What Fortis (FTS) Said on Its Q3 Earnings Call

Key Points

• Fortis reported Q3 2026 earnings of C$474 million, or C$0.92 per share, with adjusted EPS up C$0.05 year over year. It declared a C$0.665 quarterly dividend, a 4% increase, and extended its 4%–6% annual dividend-growth outlook through 2031.
• The company unveiled a C$32.2 billion five-year capital plan, entirely focused on regulated projects and weighted toward transmission, distribution and critical infrastructure. Fortis expects rate base to grow at a 7.5% compound annual rate through 2031, reaching about C$64 billion.
• Major investment opportunities include ITC transmission projects and FortisBC’s LNG expansions; potential data-center and industrial demand could add further growth beyond the base plan. Fortis expects to fund investments mainly through operating cash flow and utility debt, with some additional ATM equity issuance planned.

Fortis NYSE: FTS reported third-quarter 2026 earnings of C$474 million, or C$0.92 per common share, while unveiling a C$32.2 billion five-year capital plan centered on regulated transmission, distribution and LNG infrastructure investments.

The company said the new plan is C$3.4 billion larger than its previous five-year outlook and is expected to support a 7.5% compound annual growth rate in rate base through 2031. Fortis also extended its annual dividend-growth guidance of 4% to 6% through 2031 and declared a fourth-quarter dividend of C$0.665 per share, a 4% increase.

“This past quarter has been one of the busiest and most positive I can remember during my tenure as CEO,” President and CEO David Hutchens said. Fortis invested C$4.2 billion year to date and expects to invest about C$6 billion during 2026, C$400 million above its prior annual plan.

Quarterly earnings and operating drivers

Reported earnings totaled C$1.4 billion, or C$2.69 per share, for the first nine months of 2026. Chief Financial Officer Jocelyn Perry said adjusted third-quarter earnings per share increased C$0.05 from the prior year after excluding 2025 income taxes and closing costs tied to the disposition of FortisTCI.

ITC contributed C$0.03 of quarterly EPS growth, primarily from rate-base expansion and lower stock-based compensation expense, partly offset by higher financing costs. Fortis’ U.S. electric and gas operations contributed an additional C$0.02 per share, with UNS Energy benefiting from higher residential and industrial electricity sales, customer growth, timing of operating costs and lower income taxes associated with investment tax credits on a battery storage project.

Western Canadian utilities added C$0.02 per share, reflecting rate-base growth and lower income tax expense at FortisAlberta. These gains were partly offset by a C$0.01 decline in the other electric segment, largely due to the September 2025 sale of FortisTCI.

The company said the 2025 sales of its Turks and Caicos and Belize assets reduced quarterly EPS by C$0.02, net of financing-cost savings. Foreign exchange had a favorable C$0.01-per-share effect during the quarter.

Capital plan emphasizes transmission and LNG

Fortis said its five-year plan consists entirely of regulated projects, with about 75% directed toward transmission and distribution assets and other critical infrastructure. Consolidated rate base is projected to increase from C$45 billion in 2026 to approximately C$56 billion in 2029 and C$64 billion in 2031.

• ITC: The transmission business has a C$11.6 billion capital plan, its largest to date, supporting 8.6% five-year rate-base growth. The plan includes investments connected to MISO’s Tranche 2.1 transmission plan, reliability projects and interconnections.
• UNS Energy: The Arizona utility’s C$5.6 billion plan supports 7.4% rate-base growth, with more than two-thirds of spending allocated to transmission and distribution.
• FortisBC: The British Columbia utility’s C$6 billion plan supports 7.9% rate-base growth and includes LNG, advanced metering, system reliability and integrity investments.

ITC was awarded the MISO Tranche 2.1 MARS Project in Iowa, which includes roughly 300 miles of new 345-kilovolt and 765-kilovolt transmission lines. The project is estimated to require US$1 billion of investment, including approximately US$500 million in Fortis’ five-year plan, with the remaining investment expected after 2031.

Hutchens said ITC also sees potential customer connections tied to more than 10,000 megawatts of proposed data-center, industrial and economic-development load across its footprint. Krista Tanner, president and CEO of ITC Holdings, said C$800 million of data-center investment is already included in the plan for publicly announced and approved projects, while the broader 10-gigawatt pipeline remains incremental and is at varying stages of development.

Tilbury projects and Arizona growth opportunities

At FortisBC’s Tilbury site, the company is advancing a Phase 1B liquefaction expansion and marine jetty, with total expected investment of about C$1.7 billion. FortisBC also received environmental approvals for a Phase II expansion that includes a proposed C$1.1 billion, 3-billion-cubic-foot LNG storage tank and regasification facilities.

Roger Dall’Antonia, president and CEO of FortisBC, said construction on the Phase 1B and storage-tank projects is expected to begin in 2027, with in-service timing targeted for late 2031 into 2032. The broader Phase II opportunity could add up to 2.5 million tonnes per annum of liquefaction capacity for marine fueling or export markets, with potential investment estimated at C$2 billion to C$4 billion, mostly beyond 2031.

In Arizona, Tucson Electric Power has an approved energy supply agreement associated with approximately 300 megawatts of data-center load expected to begin ramping in 2027. Hutchens said no additional data-center capital is included in Fortis’ base plan beyond existing investments. However, TEP’s high-growth Integrated Resource Plan scenario could require about 800 megawatts of new generation and up to C$1.5 billion of incremental investment.

Funding and regulatory outlook

Fortis said it expects to fund its capital plan primarily through cash from operations and debt issued at regulated utilities. The company issued C$1 billion of hybrids and about C$260 million of at-the-market equity during the third quarter, and expects to issue approximately C$250 million of additional ATM equity over the next 12 months, subject to market conditions.

Perry said the company targets a 50- to 75-basis-point buffer above credit-rating metric thresholds. Fortis expects its average S&P funds-from-operations-to-debt ratio to remain above 12% during the five-year period, while average Fitch FFO leverage is projected at approximately 5.9 times.

Separately, an Arizona Corporation Commission administrative law judge recommended a 9.65% allowed return on equity and a 55% common-equity component for TEP’s general rate application. The recommendation calls for new rates to take effect Dec. 1, subject to commission approval anticipated later in November. Hutchens said the proposed adjustment mechanism would not begin its first adjustment until April 2028, leaving some regulatory lag despite providing a mechanism intended to smooth earnings over time.

About Fortis (NYSE:FTS)

Fortis Inc is a Canadian utility holding company that owns and operates regulated electric and natural gas utilities. Its businesses are primarily focused on the transmission and distribution of electricity, natural gas distribution, and related energy infrastructure.

Through its portfolio of utility subsidiaries, Fortis serves customers across Canada and the United States, with additional operations in the Caribbean. Its businesses include electric utilities, natural gas utilities, and electric transmission assets, providing essential energy services to residential, commercial, and industrial customers.

Fortis has expanded from its Canadian utility origins through acquisitions and investments in regulated infrastructure.

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