Fortis Reports Mixed Q2 Results as Rate Base Growth Offsets UNS Energy Weakness
The Canadian utility giant posted earnings gains at most segments driven by capital investments, while Arizona operations faced headwinds from wholesale market conditions and timing issues.
Overview
Fortis Inc. (TSX/NYSE: FTS) disclosed mixed second-quarter performance in its interim management discussion and analysis, with Rate Base growth driving earnings across most operating segments while its Arizona utility faced market-related pressures (FIN SUPP filing, 2026-07-31).
The diversified North American utility serves 3.5 million customers across five Canadian provinces, ten U.S. states and the Cayman Islands with 9,900 employees and $79 billion in total assets as of June 30, 2026 (FIN SUPP filing, 2026-07-31).
Segment Performance
ITC, the company's transmission business in which Fortis holds an 80.1% controlling interest, reported earnings growth for both the quarter and year-to-date periods "primarily due to Rate Base growth, partially offset by higher non-recoverable stock-based compensation and holding company finance costs" (FIN SUPP filing, 2026-07-31).
At UNS Energy, quarterly earnings increased due to higher retail electricity sales associated with warmer weather in southeastern Arizona, though this was "partially offset by: (i) the concentration of higher operating costs in the second quarter of 2026; and (ii) higher costs associated with Rate Base growth not yet reflected in customer rates" (FIN SUPP filing, 2026-07-31). Year-to-date earnings declined, driven by "lower margin on wholesale sales due to market conditions" and the concentration of higher operating costs in the first half of 2026 (FIN SUPP filing, 2026-07-31). TEP has filed a general rate application with the Arizona Corporation Commission expected to be finalized in November 2026.
Central Hudson posted year-to-date earnings growth "largely due to Rate Base growth and the timing of incurring operating costs in comparison to 2025," though this was "partially offset by the shift in quarterly revenue" associated with new delivery rates approved by the Public Service Commission effective July 1, 2025 (FIN SUPP filing, 2026-07-31).
Canadian Operations
FortisBC Energy saw earnings increases for both periods "primarily due to Rate Base growth," with the timing of operating costs also contributing to the six-month improvement (FIN SUPP filing, 2026-07-31). FortisAlberta similarly benefited from Rate Base growth and operating cost timing (FIN SUPP filing, 2026-07-31).
The Other Electric segment, which includes eastern Canadian utilities, reported year-to-date earnings declines "primarily due to the disposition of FortisTCI, partially offset by higher electricity sales and Rate Base growth" (FIN SUPP filing, 2026-07-31). The Turks and Caicos utility was sold in September 2025.
Currency and Outlook
The company reported results using U.S. dollar-to-Canadian dollar exchange rates averaging 1.38 for both second quarters and 1.38 and 1.41 year-to-date for 2026 and 2025, respectively (FIN SUPP filing, 2026-07-31). Forecast periods assume a rate of 1.35.
According to MarginX data, Fortis has declared a CAD $0.64 cash dividend payable August 19, 2026. Recent insider activity shows small acquisitions in the public market by directors Ball (165 shares), Blouin (148 shares), and Dobson (290 shares).
The company noted that "business risks remain substantially unchanged from those disclosed in its 2025 Annual MD&A" (FIN SUPP filing, 2026-07-31).
This article was generated by MarginX from the FIN SUPP filing on 2026-07-31. It is not investment advice.