BMO First GlanceFebruary 10, 2023 | 07:07 ET~Fortis FTS-TSX Rating Market Perform
Price: Feb-9 $53.62 Target $60.00 Total Rtn 16%
First Glance: Q4/22 EPS Generally in Line With Expectations Bottom Line:
Fortis reported Q4/22 adj. EPS (basic) of $0.72 ($0.63 in Q4/21), generally in line with our consensus-aligned $0.71.
Higher-than-expected ITC (rate base growth), Other Electric (Caribbean), and Energy Infrastructure (hydro production) helped offset corporate expense friction (interest expense).
The 5-year capex program of $22.3B was reiterated, supporting 6.2% rate base growth and 4-6% dividend growth through 2027.
Net, we expect a neutral share price reaction.
Key Points ITC. $126M of earnings ($103M in Q4/21) exceeded our $114M estimate on rate base growth and lower non-recoverable stock-based compensation.
UNS Energy. $45M ($33M in Q4/21) was generally aligned with our $46M, supported by warmer temperatures and customer growth (+3% retail sales). Central Hudson. $37M ($39M in Q4/21) was slightly below our $39M estimate on higher operating expenses along with 7% lower residential sales and 1% lower C&I. FortisBC Energy. Contributed $84M ($78M in Q4/21) compared to our $80M on higher gas sales (+1%). FortisAlberta. $34M ($23M in Q4/21) was below our $37M on timing of expenses and supported by retail sales up 1%. FortisBC Electric. $14M ($14M in Q4/21) was generally aligned with our $15M estimate and supported by 4% higher sales. Other Electric. Reported earnings of $40M ($29M in Q4/21), above our $29M estimate, reflecting rate base growth and higher sales. Caribbean sales were up 3% due to increased tourism. Non-regulated Energy Infrastructure. $26M ($12M in Q4/21) beat our $14M outlook due to higher-than-expected hydroelectric production in Belize and higher margins at Aitken Creek. Corporate. Contributed -$59M (-$31M in Q4/21) compared to our -$31M estimate, on higher interest expense and taxes. Conference call today at 8:30 a.m. ET. 1-416-764-8658 or 1-888-886-7786