Fortis Inc. (FTS): History, Ownership, Mission, How It Works & Makes Money

Ever wondered how a utility company can maintain a 51-year streak of dividend increases? Fortis Inc. (FTS), a major player in the North American energy market, has not only achieved this but also reported strong financial results for 2024, with annual net earnings of $1.6 billion, or $3.24 per common share. But how exactly does this Newfoundland-based company operate and generate revenue across Canada, the U.S., and the Caribbean?

With a $26 billion five-year capital plan through 2029 and a commitment to reducing greenhouse gas emissions, Fortis is positioning itself for a cleaner energy future, but what are the key strategies and business segments that drive its success? Keep reading to discover the history, ownership structure, operational model, and revenue streams that define Fortis Inc.

Fortis Inc. (FTS) History

Fortis Inc.'s Founding Timeline

Year established

The company was established in 1885.

Original location

The company was originally located in St. John's, Newfoundland.

Founding team members

The company was founded by a group of local businessmen in St. John's, Newfoundland.

Initial capital/funding

The initial capital was raised through local investors to establish a utility company.

Fortis Inc.'s Evolution Milestones

Fortis Inc.'s Transformative Moments

• Privatization in 1987: The privatization and renaming to Newfoundland Power in 1987 was a transformative moment, shifting the company from public to private ownership, enhancing operational efficiencies and paving the way for future expansions.
• Acquisition of Maritime Electric Company in 2001: This marked the first expansion outside Newfoundland and Labrador, setting the stage for becoming a diversified North American utility company.
• Rebranding to Fortis Inc. in 2002: The name change to Fortis Inc. in 2002 was a strategic decision to reflect the company's growing ambitions and broader scope beyond its original regional focus.
• Acquisition of U.S. Utilities: The acquisitions of Central Hudson Gas & Electric in 2013 and UNS Energy in 2014 significantly boosted Fortis' presence in the United States, providing a strong foundation for future growth.
• Acquisition of ITC Holdings Corp. in 2016: The purchase of ITC Holdings Corp. for approximately $11.3 billion was a pivotal moment, establishing Fortis as a major player in the North American transmission sector and diversifying its asset base.
• Investment in Renewable Energy: Fortis has been increasing its investments in renewable energy projects, aligning with global trends towards sustainable energy and reducing its carbon footprint. For example, the company aims to reduce emissions by 75% by 2035.

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Fortis Inc. (FTS) Ownership Structure

Fortis Inc. features a widely held ownership structure, with a mix of institutional and retail investors holding the majority of its shares. This diversified ownership base contributes to the company's stability and long-term strategic planning.

Fortis Inc.'s Current Status

Fortis Inc. (FTS) is a publicly traded company. It is listed on the Toronto Stock Exchange (TSX) under the ticker symbol FTS. As a publicly-traded entity, Fortis operates under the regulatory oversight of securities commissions and is required to disclose financial information to the public, ensuring transparency and accountability to its shareholders. For an in-depth look at the company's financial performance, consider reading Breaking Down Fortis Inc. (FTS) Financial Health: Key Insights for Investors.

Fortis Inc.'s Ownership Breakdown

Fortis Inc.'s Leadership

The leadership team at Fortis Inc. is responsible for the strategic direction and operational management of the company. Key figures include:

• David G. Hutchens: President and Chief Executive Officer
• Barry V. Perry: Executive Vice President and Chief Financial Officer

These individuals, along with other members of the executive team, guide Fortis Inc. in its mission to deliver sustainable and reliable utility services across North America.

Fortis Inc. (FTS) Mission and Values

Fortis operates with a commitment to delivering essential utility services while upholding strong values related to safety, customer service, and community support.

Fortis Inc.'s Core Purpose

Official mission statement

While a singular, official mission statement is not explicitly declared, Fortis Inc.'s approach to business reflects an overarching mission focused on:

• Providing safe and reliable utility services: Ensuring the delivery of electricity and gas to meet the essential needs of its customers.
• Sustainable operations: Committing to environmentally responsible practices and investments in renewable energy.
• Community engagement: Supporting the communities it serves through various initiatives and contributions.
• Stakeholder value: Delivering consistent value to its shareholders through stable and growing dividends.

Vision statement

Fortis Inc.'s vision is centered around becoming a leading North American utility company, recognized for:

• Growth and expansion: Expanding its utility base through strategic acquisitions and organic growth.
• Innovation and technology: Embracing new technologies to improve service delivery and operational efficiency.
• Customer satisfaction: Enhancing customer experience through reliable service and innovative solutions.
• Financial strength: Maintaining a strong financial position to support future investments and shareholder returns.

Company slogan/tagline

While Fortis Inc. does not have a specific, publicly advertised slogan, their corporate communications often emphasize themes such as:

• 'Reliable Energy, Sustainable Future': Highlighting their commitment to providing dependable energy services while focusing on environmental sustainability.
• 'Your Partner in Energy': Positioning themselves as a trusted and dependable provider of essential utility services.

To gain a deeper understanding of Fortis Inc.'s financial stability and investment potential, explore: Breaking Down Fortis Inc. (FTS) Financial Health: Key Insights for Investors

Fortis Inc. (FTS) How It Works

Fortis Inc. operates as a diversified utility company, delivering electricity and gas services across North America.

Fortis Inc.'s Product/Service Portfolio

Fortis Inc.'s Operational Framework

Fortis operates through a decentralized structure with various utility subsidiaries across North America. These subsidiaries are responsible for the day-to-day operations within their respective service territories. Key aspects of Fortis' operational framework include:

• Infrastructure Development and Maintenance: Fortis invests in maintaining and upgrading its infrastructure to ensure reliable service delivery. This includes replacing aging equipment, expanding capacity to meet growing demand, and investing in smart grid technologies.
• Regulatory Compliance: As a regulated utility, Fortis operates under the oversight of various regulatory bodies. Compliance with regulatory requirements is critical for obtaining approvals for capital projects and rate adjustments.
• Customer Service: Providing excellent customer service is a priority for Fortis. This includes offering a variety of payment options, responding promptly to customer inquiries, and providing energy efficiency programs to help customers manage their energy consumption.
• Risk Management: Fortis manages various risks, including commodity price risk, interest rate risk, and operational risk. Hedging strategies and insurance coverage are used to mitigate these risks.

For more insights into Fortis Inc.'s financial performance, you can explore this resource: Breaking Down Fortis Inc. (FTS) Financial Health: Key Insights for Investors

Fortis Inc.'s Strategic Advantages

Fortis possesses several strategic advantages that contribute to its success:

• Diversified Operations: Fortis operates in multiple geographic regions and business segments, reducing its exposure to regional economic downturns or regulatory changes.
• Regulated Business Model: The regulated nature of Fortis' business provides a stable and predictable revenue stream. Regulated utilities are typically allowed to earn a reasonable rate of return on their investments.
• Growth Through Acquisitions: Fortis has a track record of successfully acquiring and integrating other utilities, expanding its geographic footprint and customer base.
• Commitment to Sustainability: Fortis is committed to reducing its environmental impact and investing in renewable energy sources. This commitment enhances its reputation and helps it attract environmentally conscious customers and investors.

Fortis Inc. (FTS) How It Makes Money

Fortis Inc. primarily generates revenue through regulated utilities, focusing on electricity and gas distribution, and to a lesser extent, electricity generation.

Fortis Inc.'s Revenue Breakdown

Here's a look at how Fortis Inc. generates its revenue:

Fortis Inc.'s Business Economics

Fortis operates under a regulated business model, which provides a stable and predictable revenue stream. Key aspects of its business economics include:

• Regulatory Framework: Revenue is largely determined by regulatory decisions, allowing for cost recovery plus a reasonable rate of return on invested capital.
• Capital Investments: Significant investments in infrastructure are crucial for maintaining and expanding utility networks, which are factored into rate base calculations.
• Operating Costs: Efficient management of operating expenses, including maintenance and administrative costs, impacts profitability within the regulated rate structure.
• Geographic Diversification: Operations across North America reduce reliance on any single region's economic conditions or regulatory environment.

Fortis Inc.'s Financial Performance

Fortis Inc.'s financial performance is characterized by stable growth and consistent profitability, driven by its regulated utility operations. Here are some key points:

• Consistent Revenue Growth: The company has demonstrated a history of steady revenue growth, supported by increasing rate base and customer growth within its service territories. In 2024, Fortis reported revenues of $11.4 billion CAD.
• Profitability: Fortis maintains healthy profit margins due to the regulated nature of its business, which allows for the recovery of costs and a predetermined rate of return.
• Dividend Growth: Fortis has a long track record of increasing its dividend, reflecting the stability and predictability of its earnings. The company has increased its dividend for 50 consecutive years.
• Capital Expenditures: Fortis continues to invest significantly in its infrastructure, with a five-year capital expenditure plan of approximately $25 billion CAD focused on modernizing and expanding its utility systems.
• Debt Management: Prudent debt management is essential for funding capital projects while maintaining a strong credit rating.

To gain further insights into Fortis Inc.'s values, refer to: Mission Statement, Vision, & Core Values of Fortis Inc. (FTS).

Fortis Inc. (FTS) Market Position & Future Outlook

The company holds a strong position in the North American regulated utility market, with a focus on long-term growth through strategic investments in its existing assets and expansion into new markets, emphasizing sustainable energy solutions and grid modernization. For further insights into the company's financial standing, see: Breaking Down Fortis Inc. (FTS) Financial Health: Key Insights for Investors

Competitive Landscape

Opportunities & Challenges

Industry Position

The company is a prominent player in the North American utility sector, characterized by:

• A strong emphasis on regulated operations, which provide a stable and predictable revenue stream.
• A commitment to investing in sustainable energy projects and reducing carbon emissions.
• A diversified portfolio of assets across multiple geographic regions, reducing exposure to regional economic downturns.
• Focus on grid modernization to enhance reliability and integrate renewable energy sources.