Exhibit | Description | ||||
Fortis Inc. (Registrant) | |||||||||||||||||
Date: May 5, 2021 | /s/ Jocelyn H. Perry | ||||||||||||||||
By: | Jocelyn H. Perry | ||||||||||||||||
Title: | Executive Vice President, Chief Financial Officer | ||||||||||||||||
Non-US GAAP Reconciliation | |||||||||||
Three months ended March 31 | |||||||||||
($ millions, except earnings per share) | 2021 | 2020 | Variance | ||||||||
Net Earnings | 355 | 312 | 43 | ||||||||
Adjusting items: | |||||||||||
Unrealized loss on mark-to-market of derivatives3 | 5 | 3 | 2 | ||||||||
Adjusted Net Earnings | 360 | 315 | 45 | ||||||||
Adjusted basic earnings per share ($) | 0.77 | 0.68 | 0.09 |
i |
ii |
iii |
Teleconference to Discuss First Quarter 2021 Results A teleconference and webcast will be held on May 5, 2021 at 8:30 a.m. (Eastern). David Hutchens, President and Chief Executive Officer and Jocelyn Perry, Executive Vice President and Chief Financial Officer, will discuss the Corporation's first quarter 2021 results. Shareholders, analysts, members of the media and other interested parties in North America are invited to participate by calling 1.877.223.4471. International participants may participate by calling 647.788.4922. Please dial in 10 minutes prior to the start of the call. No pass code is required. A live and archived audio webcast of the teleconference will be available on the Corporation's website, www.fortisinc.com. A replay of the conference will be available two hours after the conclusion of the call until June 5, 2021. Please call 1.800.585.8367 or 416.621.4642 and enter pass code 5765755. |
Investor Enquiries | Media Enquiries | ||||
Ms. Stephanie Amaimo | Ms. Karen McCarthy | ||||
Vice President, Investor Relations | Vice President, Communications & Corporate Affairs | ||||
Fortis Inc. | Fortis Inc. | ||||
248.946.3572 | 709.737.5323 | ||||
investorrelations@fortisinc.com | media@fortisinc.com |
iv |
1 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS (Unaudited) | |||||||||||
FORTIS INC. | |||||||||||
March 31, | December 31, | ||||||||||
As at (in millions of Canadian dollars) | 2021 | 2020 | |||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 317 | $ | 249 | |||||||
Accounts receivable and other current assets (Note 5) | 1,408 | 1,369 | |||||||||
Prepaid expenses | 104 | 102 | |||||||||
Inventories | 394 | 422 | |||||||||
Regulatory assets (Note 6) | 547 | 470 | |||||||||
Total current assets | 2,770 | 2,612 | |||||||||
Other assets | 687 | 670 | |||||||||
Regulatory assets (Note 6) | 3,148 | 3,118 | |||||||||
Property, plant and equipment, net | 36,069 | 35,998 | |||||||||
Intangible assets, net | 1,281 | 1,291 | |||||||||
Goodwill | 11,659 | 11,792 | |||||||||
Total assets | $ | 55,614 | $ | 55,481 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities | |||||||||||
Short-term borrowings (Note 7) | $ | 235 | $ | 132 | |||||||
Accounts payable and other current liabilities | 2,314 | 2,321 | |||||||||
Regulatory liabilities (Note 6) | 430 | 441 | |||||||||
Current installments of long-term debt (Note 7) | 1,276 | 1,254 | |||||||||
Total current liabilities | 4,255 | 4,148 | |||||||||
Other liabilities | 1,562 | 1,599 | |||||||||
Regulatory liabilities (Note 6) | 2,647 | 2,662 | |||||||||
Deferred income taxes | 3,377 | 3,344 | |||||||||
Long-term debt (Note 7) | 23,089 | 23,113 | |||||||||
Finance leases | 338 | 331 | |||||||||
Total liabilities | 35,268 | 35,197 | |||||||||
Commitments and contingencies (Note 13) | |||||||||||
Equity | |||||||||||
Common shares (1) | 13,944 | 13,819 | |||||||||
Preference shares | 1,623 | 1,623 | |||||||||
Additional paid-in capital | 10 | 11 | |||||||||
Accumulated other comprehensive income | (133) | 34 | |||||||||
Retained earnings | 3,328 | 3,210 | |||||||||
Shareholders' equity | 18,772 | 18,697 | |||||||||
Non-controlling interests | 1,574 | 1,587 | |||||||||
Total equity | 20,346 | 20,284 | |||||||||
Total liabilities and equity | $ | 55,614 | $ | 55,481 | |||||||
(1) No par value. Unlimited authorized shares. 469.4 million and 466.8 million issued and outstanding as at March 31, 2021 and December 31, 2020, respectively. | |||||||||||
See accompanying Notes to Condensed Consolidated Interim Financial Statements |
2 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS (Unaudited) | ||||||||||||||
FORTIS INC. | ||||||||||||||
For the quarter ended March 31 (in millions of Canadian dollars, | ||||||||||||||
except per share amounts) | 2021 | 2020 | ||||||||||||
Revenue | $ | 2,539 | $ | 2,391 | ||||||||||
Expenses | ||||||||||||||
Energy supply costs | 849 | 750 | ||||||||||||
Operating expenses | 650 | 626 | ||||||||||||
Depreciation and amortization | 372 | 357 | ||||||||||||
Total expenses | 1,871 | 1,733 | ||||||||||||
Operating income | 668 | 658 | ||||||||||||
Other income, net (Note 9) | 50 | 9 | ||||||||||||
Finance charges | 252 | 256 | ||||||||||||
Earnings before income tax expense | 466 | 411 | ||||||||||||
Income tax expense | 70 | 58 | ||||||||||||
Net earnings | $ | 396 | $ | 353 | ||||||||||
Net earnings attributable to: | ||||||||||||||
Non-controlling interests | $ | 25 | $ | 25 | ||||||||||
Preference equity shareholders | 16 | 16 | ||||||||||||
Common equity shareholders | 355 | 312 | ||||||||||||
$ | 396 | $ | 353 | |||||||||||
Earnings per common share (Note 10) | ||||||||||||||
Basic | $ | 0.76 | $ | 0.67 | ||||||||||
Diluted | $ | 0.76 | $ | 0.67 | ||||||||||
See accompanying Notes to Condensed Consolidated Interim Financial Statements |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | |||||||||||
FORTIS INC. | |||||||||||
For the quarter ended March 31 (in millions of Canadian dollars) | 2021 | 2020 | |||||||||
Net earnings | $ | 396 | $ | 353 | |||||||
Other comprehensive (loss) income | |||||||||||
Unrealized foreign currency translation (losses) gains, net of hedging activities and income tax (expense) recovery of $(2) million and $12 million, respectively | (189) | 1,202 | |||||||||
Other, net of income tax recovery of $nil and $9 million, respectively | 2 | (21) | |||||||||
(187) | 1,181 | ||||||||||
Comprehensive income | $ | 209 | $ | 1,534 | |||||||
Comprehensive income attributable to: | |||||||||||
Non-controlling interests | $ | 5 | $ | 150 | |||||||
Preference equity shareholders | 16 | 16 | |||||||||
Common equity shareholders | 188 | 1,368 | |||||||||
$ | 209 | $ | 1,534 | ||||||||
See accompanying Notes to Condensed Consolidated Interim Financial Statements |
3 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited) | |||||||||||||||||
FORTIS INC. | |||||||||||||||||
For the quarter ended March 31 (in millions of Canadian dollars) | 2021 | 2020 | |||||||||||||||
Operating activities | |||||||||||||||||
Net earnings | $ | 396 | $ | 353 | |||||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||||||||
Depreciation - property, plant and equipment | 324 | 321 | |||||||||||||||
Amortization - intangible assets | 34 | 32 | |||||||||||||||
Amortization - other | 14 | 4 | |||||||||||||||
Deferred income tax expense | 46 | 59 | |||||||||||||||
Equity component, allowance for funds used during construction (Note 9) | (22) | (14) | |||||||||||||||
Other | 20 | 47 | |||||||||||||||
Change in long-term regulatory assets and liabilities | 14 | (58) | |||||||||||||||
Change in working capital (Note 11) | (87) | (154) | |||||||||||||||
Cash from operating activities | 739 | 590 | |||||||||||||||
Investing activities | |||||||||||||||||
Capital expenditures - property, plant and equipment | (764) | (1,111) | |||||||||||||||
Capital expenditures - intangible assets | (40) | (51) | |||||||||||||||
Contributions in aid of construction | 14 | 17 | |||||||||||||||
Other | (48) | (44) | |||||||||||||||
Cash used in investing activities | (838) | (1,189) | |||||||||||||||
Financing activities | |||||||||||||||||
Proceeds from long-term debt, net of issuance costs | 94 | 359 | |||||||||||||||
Repayments of long-term debt and finance leases | (6) | (17) | |||||||||||||||
Borrowings under committed credit facilities | 1,267 | 1,756 | |||||||||||||||
Repayments under committed credit facilities | (1,155) | (1,263) | |||||||||||||||
Net change in short-term borrowings | 106 | (132) | |||||||||||||||
Issue of common shares, net of costs and dividends reinvested | 35 | 34 | |||||||||||||||
Dividends | |||||||||||||||||
Common shares, net of dividends reinvested | (147) | (213) | |||||||||||||||
Preference shares | (16) | (16) | |||||||||||||||
Subsidiary dividends paid to non-controlling interests | (18) | (25) | |||||||||||||||
Other | 9 | 3 | |||||||||||||||
Cash from financing activities | 169 | 486 | |||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (2) | 15 | |||||||||||||||
Change in cash and cash equivalents | 68 | (98) | |||||||||||||||
Cash and cash equivalents, beginning of period | 249 | 370 | |||||||||||||||
Cash and cash equivalents, end of period | $ | 317 | $ | 272 | |||||||||||||
Supplementary Cash Flow Information (Note 11) | |||||||||||||||||
See accompanying Notes to Condensed Consolidated Interim Financial Statements |
4 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
FORTIS INC. | |||||||||||||||||||||||||||||||||||||||||||||||
For the quarter ended March 31 (in millions of Canadian dollars, except share numbers) | Common Shares (# millions) | Common Shares | Preference Shares | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non-Controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||
As at December 31, 2020 | 466.8 | $ | 13,819 | $ | 1,623 | $ | 11 | $ | 34 | $ | 3,210 | $ | 1,587 | $ | 20,284 | ||||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | — | 371 | 25 | 396 | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (167) | — | (20) | (187) | |||||||||||||||||||||||||||||||||||||||
Common shares issued | 2.6 | 125 | — | (2) | — | — | — | 123 | |||||||||||||||||||||||||||||||||||||||
Subsidiary dividends paid to non-controlling interests | — | — | — | — | — | — | (18) | (18) | |||||||||||||||||||||||||||||||||||||||
Dividends declared on common shares ($0.505 per share) | — | — | — | — | — | (237) | — | (237) | |||||||||||||||||||||||||||||||||||||||
Dividends on preference shares | — | — | — | — | — | (16) | — | (16) | |||||||||||||||||||||||||||||||||||||||
Other | — | — | — | 1 | — | — | — | 1 | |||||||||||||||||||||||||||||||||||||||
As at March 31, 2021 | 469.4 | $ | 13,944 | $ | 1,623 | $ | 10 | $ | (133) | $ | 3,328 | $ | 1,574 | $ | 20,346 | ||||||||||||||||||||||||||||||||
As at December 31, 2019 | 463.3 | $ | 13,645 | $ | 1,623 | $ | 11 | $ | 336 | $ | 2,916 | $ | 1,582 | $ | 20,113 | ||||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | — | 328 | 25 | 353 | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 1,056 | — | 125 | 1,181 | |||||||||||||||||||||||||||||||||||||||
Common shares issued | 0.9 | 43 | — | (2) | — | — | — | 41 | |||||||||||||||||||||||||||||||||||||||
Subsidiary dividends paid to non-controlling interests | — | — | — | — | — | — | (25) | (25) | |||||||||||||||||||||||||||||||||||||||
Dividends declared on common shares ($0.4775 per share) | — | — | — | — | — | (223) | — | (223) | |||||||||||||||||||||||||||||||||||||||
Dividends on preference shares | — | — | — | — | — | (16) | — | (16) | |||||||||||||||||||||||||||||||||||||||
Other | — | — | — | 1 | — | — | (6) | (5) | |||||||||||||||||||||||||||||||||||||||
As at March 31, 2020 | 464.2 | $ | 13,688 | $ | 1,623 | $ | 10 | $ | 1,392 | $ | 3,005 | $ | 1,701 | $ | 21,419 | ||||||||||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Interim Financial Statements |
5 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
6 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
7 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
8 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
Regulated | Non-Regulated | |||||||||||||||||||||||||||||||||||||||||||
Energy | Inter- | |||||||||||||||||||||||||||||||||||||||||||
Quarter ended March 31, 2021 | UNS | Central | FortisBC | Fortis | FortisBC | Other | Sub | Infra- | Corporate | segment | ||||||||||||||||||||||||||||||||||
($ millions) | ITC | Energy | Hudson | Energy | Alberta | Electric | Electric | Total | structure | and Other | eliminations | Total | ||||||||||||||||||||||||||||||||
Revenue | 426 | 522 | 285 | 586 | 158 | 120 | 413 | 2,510 | 29 | — | — | 2,539 | ||||||||||||||||||||||||||||||||
Energy supply costs | — | 200 | 81 | 254 | — | 39 | 274 | 848 | 1 | — | — | 849 | ||||||||||||||||||||||||||||||||
Operating expenses | 117 | 177 | 131 | 84 | 39 | 30 | 49 | 627 | 9 | 14 | — | 650 | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 72 | 83 | 23 | 71 | 57 | 16 | 45 | 367 | 4 | 1 | — | 372 | ||||||||||||||||||||||||||||||||
Operating income | 237 | 62 | 50 | 177 | 62 | 35 | 45 | 668 | 15 | (15) | — | 668 | ||||||||||||||||||||||||||||||||
Other income, net | 9 | 16 | 9 | 2 | 1 | 1 | — | 38 | — | 12 | — | 50 | ||||||||||||||||||||||||||||||||
Finance charges | 79 | 28 | 12 | 36 | 26 | 18 | 18 | 217 | — | 35 | — | 252 | ||||||||||||||||||||||||||||||||
Income tax expense | 41 | 5 | 8 | 32 | 2 | 2 | 5 | 95 | 1 | (26) | — | 70 | ||||||||||||||||||||||||||||||||
Net earnings | 126 | 45 | 39 | 111 | 35 | 16 | 22 | 394 | 14 | (12) | — | 396 | ||||||||||||||||||||||||||||||||
Non-controlling interests | 23 | — | — | — | — | — | 2 | 25 | — | — | — | 25 | ||||||||||||||||||||||||||||||||
Preference share dividends | — | — | — | — | — | — | — | — | — | 16 | — | 16 | ||||||||||||||||||||||||||||||||
Net earnings attributable to common equity shareholders | 103 | 45 | 39 | 111 | 35 | 16 | 20 | 369 | 14 | (28) | — | 355 | ||||||||||||||||||||||||||||||||
Goodwill | 7,710 | 1,735 | 567 | 913 | 228 | 235 | 244 | 11,632 | 27 | — | — | 11,659 | ||||||||||||||||||||||||||||||||
Total assets | 20,360 | 10,744 | 3,994 | 7,745 | 5,128 | 2,465 | 4,269 | 54,705 | 730 | 225 | (46) | 55,614 | ||||||||||||||||||||||||||||||||
Capital expenditures | 302 | 152 | 61 | 93 | 104 | 28 | 63 | 803 | 1 | — | — | 804 | ||||||||||||||||||||||||||||||||
Quarter ended March 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||
($ millions) | ||||||||||||||||||||||||||||||||||||||||||||
Revenue | 433 | 473 | 280 | 466 | 152 | 114 | 448 | 2,366 | 25 | — | — | 2,391 | ||||||||||||||||||||||||||||||||
Energy supply costs | — | 167 | 78 | 160 | — | 39 | 305 | 749 | 1 | — | — | 750 | ||||||||||||||||||||||||||||||||
Operating expenses | 118 | 158 | 134 | 82 | 38 | 27 | 51 | 608 | 8 | 10 | — | 626 | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 73 | 81 | 22 | 60 | 55 | 15 | 46 | 352 | 4 | 1 | — | 357 | ||||||||||||||||||||||||||||||||
Operating income | 242 | 67 | 46 | 164 | 59 | 33 | 46 | 657 | 12 | (11) | — | 658 | ||||||||||||||||||||||||||||||||
Other income, net | 4 | (3) | 9 | 1 | 1 | 1 | 3 | 16 | — | (7) | — | 9 | ||||||||||||||||||||||||||||||||
Finance charges | 80 | 28 | 12 | 36 | 26 | 18 | 19 | 219 | — | 37 | — | 256 | ||||||||||||||||||||||||||||||||
Income tax expense | 43 | 8 | 8 | 23 | 2 | 1 | 4 | 89 | 3 | (34) | — | 58 | ||||||||||||||||||||||||||||||||
Net earnings | 123 | 28 | 35 | 106 | 32 | 15 | 26 | 365 | 9 | (21) | — | 353 | ||||||||||||||||||||||||||||||||
Non-controlling interests | 22 | — | — | — | — | — | 3 | 25 | — | — | — | 25 | ||||||||||||||||||||||||||||||||
Preference share dividends | — | — | — | — | — | — | — | — | — | 16 | — | 16 | ||||||||||||||||||||||||||||||||
Net earnings attributable to common equity shareholders | 101 | 28 | 35 | 106 | 32 | 15 | 23 | 340 | 9 | (37) | — | 312 | ||||||||||||||||||||||||||||||||
Goodwill | 8,630 | 1,943 | 634 | 913 | 228 | 235 | 266 | 12,849 | 27 | — | — | 12,876 | ||||||||||||||||||||||||||||||||
Total assets | 21,676 | 11,426 | 4,120 | 7,297 | 4,884 | 2,359 | 4,342 | 56,104 | 727 | 365 | (177) | 57,019 | ||||||||||||||||||||||||||||||||
Capital expenditures | 249 | 509 | 73 | 121 | 121 | 28 | 57 | 1,158 | 4 | — | — | 1,162 |
9 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
Quarter ended March 31 | ||||||||
($ millions) | 2021 | 2020 | ||||||
Beginning of period | (64) | (35) | ||||||
Credit loss expensed | (7) | (9) | ||||||
Write-offs, net of recoveries | 5 | 3 | ||||||
Foreign exchange | 2 | (3) | ||||||
End of period | (64) | (44) |
As at | ||||||||
March 31, | December 31, | |||||||
($ millions) | 2021 | 2020 | ||||||
Regulatory assets | ||||||||
Deferred income taxes | 1,705 | 1,697 | ||||||
Employee future benefits | 567 | 588 | ||||||
Deferred energy management costs | 342 | 334 | ||||||
Rate stabilization and related accounts | 288 | 213 | ||||||
Deferred lease costs | 131 | 122 | ||||||
Manufactured gas plant site remediation deferral | 103 | 107 | ||||||
Derivatives | 79 | 73 | ||||||
Generation early retirement costs | 52 | 55 | ||||||
Other regulatory assets | 428 | 399 | ||||||
Total regulatory assets | 3,695 | 3,588 | ||||||
Less: Current portion | (547) | (470) | ||||||
Long-term regulatory assets | 3,148 | 3,118 | ||||||
Regulatory liabilities | ||||||||
Deferred income taxes | 1,336 | 1,361 | ||||||
Asset removal cost provision | 1,174 | 1,206 | ||||||
Rate stabilization and related accounts | 104 | 104 | ||||||
Renewable energy surcharge | 99 | 100 | ||||||
Energy efficiency liability | 72 | 83 | ||||||
Employee future benefits | 17 | 43 | ||||||
Other regulatory liabilities | 275 | 206 | ||||||
Total regulatory liabilities | 3,077 | 3,103 | ||||||
Less: Current portion | (430) | (441) | ||||||
Long-term regulatory liabilities | 2,647 | 2,662 |
10 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
As at | |||||||||||
March 31, | December 31, | ||||||||||
($ millions) | 2021 | 2020 | |||||||||
Long-term debt | 23,423 | 23,534 | |||||||||
Credit facility borrowings | 1,085 | 980 | |||||||||
Total long-term debt | 24,508 | 24,514 | |||||||||
Less: Deferred financing costs and debt discounts | (143) | (147) | |||||||||
Less: Current installments of long-term debt | (1,276) | (1,254) | |||||||||
23,089 | 23,113 |
As at | ||||||||||||||
Credit facilities | Regulated | Corporate | March 31, | December 31, | ||||||||||
($ millions) | Utilities | and Other | 2021 | 2020 | ||||||||||
Total credit facilities | 3,585 | 1,880 | 5,465 | 5,581 | ||||||||||
Credit facilities utilized: | ||||||||||||||
Short-term borrowings (1) | (235) | — | (235) | (132) | ||||||||||
Long-term debt (including current portion) (2) | (740) | (345) | (1,085) | (980) | ||||||||||
Letters of credit outstanding | (77) | (47) | (124) | (130) | ||||||||||
Credit facilities unutilized | 2,533 | 1,488 | 4,021 | 4,339 |
11 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
Quarter ended March 31 | Defined Benefit Pension Plans | OPEB Plans | ||||||||||||
($ millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||
Components of net benefit cost | ||||||||||||||
Service costs | 28 | 25 | 9 | 8 | ||||||||||
Interest costs | 25 | 28 | 5 | 6 | ||||||||||
Expected return on plan assets | (45) | (44) | (5) | (5) | ||||||||||
Amortization of actuarial losses (gains) | 9 | 8 | (1) | (1) | ||||||||||
Amortization of past service credits/plan amendments | — | — | — | (1) | ||||||||||
Regulatory adjustments | — | (1) | 1 | 1 | ||||||||||
Net benefit cost | 17 | 16 | 9 | 8 | ||||||||||
Quarter ended March 31 | ||||||||
($ millions) | 2021 | 2020 | ||||||
Equity component, allowance for funds used during construction | 22 | 14 | ||||||
Non-service benefit cost | 11 | 8 | ||||||
Derivative gains (losses) | 9 | (7) | ||||||
Interest income | 2 | 5 | ||||||
Other | 6 | (11) | ||||||
50 | 9 |
2021 | 2020 | |||||||||||||||||||
Net Earnings | Weighted | Net Earnings | Weighted | |||||||||||||||||
to Common | Average | to Common | Average | |||||||||||||||||
Shareholders | Shares | EPS | Shareholders | Shares | EPS | |||||||||||||||
Quarter ended March 31 | ($ millions) | (# millions) | ($) | ($ millions) | (# millions) | ($) | ||||||||||||||
Basic EPS | 355 | 467.8 | 0.76 | 312 | 463.9 | 0.67 | ||||||||||||||
Potential dilutive effect of stock options | — | 0.4 | — | 0.7 | ||||||||||||||||
Diluted EPS | 355 | 468.2 | 0.76 | 312 | 464.6 | 0.67 | ||||||||||||||
12 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
Quarter ended March 31 | ||||||||
($ millions) | 2021 | 2020 | ||||||
Change in working capital | ||||||||
Accounts receivable and other current assets | (49) | 38 | ||||||
Prepaid expenses | (3) | (4) | ||||||
Inventories | 25 | 44 | ||||||
Regulatory assets - current portion | (69) | 14 | ||||||
Accounts payable and other current liabilities | 30 | (208) | ||||||
Regulatory liabilities - current portion | (21) | (38) | ||||||
(87) | (154) | |||||||
Non-cash investing and financing activities | ||||||||
Accrued capital expenditures | 326 | 324 | ||||||
Common share dividends reinvested | 89 | 8 | ||||||
Contributions in aid of construction | 12 | 8 | ||||||
13 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
14 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
($ millions) | Level 1 (1) | Level 2 (1) | Level 3 (1) | Total | ||||||||||
As at March 31, 2021 | ||||||||||||||
Assets | ||||||||||||||
Energy contracts subject to regulatory deferral (2) (3) | — | 42 | — | 42 | ||||||||||
Energy contracts not subject to regulatory deferral (2) | — | 3 | — | 3 | ||||||||||
Foreign exchange contracts and total return swaps (2) | 20 | — | — | 20 | ||||||||||
Other investments (4) | 121 | — | — | 121 | ||||||||||
141 | 45 | — | 186 | |||||||||||
Liabilities | ||||||||||||||
Energy contracts subject to regulatory deferral (3) (5) | — | (98) | — | (98) | ||||||||||
Energy contracts not subject to regulatory deferral (5) | — | (15) | — | (15) | ||||||||||
— | (113) | — | (113) | |||||||||||
As at December 31, 2020 | ||||||||||||||
Assets | ||||||||||||||
Energy contracts subject to regulatory deferral (2) (3) | — | 38 | — | 38 | ||||||||||
Energy contracts not subject to regulatory deferral (2) | — | 6 | — | 6 | ||||||||||
Foreign exchange contracts and total return swaps (2) | 16 | — | — | 16 | ||||||||||
Other investments (4) | 126 | — | — | 126 | ||||||||||
142 | 44 | — | 186 | |||||||||||
Liabilities | ||||||||||||||
Energy contracts subject to regulatory deferral (3) (5) | — | (94) | — | (94) | ||||||||||
Energy contracts not subject to regulatory deferral (5) | — | (12) | — | (12) | ||||||||||
— | (106) | — | (106) |
15 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
Gross | ||||||||||||||
Amount | Counterparty | Cash | ||||||||||||
Recognized | Netting of | Collateral | ||||||||||||
on Balance | Energy | Received/ | ||||||||||||
($ millions) | Sheet | Contracts | Posted | Net Amount | ||||||||||
As at March 31, 2021 | ||||||||||||||
Derivative assets | 45 | 25 | 10 | 10 | ||||||||||
Derivative liabilities | (113) | (25) | (18) | (70) | ||||||||||
As at December 31, 2020 | ||||||||||||||
Derivative assets | 44 | 26 | 10 | 8 | ||||||||||
Derivative liabilities | (106) | (26) | (9) | (71) |
As at | ||||||||
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
Energy contracts subject to regulatory deferral (1) | ||||||||
Electricity swap contracts (GWh) | 99 | 522 | ||||||
Electricity power purchase contracts (GWh) | 2,195 | 2,781 | ||||||
Gas swap contracts (PJ) | 164 | 156 | ||||||
Gas supply contract premiums (PJ) | 179 | 203 | ||||||
Energy contracts not subject to regulatory deferral (1) | ||||||||
Wholesale trading contracts (GWh) | 1,626 | 1,588 | ||||||
Gas swap contracts (PJ) | 22 | 36 |
16 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Notes to Condensed Consolidated Interim Financial Statements |
For the three months ended March 31, 2021 and 2020 (Unaudited) |
17 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
CONTENTS | ||||||||||||||
About Fortis | 1 | Liquidity and Capital Resources | 10 | |||||||||||
Key Developments | 1 | Cash Flow Requirements | 10 | |||||||||||
Performance at a Glance | 3 | Cash Flow Summary | 12 | |||||||||||
Business Unit Performance | 5 | Contractual Obligations | 13 | |||||||||||
ITC | 5 | Capital Structure and Credit Ratings | 13 | |||||||||||
UNS Energy | 5 | Capital Plan | 14 | |||||||||||
Central Hudson | 6 | Business Risks | 14 | |||||||||||
FortisBC Energy | 6 | Accounting Matters | 15 | |||||||||||
FortisAlberta | 7 | Financial Instruments | 15 | |||||||||||
FortisBC Electric | 7 | Long-Term Debt and Other | 15 | |||||||||||
Other Electric | 8 | Derivatives | 15 | |||||||||||
Energy Infrastructure | 8 | Summary of Quarterly Results | 15 | |||||||||||
Corporate and Other | 8 | Related-Party and Inter-Company Transactions | 16 | |||||||||||
Non-US GAAP Financial Measures | 9 | Outlook | 17 | |||||||||||
Regulatory Highlights | 9 | Forward-Looking Information | 17 | |||||||||||
Financial Position | 10 | Glossary | 19 | |||||||||||
Condensed Consolidated Interim Financial Statements (Unaudited) | F-1 | |||||||||||||
1 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
2 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
PERFORMANCE AT A GLANCE | |||||||||||
Key Financial Metrics | |||||||||||
Quarter ended March 31 | |||||||||||
($ millions, except as indicated) | 2021 | 2020 | Variance | ||||||||
Revenue | 2,539 | 2,391 | 148 | ||||||||
Common Equity Earnings | |||||||||||
Actual | 355 | 312 | 43 | ||||||||
Adjusted (1) | 360 | 315 | 45 | ||||||||
Basic EPS ($) | |||||||||||
Actual | 0.76 | 0.67 | 0.09 | ||||||||
Adjusted (1) | 0.77 | 0.68 | 0.09 | ||||||||
Dividends Paid per Common Share ($) | 0.505 | 0.4775 | 0.0275 | ||||||||
Weighted Average Number of Common Shares Outstanding (# millions) | 467.8 | 463.9 | 3.9 | ||||||||
Operating Cash Flow | 739 | 590 | 149 | ||||||||
Capital Expenditures (2) | 880 | 1,174 | (294) |
3 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
4 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
BUSINESS UNIT PERFORMANCE | ||||||||||||||
Common Equity Earnings | ||||||||||||||
Quarter ended March 31 | Variance | |||||||||||||
($ millions) | 2021 | 2020 | FX (1) | Other | ||||||||||
Regulated Utilities | ||||||||||||||
ITC | 103 | 101 | (6) | 8 | ||||||||||
UNS Energy | 45 | 28 | (2) | 19 | ||||||||||
Central Hudson | 39 | 35 | (2) | 6 | ||||||||||
FortisBC Energy | 111 | 106 | — | 5 | ||||||||||
FortisAlberta | 35 | 32 | — | 3 | ||||||||||
FortisBC Electric | 16 | 15 | — | 1 | ||||||||||
Other Electric (2) | 20 | 23 | — | (3) | ||||||||||
369 | 340 | (10) | 39 | |||||||||||
Non-Regulated | ||||||||||||||
Energy Infrastructure (3) | 14 | 9 | — | 5 | ||||||||||
Corporate and Other (4) | (28) | (37) | 2 | 7 | ||||||||||
Common Equity Earnings | 355 | 312 | (8) | 51 |
ITC | ||||||||||||||
Quarter ended March 31 | Variance | |||||||||||||
($ millions) | 2021 | 2020 | FX | Other | ||||||||||
Revenue (1) | 426 | 433 | (25) | 18 | ||||||||||
Earnings (1) | 103 | 101 | (6) | 8 |
UNS ENERGY | ||||||||||||||
Quarter ended March 31 | Variance | |||||||||||||
($ millions, except as indicated) | 2021 | 2020 | FX | Other | ||||||||||
Retail electricity sales (GWh) | 2,150 | 2,168 | — | (18) | ||||||||||
Wholesale electricity sales (GWh) (1) | 1,727 | 1,330 | — | 397 | ||||||||||
Gas sales (PJ) | 7 | 6 | — | 1 | ||||||||||
Revenue | 522 | 473 | (28) | 77 | ||||||||||
Earnings | 45 | 28 | (2) | 19 |
5 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
CENTRAL HUDSON | ||||||||||||||
Quarter ended March 31 | Variance | |||||||||||||
($ millions, except as indicated) | 2021 | 2020 | FX | Other | ||||||||||
Electricity sales (GWh) | 1,290 | 1,243 | — | 47 | ||||||||||
Gas sales (PJ) | 9 | 8 | — | 1 | ||||||||||
Revenue | 285 | 280 | (16) | 21 | ||||||||||
Earnings | 39 | 35 | (2) | 6 |
FORTISBC ENERGY | |||||||||||
Quarter ended March 31 | |||||||||||
($ millions, except as indicated) | 2021 | 2020 | Variance | ||||||||
Gas sales (PJ) | 80 | 82 | (2) | ||||||||
Revenue | 586 | 466 | 120 | ||||||||
Earnings | 111 | 106 | 5 |
6 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
FORTISALBERTA | |||||||||||
Quarter ended March 31 | |||||||||||
($ millions, except as indicated) | 2021 | 2020 | Variance | ||||||||
Electricity deliveries (GWh) | 4,412 | 4,553 | (141) | ||||||||
Revenue | 158 | 152 | 6 | ||||||||
Earnings | 35 | 32 | 3 |
FORTISBC ELECTRIC | |||||||||||
Quarter ended March 31 | |||||||||||
($ millions, except as indicated) | 2021 | 2020 | Variance | ||||||||
Electricity sales (GWh) | 933 | 915 | 18 | ||||||||
Revenue | 120 | 114 | 6 | ||||||||
Earnings | 16 | 15 | 1 |
7 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
OTHER ELECTRIC | ||||||||||||||
Quarter ended March 31 | Variance | |||||||||||||
($ millions, except as indicated) | 2021 | 2020 | FX | Other | ||||||||||
Electricity sales (GWh) | 2,842 | 2,938 | — | (96) | ||||||||||
Revenue | 413 | 448 | (5) | (30) | ||||||||||
Earnings | 20 | 23 | — | (3) |
ENERGY INFRASTRUCTURE | |||||||||||
Quarter ended March 31 | |||||||||||
($ millions, except as indicated) | 2021 | 2020 | Variance | ||||||||
Electricity sales (GWh) | 53 | 16 | 37 | ||||||||
Revenue | 29 | 25 | 4 | ||||||||
Earnings | 14 | 9 | 5 |
CORPORATE AND OTHER | ||||||||||||||
Quarter ended March 31 | Variance | |||||||||||||
($ millions) | 2021 | 2020 | FX | Other | ||||||||||
Net expenses | (28) | (37) | 2 | 7 |
8 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
Non-US GAAP Reconciliation | |||||||||||
Quarter ended March 31 | |||||||||||
($ millions, except as indicated) | 2021 | 2020 | Variance | ||||||||
Common Equity Earnings | 355 | 312 | 43 | ||||||||
Adjusting item: | |||||||||||
Unrealized loss on mark-to-market of derivatives (1) | 5 | 3 | 2 | ||||||||
Adjusted Common Equity Earnings | 360 | 315 | 45 | ||||||||
Adjusted Basic EPS ($) | 0.77 | 0.68 | 0.09 |
9 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
Significant Changes between March 31, 2021 and December 31, 2020 | |||||||||||
Increase/(Decrease) | |||||||||||
FX | Other | ||||||||||
Balance Sheet Account | ($ millions) | ($ millions) | Explanation | ||||||||
Regulatory assets (current and long-term) | (16) | 123 | Due primarily to the operation of rate stabilization accounts, largely at: (i) UNS Energy, reflecting higher energy costs resulting from a severe winter storm in southwestern US in February 2021; and (ii) ITC, due to the normal operation of the annual flow-through mechanism. | ||||||||
Property, plant and equipment, net | (288) | 359 | Due to capital expenditures, partially offset by depreciation. | ||||||||
Goodwill | (133) | — | |||||||||
Short-term borrowings | (1) | 104 | Reflects the issuance of commercial paper at ITC to finance working capital and capital investment requirements. | ||||||||
Long-term debt (including current portion) | (207) | 205 | Reflects higher net borrowings under committed credit facilities and the issuance of debt at Central Hudson. | ||||||||
Shareholders' equity | (169) | 244 | Due primarily to: (i) Common Equity Earnings for the three months ended March 31, 2021, less dividends declared on common shares; and (ii) the issuance of common shares. | ||||||||
10 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
As at | ||||||||||||||
Credit Facilities | Regulated Utilities | Corporate and Other | March 31, | December 31, 2020 | ||||||||||
($ millions) | 2021 | |||||||||||||
Total credit facilities (1) | 3,585 | 1,880 | 5,465 | 5,581 | ||||||||||
Credit facilities utilized: | ||||||||||||||
Short-term borrowings | (235) | — | (235) | (132) | ||||||||||
Long-term debt (including current portion) | (740) | (345) | (1,085) | (980) | ||||||||||
Letters of credit outstanding | (77) | (47) | (124) | (130) | ||||||||||
Credit facilities unutilized | 2,533 | 1,488 | 4,021 | 4,339 |
11 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
CASH FLOW SUMMARY | |||||||||||
Summary of Cash Flows | |||||||||||
Quarter ended March 31 | |||||||||||
($ millions) | 2021 | 2020 | Variance | ||||||||
Cash, beginning of period | 249 | 370 | (121) | ||||||||
Cash provided from (used in): | |||||||||||
Operating activities | 739 | 590 | 149 | ||||||||
Investing activities | (838) | (1,189) | 351 | ||||||||
Financing activities | 169 | 486 | (317) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (2) | 15 | (17) | ||||||||
Cash, end of period | 317 | 272 | 45 |
Common Equity Financing | |||||||||||
Common Equity Issuances and Dividends Paid | |||||||||||
Quarter ended March 31 | |||||||||||
($ millions, except as indicated) | 2021 | 2020 | Variance | ||||||||
Common shares issued: | |||||||||||
Cash (1) | 35 | 34 | 1 | ||||||||
Non-cash (2) | 90 | 9 | 81 | ||||||||
Total common shares issued ($) | 125 | 43 | 82 | ||||||||
Number of common shares issued (# millions) | 2.6 | 0.9 | 1.7 | ||||||||
Common share dividends paid: | |||||||||||
Cash | (147) | (213) | 66 | ||||||||
Non-cash (3) | (89) | (8) | (81) | ||||||||
Total common share dividends paid ($) | (236) | (221) | (15) | ||||||||
Dividends paid per common share ($) | 0.5050 | 0.4775 | 0.0275 |
12 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
Consolidated Capital Structure | As at | |||||||
March 31, | December 31, | |||||||
(%) | 2021 | 2020 | ||||||
Debt (1) | 54.8 | 54.8 | ||||||
Preference shares | 3.6 | 3.6 | ||||||
Common shareholders' equity and minority interest (2) | 41.6 | 41.6 | ||||||
100.0 | 100.0 |
As at March 31, 2021 | Rating | Type | Outlook | ||||||||||||||
S&P | A- | Corporate | Negative | ||||||||||||||
BBB+ | Unsecured debt | ||||||||||||||||
DBRS Morningstar | BBB (high) | Corporate | Positive | ||||||||||||||
BBB (high) | Unsecured debt | ||||||||||||||||
Moody's | Baa3 | Issuer | Stable | ||||||||||||||
Baa3 | Unsecured debt |
13 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
Consolidated Capital Expenditures (1) | ||||||||||||||||||||||||||||||||
Quarter ended March 31, 2021 | ||||||||||||||||||||||||||||||||
($ millions) | Regulated | Total | ||||||||||||||||||||||||||||||
UNS | Central | FortisBC | Fortis | FortisBC | Other | Regulated | Non- | |||||||||||||||||||||||||
ITC | Energy | Hudson | Energy | Alberta | Electric | Electric | Utilities | Regulated (2) | Total | |||||||||||||||||||||||
Total | 302 | 152 | 61 | 93 | 104 | 28 | 139 | 879 | 1 | 880 |
14 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
SUMMARY OF QUARTERLY RESULTS | ||||||||||||||
Common Equity | ||||||||||||||
Revenue | Earnings | Basic EPS | Diluted EPS | |||||||||||
Quarter Ended | ($ millions) | ($ millions) | ($) | ($) | ||||||||||
March 31, 2021 | 2,539 | 355 | 0.76 | 0.76 | ||||||||||
December 31, 2020 | 2,346 | 331 | 0.71 | 0.71 | ||||||||||
September 30, 2020 | 2,121 | 292 | 0.63 | 0.63 | ||||||||||
June 30, 2020 | 2,077 | 274 | 0.59 | 0.59 | ||||||||||
March 31, 2020 | 2,391 | 312 | 0.67 | 0.67 | ||||||||||
December 31, 2019 | 2,326 | 346 | 0.77 | 0.77 | ||||||||||
September 30, 2019 | 2,051 | 278 | 0.64 | 0.63 | ||||||||||
June 30, 2019 | 1,970 | 720 | 1.66 | 1.66 |
15 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
16 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
17 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
18 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
19 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
Interim Management Discussion and Analysis |
20 | FORTIS INC. | MARCH 31, 2021 QUARTER REPORT |
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