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US regulated utilities boost Fortis Q4, FY'17 adjusted earnings

Fortis Inc. on Feb. 15 reported fourth-quarter 2017 adjusted net earnings attributable to common equity shareholders of C$259 million, or 62 cents per share, largely flat year over year but in line with the S&P Capital IQ consensus normalized EPS estimate for the most recent quarter of 62 cents.

The company booked 62 cents per share in adjusted net earnings a year earlier.

On a GAAP basis, fourth-quarter net earnings attributable to shareholders were down to C$134 million, or 32 cents per share, in 2017, from C$189 million, or 49 cents per share, in 2016, results shows.

Fortis posted full-year 2017 adjusted net earnings attributable to common equity shareholders of C$1.05 billion, or C$2.53 per basic share, an increase from C$715 million, or C$2.31 per basic share, for 2016.

The S&P Capital IQ consensus normalized EPS estimate for 2017 was C$2.53.

UNS Energy Corp. contributed an additional 16 cents in adjusted EPS due to the impact of its rate case settlement and more favorably priced long-term wholesale sales, the company said. ITC Holdings Corp. contributed adjusted net earnings of C$363 million in 2017.

GAAP net earnings attributable to common equity shareholders for 2017 grew to C$963 million, or C$2.32 per basic share, from C$585 million, or C$1.89 per basic share, in 2016.

The company attributed the C$378 million year-over-year increase in results to full-year earnings contribution at ITC, lower corporate and other expenses, strong performance at UNS Energy, and higher earnings from Aitken Creek.

By segment, the U.S. regulated utilities contributed C$612 million toward 2017 GAAP net earnings, an increase from C$328 million in 2016, driven by the ITC acquisition in October 2016. The Canadian regulated utilities booked C$393 million in GAAP net earnings, a decrease from C$390 million a year earlier. The Caribbean regulated utilities earned C$34 million in 2017, compared with C$46 million in 2016.

Consolidated capital expenditures were C$3.0 billion in 2017, compared with C$2.1 billion in 2016. The company reaffirmed its five-year CapEx program of about C$14.5 billion for 2018 through 2022 and average annual dividend growth target of 6% through 2022.

The company's 2017 cash flow from operating activities totaled C$2.8 billion, a 46% year-over-year increase from C$1.9 billion in 2016. Fortis generated C$8.30 billion in full-year 2017 revenues, an increase of C$1.46 billion from C$6.84 billion in 2016.

Fortis expects to record an approximately 3% decrease in its annual EPS as a result of U.S. tax reform. Going forward, the tax reform is expected to increase the rate base growth for the five-year period to 2022 by about 50 basis points, resulting in a 5% increase to compound annual growth in rate base over the next five years.