Ladies and gentlemen, thank you for standing by and welcome to Emera Q3 2019 Analyst Call. [Operator Instructions] Please note that this call is being recorded. [Operator Instructions] Thank you. I would now like to turn conference to your speakers today, Erin Power. Please go ahead.

Thank you, Alisa, and thank you all for joining us this morning for Emera's third quarter 2019 conference call and live webcast. Emera's third quarter earnings release was distributed this morning via Newswire and the financial statements, management's discussion and analysis and the presentation being referenced on this call are available on our website at emera.com. Joining me for this morning's call are Scott Balfour, Emera's President and Chief Executive Officer; Greg Blunden, Emera's Chief Financial Officer; and other members of Emera's management team. Before I begin, I will take a moment to advise you that this morning's discussion will include forward-looking information, which is subject to the cautionary statement contained in the supporting slide. Today's discussion and presentation will also include references to non-GAAP financial measures. You should refer to the supporting slides for definitional information and reconciliation of historical non-GAAP measures to the closest GAAP financial measure. And now, I will turn things over to Scott.

Thanks, Erin, and good morning, everyone. This morning we reported third quarter adjusted earnings per share of $0.51 and year-to-date adjusted earnings per share of $1.99. While consolidated results are down compared to last year, the core of our business are continuing portfolio of regulated utilities remains strong and is performing very well delivering adjusted earnings growth of 4% in the quarter and 12% for the year-to-date. We are very pleased with this level of growth, which was primarily driven by strong earnings from Tampa Electric and our gas utilities. Our quarterly and year-to-date financial results were weaker relative to 2018, specifically due to four main factors. Two of these factors, of course includes the loss of earnings contributions from our emerging gas plant that we sold in the fourth quarter 2019 as well as the non-recurring tax benefit we recorded in the third quarter of last year. The other two factors with the impacts from hurricane Dorian and continued unfavorable weather and weak market conditions largely into New England negatively impacting Emera Energy’s marketing and trading operations. Collectively, the earnings impact of these items outweigh the growth in our utilities fourth quarter. The fact is though that Emera’s portfolio of regulated utilities is the primary driver of our growth and the underlying performance of these businesses is delivering strong earnings growth consistent with our expectations. As we have seen this quarter, adjusted earnings per share will fluctuate as a result of nonrecurring items and market driven volatility in Emera Energy. While at this time it has create creating lumpiness to our headline adjusted earnings per share, the underlying contributions from utilities has been steadily and predicatively growing. We continue to expect Emera Energy’s marketing and trading results to contribute positively to earnings for the full-year, although weak market conditions…

Thank you Scott and thank you all for joining us this morning. 2019 was a not a difficult for Emera. As Scott highlighted our financial results included the negative earnings impact of asset sales, weaker marketing trend conditions and non-recurring items including the impacts of Hurricane Dorian. As a result, our headline adjusted earnings per share for the quarter and year-to-date period are lower than in 2018 and for the quarter below our expectations. However, we continue to be very pleased with the earnings growth that our team delivered from regulated portfolio. As I will walk you through in a moment, strong growth from Regulated Utility has fully offset the year-to-date earnings impact of asset sales and we expect the Regulated Earnings to continue to grow in the fourth quarter. This strong growth combined with the opportunities ahead of our new capital program reinforces our confidence that we will continue to deliver long-term earnings growth to our shareholders. While we expect that Regulated Earnings will continue to grow in the fourth quarter, this growth will not be sufficient in the third quarter impacts of Hurricane Dorian and weaker market trading conditions. As a result, we now expect our 2019 annual adjusted earnings per share to be lower than 2018. Without these negative impacts, we would expect adjusted earnings per share for the year to be consistent with the normalized 2018 results. Year-to-date operating cash flow before changes in net working capital was down modestly compared to the 2018 period due to the impact of Hurricane Dorian and lower marketing and trading margins at Emera Energy. While operating cash flow was down modestly this year, we have continued to improve the quality of these cash flows. Operating cash flow from our regulated businesses grew by 6% year-to-date and led by Tampa…

Thank you Greg. This concludes the presentation. We would now like to open up the call to take questions from analysts.

[Operator Instructions]. Your first question comes from the line of Julien Dumoulin-Smith from Bank of America. Your line is open.

Hey. Good morning to you.

Good morning, Julien.

Good morning, Julien.

Hey, good morning. So, let's just address the white elephant in the room. Can we talk a little bit about your commentary on M&A and especially some of the public disclosure around JEA When you guys were making the comments in your prepared remarks, were you alluding specifically to some of the dynamics and learning more about Florida or are you thinking more holistically. I just want to put the M&A context or comments in more of a specific context that you don't mind. So want to understand exactly how you are thinking about this. And then at the same time, if you can comment about how you are thinking about financing just given the fact that we have exclusive on the verge of getting to a much better balance sheet quality to being with?

Yes. Julien, thanks for your question. So, look, the commentary that made in my market is commentary that frankly would apply generally has always applied for us in terms of how we think about M&A and really just looking to reassure investors that that continuous to be our focus as it relates to thinking about the strategic and financial aspects of M&A. The fact that for us it doesn't work, if it is just a strategic fit, it also needs to fit financially, and look we have recognized in this market that is a difficult to help to client. So, we are in a good spot. Frankly we have got a very robust set of organic growth opportunities in front of us that continues to be our primary focus. But as it has before, we continue to look at opportunities to continue to expand the portfolio and where opportunities exists where as both strategic and financial fit is good, without taking a soft track to maintain our credit metrics to continue to maintain our balance sheet and our targeted capital structure. When we find things through that small box, we will look at. But in the mean time, we are just really focused on executing our organic growth portfolio.

Got it. So there was no specific reason to put that commentary and then also just the extra care has been about these things, because they can be sensitive. When you are talking about maintaining balance sheet quality, would you contemplate a transaction that would once more re-lever the balance sheet. And would you contemplate any transactions that are not accretive from an EPS perspective. Just to be extra care.

No. As I say, we are focused on maintaining our target capital structure and look at the time when we took on extra leverage to acquire Tampa Electric at Seiko. We did have some excess leverage capacity, today that is clearly less true. So, we continue to focus on the things that I mentioned and in respect of the specific situation Julien that you referenced just in a place where out of respect for the process, we are not going to comment.

Got it, sorry. And back to regulatory scheduled question, if you don’t mind. Just with respect to the 15% that you guys have historically allocated for equity raise broadly in the current organic plan. How do you think about the combination of common versus hybrid versus other sort of lingering financing needs.

Yes. Julien it is Greg. If you think the capital plan at C$6.9 billion with a kind of 15% to 20% range of equity, let’s take the top end of 2020 that will give you around 1.4 billion. As I indicated in my remarks, both half of that would be to our existing dividend reinvesting plan over that three year period which would leave you with the rails of C$700 million, which will be some combination of the existing ATM program that we have in place. And I think as you have heard us say, where we say before we still have some room in our capital structure for some additional preferred shares. Although that market is a market that is not always opened, but over the next three years we envision putting some more preferred share or capital structure as well. So that is kind of how we are thinking about in the totality.

Awesome. Alright, excellent guys. Thanks for the patience. I appreciate the clarity.

Thanks, Julien.

Your next question comes from the line of Rob Hope from Scotiabank. Your line is open.

Good morning everyone. Thanks for taking my call. Want to focus in on the $6.9 billion capital plan, so it includes $650 million as of storm hardening and solar investments, based on your comments it seems like $200 million is hardening and $450 million is solar. Just want to get a sense of how you are thinking about that solar in the existing capital plan. And then I guess the second question would be what is in that half to $1 billion of other opportunities?

Hi, Rob. It is Greg. First of all, those numbers $650 million and $200 million, those are all in U.S. dollars as well. So, keep in mind there is a foreign exchange adjustment there. Really the balance of the $.5 billion to a $1 billion, we think that we have conservative estimates at this point of storm hardening legislation on what the implications are for us, our team is working through that in Florida. And we think we will have more visibility on that as we go throughout in time. And really there is probably about $0.5 billion of projects across all of our regulated businesses, that is just too early at this point to be more definitive on whether we are going to move forward or when we are going to move forward. But I can’t say there is anything specific, they are not individual projects, it is more of a collection of projects kind of the getting around $100 million range each.

And Rob this is Scott. I think as it relates to the solar side of things we have been talking for sometime about the opportunity and the value for customers of looking to continue to build more solar in [indiscernible] territory and we are excited about the 600 megawatts that we are on a path to complete in less than a year and half with about two-thirds of that are ready in service. And as we have said, you know we think there is the opportunity for more, we think that the cost profile that is in customer’s interest to do that and so while the full scope of that program is still working its way through. We have got confidence that we will be continuing to build solar in Tampa and that is why we built a component of that into the base line forecast and we will look to update and refine those numbers further in February at our Investor Day.

Thank you for that. And then just a clarification, so [indiscernible] which you will file in June of 2020, would that include the next tranche?

No. So the fourth phase, we will have another 100 megawatts in early 2020 and a final 50 megawatts in early 2021.

Okay. Great. Thank you for the color.

Thanks Rob.

Your next question comes from line of Benjamin Pham from BMO. Your line is open.

Okay. Thanks and good morning. I wanted to go back to the M&A discussion and I guess some has happened here in this - highly focused organic growth, it is a high growth rate. But your balance sheet in better shape now that you could be opportunistic with acquisitions and - those in your backyard still make sense to look at it. But, I'm curious, how broad would you guys go with M&A geographically and I guess with the 10% growth rate, I mean isn’t that really difficult to financing outside Florida that is grown up 7% a year.

Yes. I think you know that as I mentioned in my call, we are really happy with the portfolio of asset that we have. We think that we have got some really, really high quality assets across the business, but particularly in Florida, but you know - the Canadian context also in Atlantic Canada. And we are really happy with that and therefore, you know, it is why when we think that those strategic fit we are pretty mossy about that in how we think about it and that is an important consideration and all the financial elements that I mentioned earlier that too has done work. Anything that we do have to be in what we see is both good strategic fit for the business but frankly in financial interest of shareholders and obviously, the path to doing that is to make sure that we continue to have a strong balance sheet and we continue to maintain our investment grade credit ratings and to make sure that anything we would do would be accretive to earnings. So, unless we can find something that does those things we are very happy to stay and remain focused on organic growth opportunities.

Okay. And then even Grand Bahamas system impact you saw during the quarter. As you look for - looking at recovering a portion of some of the costs, can you speak to historically has there been some historical presence in Grand Bahamas, the regulate that Hurricane and what not that you can lean to or is this really the new process that you are going to work with?

Well, so we have got a regulatory process that is mechanism is already in place for the recovery of cost relating to Hurricane Matthew that occurred in 2016 and the cost to Grand Bahamas at this point for recovery look to be less frankly than what those cost were for Hurricane Matthew. So, the team there is working with the regulator and we have seen in the case of Matthew and times before that, a constructive approach to making sure that there is recovery of those thoughts without putting undue pressure on customers and we are confident we end up in the same place again.

Okay. That is great. Thanks for answering my questions.

Thanks Ben.

[Operator Instructions] Your next question comes from the line of Robert Kwan from RBC Capital Markets. Your line is open.

Hey good morning. When you are talking about the $650 million in cash kind of highly confident with that and you have got $500 million to a $1 billion. Sounds like that those are projects that have named in some amount of investment. Is it fair to say that you are kind of viewing those numbers conservatively and whether that is in February at the Investor Day or in kind of the years ahead that there could be upside in this capital plan?

Robert, it is Greg. I mean I think if you think of our track record we traditionally have shown baseline capital forecast with some projects under development and every year as we get closer and closer more of those project under development tends to get more certain. And so we would expect that to continue over this period as well. So, I’m not so sure I used the word conservative, but I think it is a confident baseline that we have, but we are not stopping there, we see some other opportunities across all of our regulated businesses that we are pursuing, it is just a little bit too early to be that definitive on.

Got it. So the upside there is on the growth that maybe kind of then turning to the other side of how you then think about financing that or even within this current capital plan. Just wondering if there is some colors as to why asset monetization were not considering just given how much success you have had in valuation line on those?

Robert, I think the way we think about - don’t need to sell any assets to fund the capital program. Obviously if we start to see a material increase in the opportunities in front of us in a regulated businesses over the next few years like we always do we will sit back and say what is the best and most optimal way to fund that. But at this point in time, we are really pleased with the portfolio that we have in our business.

Okay. If I can just finish, kind of coming back to M&A and within - you kind of outlined the EPS accretion side. And I don’t know you are eluding this as the long-term side of things, but do you need to look for assets that are accretive to your growth rate i.e., that those assets are growing faster than say the 7% rate base growth?

I think, when you think about M&A, Robert I mean obviously there is a bunch of lenses to look through and certainly, we look for things that are accretive to credit metrics, accretive to earnings growth, accretive to cash flow, accretive to our ability to sustain and grow our dividend as well as strategic fit. Clearly within that obviously is growth and certainly as we have thought about our portfolio optimization effort and the allocation of capital fairly. We have been allocating capital towards our higher growth investments. And so, yes, growth rates are - and the opportunity for growth are important consideration when we think about how we allocate capital and that is true as it relates to the portfolio businesses that we have. The organic growth that we have and obviously its relevant when you think of M&A and trying to find those opportunities that fits that narrow box that we look for in terms of both strategic fit and financial merit.

It is also important where that rate base growth is coming from. So, for us, we are very fortunate 70% of it is coming into State of Florida. Because not all rate base growth is equal, because you also have to look at the relative equity thicknesses or where that rate base growth is been invested and the ROEs associated with it. So which is why the capital planning in front of us is attractive, because of the higher equity - in ROE in jurisdictions where we are focusing our capital investment.

Got it. And I can finish, you mentioned strategic study number of times, there was the question earlier about geography, but I’m also wondering how much is - fee really matter, I kind of think about Seiko is strategic fit to you a lot as well about the ability to execute your core strategy and kind of coming back to the success you had at and NFCI and the field of assets and just being able to [indiscernible] Seiko.

Yes, you know, it is an excellent point and a great example Robert and clearly that ability to invest in the transition from higher to lower carbon has been what it has been driving growth Emera’s growth, Nova Scotia Power’s growth and now over the last three years, growth within Seiko business as well. And so, yes, that is one of the key factors we look at in terms of strategic fit.

Okay. That is great. Thanks very much.

Your next question comes from the line of Patrick Kenny from National Bank Financial. Your line is open.

Hey guys. Just on the capital plan I know it is relatively small then the overall context, but a little bit of a step down CapEx profile for New Mexico over the three year period. Can you just remind us what is driving that decline and I think you just answered it Greg, but specifically to New Mexico, is there a way to think about that it is still a core utility today, but could be a candidate raw source of cash for redeployment, incremental, organic growth or new M&A going forward?

Yes. Patrick its Greg. I wouldn't necessarily characterize it as step down in the capital program per say. There is a couple of projects but the timing has been moving around a little bit, in particular we had an IT project that looks like we are going to push a little bit. The percent of growth rate may have come down a little bit only because we had some of those projects, we are more front-end loaded from the last version. But, in general, there is nothing really material from a New Mexico perspective. Well we could follow-up with you later I happen to invest and that is not top of my head.

Okay. Great. Just in terms of New Mexico specifically, it is still a core utility today, but again could be a source of cash going forward for incremental opportunities.

You know, Patrick, we see I think the performance that we are seeing in New Mexico reaffirms the value of that asset and yes it is an important business for us, we are seeing some growth, we have seen some support to address some issues within that business including the implementation of a weather tracker there now that helps to provide more - to help to reduce the volatility let say, the financial performance for New Mexico Gas relating to weather. We are seeing the economic climates in the state improve and we think that bodes well for the utility overtime as well. So, I would say we are cautiously optimistic as it relates to the future for New Mexico Gas, for us as we acquire TECO, we agreed with the regulator to make a commitment as it relates to that business they have heard that portfolio for a period of time and we take those kind of commitment seriously.

Okay, that is great. Thanks for that. I think Greg, wondering if we can get your thoughts on how you are thinking about timing in terms of - hybrid market just given your $1 billion due in 2026, I believe. Would you be more inclined to wait to until the back half of the three year capital program to tap to hybrid market or be more inclined to perhaps take advantage of the current - environment?

It is a good question Patrick, what we are experiencing in the current interest rate environment hasn’t translated into the preferred share market in Canada. So, I think the short answer is I don’t know. Certainly we have limited our capital structure to do another preferred share offering in Canada probably consistent with what we did last year, think of it as a few hundred million offering. It is just the pricing that we are seeing in the preferred share market now and the terms and conditions that are being attached to it, doesn’t make it the most appealing such as financing right now, but we are going to continue to watch as we know it is a market that has windows where it opens up and is more conducive for participating in. But, I think you have a sense of urgency to do it, but it likely going to form part of our plan over the next three years.

Okay. Got it. And then last just on your discussions with S&P. Are they just waiting for the main transaction to officially close before they reassess to negative outlook or do they really want to see you fully execute on another hybrid deal or fully execute the ATM before going back to the stable outlook.

I mean if we focus on what they have said publicly, they are negative - book is primarily around uncertainty around the asset sale program. We had close the sale of the merchant gas plants in Q1 of this year, well on our way to close many. So, given what their reports said in December of last year, we believe we want to close the remaining - address their concerns that they had in terms of the negative -.

Okay. That is great. Thanks very much.

Thanks, Patrick.

Your next question comes from the line of Julien Dumoulin-Smith from Bank of Merrill Lynch. Your line is open.

Hi, can you guys hear me again.

Yes. We hear you fine Julien.

Sorry, just wanted to clarify super quickly, because again I know these things require certainly a great clarity. When you say earnings before in the M&A context do you mean earnings per share in terms of per share metrics. And then secondly, can you elaborate a little bit on how you think about per share on the context of this management comp and or targets just again to reaffirms investors here?

So, yes to the first question. Our goal is to grow earnings per share and that also is aligned with the incentive compensation structure, the performance-based compensation structure for the executive team.

So any deal will be accretive per share?

That is right.

Excellent. And so one other nuance I wanted to clarify here. Just a timeline in the main transaction itself. Just given some of the updates I believe that were expected this week haven't - I know its Friday so hasn't let’s say translated, just confidence on the timeline itself, with respect to the main transaction?

So Julien, the way to characterize it, it is kind of progressing as planned, we have had number of settlement conferences with stakeholders. There is another one scheduled I think in the next week or two. [indiscernible] thank you. And we also in the event that we are going to be able reach a settlement December 10th and 11th, I believe or 11th and 12th those couple of days there is already date set aside to have a litigated hearing. We are hopeful and optimistic that that will be required and so we are really on two path right now hoping and expecting that we will reach a settlement which would probably get us to a closing by year end. We have got a litigated route that would probably be in early 2020 depending how fast the commission could turn around their decision. But at this point, we don’t see anything that would prohibit a closing over the next month or two.

Yes, the only thing I would add to that Julien is just we firmly believe that the filing is part of the formal regulated process, has indeed met with net benefit test, and it is - we could evolve that and as well as the efforts to set a little bit to gives us the confidence that we are clearly on path to close. The only thing that is not quite certain yet is timing, we are going to be just before the end of the year or might be in early 2020.

Okay. Excellent guys. Thanks for the clarity.

Thanks Julien.

You next question comes from the line of David Quezada from Raymond James. Your line is open.

Thanks. Good morning guys. Just one quick question from me, just wondering if you could provide any recent thought on the retail choice ballet initiative for Florida? It seems like there is slim chance they get the number of signatures there, but just wondering if you have any updated thoughts there?

Yes. David, thanks for the question. So, we are still waiting decision from the Supreme Court as to their approval or not of the proposed language from going on the ballet. We believe that there reason why the answer to that will be no, but obviously we are waiting for that decision as with others. And then to the point that you may guess, the performance does need to secure a specific number of signatures 770,000 approved signatures and to have those reviewed formally as part of the process before the end of January. And certainly at this point they have not met that threshold that is not to say that it is impossible for that to happen, but at this point, they have not yet met that threshold and obviously there isn’t too much time left before they need to achieve that threshold before the end of January.

Great. Thanks Scott.

There are no further questions at this time.

Great. Well, thanks. Thank you all for joining us this morning. We look forward to speaking to you again next quarter.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.