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Fortis Inc ( NYSE:FTS ) remains on track to invest $5.6 billion in 2026, supporting an expected average annual rate base growth of 7% through 2030.
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The second Roadrunner Reserve battery storage project (200 MW/800 MWh) was placed in service at TEP, enhancing grid reliability and renewable integration.
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Fortis Inc ( NYSE:FTS ) continues to see significant growth opportunities, including ITC's MISO transmission projects (USD3.3-3.8 billion) and TEP's data center negotiations (USD1.5-2 billion potential investment).
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The company's 52-year dividend growth streak remains intact, with 4-6% annual dividend growth guidance through 2030, supported by a disciplined balance sheet approach.
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Fortis Inc ( NYSE:FTS ) achieved a 38% reduction in Scope 1 greenhouse gas emissions through 2025 compared to 2019 levels, highlighting progress on sustainability goals.
Negative Points
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Fortis Inc ( NYSE:FTS ) faces regulatory lag at UNS, where rate base growth is not yet reflected in customer rates, moderating earnings growth.
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The TEP general rate application decision has been delayed to November 17, 2026, creating near-term regulatory uncertainty.
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Higher finance costs and stock-based compensation expense at ITC partially offset earnings growth in the quarter.
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Foreign exchange had a $0.01 unfavorable impact on EPS for the quarter, and higher weighted average shares from the DRIP also reduced EPS by $0.01.
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The Corporate and Other segment reported unrealized losses on foreign exchange contracts and higher finance costs, partially offset by tax recoveries.
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The Tilbury LNG Phase 1B project remains subject to regulatory approvals and permitting, with construction not expected to start until mid-2027 and in-service as early as 2031, delaying potential benefits.
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UNS Energy's year-to-date EPS was down $0.03 due to lower wholesale sales margins and timing of operating costs, despite higher retail sales.
Q & A Highlights
Q: Can you unpack the next steps for Tilbury 1B and provide an update on the bigger Tilbury Phase 2, including potential rate benefits? A: Roger Dall'Antonia (CEO, FortisBC) detailed that Tilbury 1B includes a marine jetty, liquefaction expansion, and a 230 kV power line. The next steps involve addressing conditions from the 2024 environmental assessment certificate and finalizing an equity partnership agreement with the Musqueam Indian Band. Construction could start in 2027. For Tilbury 2, the storage tank replacement is primarily for resiliency and gas supply management, while the larger 2.5 million tonnes per annum liquefaction expansion is further out and would be designed with a rate benefit, though it's too early to quantify.
Q: Have you witnessed any change in how data center customers approach negotiations at TEP, given the selective opposition in the US? A: David Hutchens (President and CEO) acknowledged pushback but emphasized the positive story of rate benefits for other customers, as seen with Project Blue. He stated that utilities, data center developers, and all levels of government are aligned on ensuring data centers cover their own costs and provide a rate benefit to other customers by sharing system fixed costs. The challenge is getting this message heard.
Q: Is there potential to look beyond the five-year capital plan to a longer horizon, given the visible backlog from Tilbury and ITC transmission? A: David Hutchens (President and CEO) explained that while they plan for longer-term items like integrated resource plans, providing a capital plan beyond five years would be difficult due to wide forecast error bars. He noted they prefer to provide color on opportunities above and beyond the plan, breaking them into those that could be added to the existing plan and those that extend growth beyond it.
Q: Can you quantify the impact of the Tilbury expansion on the balance sheet, and will it affect the funding plan? A: Jocelyn Perry (CFO) stated that Tilbury will be included in the full review of the five-year plan. The company will need to firm up the timing of investments and will look at all funding options available to keep credit metrics in check, with a deeper dive planned for the fall.
Q: Can you indicate the profile of CapEx for the Tilbury projectwill material amounts be spent before 2030 or mostly in the early 2030s? A: David Hutchens (President and CEO) said the shape of CapEx hasn't been finalized yet, but large projects typically start slowly and ramp up. With the project potentially in service as early as 2031, they will also receive AFUDC on the capital spent. The shape of capital matters, not just the overall size, and more details will be provided later.
Q: What is your updated view on ITC's conversations with local distribution companies regarding accelerating investments for large loads? A: Krista Tanner (CEO, FortisAlberta) stated they remain optimistic and are working hand-in-hand with customers like CMS, DTE, and Alliant. They are sticking to the approximately 8 gigawatts of additional load in their queue. Due to speed-to-power demands, they are directing customers to locations requiring fewer upgrades, which still provides rate relief benefits.
Q: How are you feeling about the TEP rate case coming out of the hearings, and what is the expected timeline? A: Susan Gray (CEO, UNS Energy) said they are optimistic and close to alignment with ACC staff on many issues. TEP has adjusted its requested ROE to 9.75%, resulting in a 10.2% increase request. They expect the judge's recommended opinion and order soon, with a final decision in November and an implementation date in December, wrapping up by year-end.
Q: Can you talk about the data center pipeline in Arizona beyond Project Blue and the $1.5-2 billion opportunity? A: Susan Gray (CEO, UNS Energy) noted they still have 8 to 10 gigawatts of data center pipeline in their queue. Beyond data centers, they also see growth from the Hermosa mine, Copper World (likely in the latter part of the five-year plan), and other manufacturing and existing customer growth, indicating a wide variety of opportunities in Tucson.
Q: Did the recent primary election outcome in Arizona surprise you, and will it impact your regulatory strategy? A: David Hutchens (President and CEO) said the primary result wasn't a surprise given three candidates for two seats. He emphasized that the company does not change its regulatory strategy based on elections. They will work with the regulators in place and continue to push for solid policy that supports customers, regardless of election outcomes.
Q: What range of outcomes can we expect from the upcoming IRP filing in Arizona, and how does it affect the opportunity set? A: David Hutchens (President and CEO) explained that the IRP will run various scenarios and pick a recommended portfolio for filing. The filing will show the investments needed and in which years, providing data for analysts to estimate requirements. The scenarios will be released, offering a high-level view of net present value revenue requirements for the portfolios.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
