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Costs of UNS Energy acquisition reduce Fortis Q3 profit by $58 million

The Canadian Press

ST. JOHN'S, N.L. - Fortis inc. (TSX:FTS) says its third-quarter profit took a $58-million hit from costs associated with its acquisition of UNS Energy Corp., a gas and electric utility in Arizona.

Fortis said its net income attributable to common shareholders fell about 70 per cent to $14 million in the third quarter, from $48 million a year earlier, including number of non-recurring items related to the UNS deal.

Excluding those items, Fortis had $72 million or 33 cents per share of net income in the three months ended Sept. 30.

Fortis is a Newfoundland-based company that owns a number of utility businesses in several Canadian provinces as well as outside of the country.

Its revenue for the third quarter was nearly $1.2 billion, up from $915 million a year earlier.

The third quarter included $35 million or 16 cents per common share in expenses required to obtain regulatory approval for the UNS deal plus a $23-million or 11 cents per share in after-tax interest expense related to convertible debt issued to help fund the transaction.

Earnings continuing operations were also down compared with last year, dropping to $32 million from $69 million due to increased costs, while cash flow from operating activities dropped to $62 million from $106 million a year before.

The reduced cash flow was attributed to unfavourable changes at Central Hudson Gas and Electric, which Fortis acquired in 2013, and at FortisBC. Those changes were partially offset by favourable changes at FortisAlberta.