Good morning, ladies and gentlemen, and welcome to Emera Q4 Analyst Conference Call. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. Please note that this call is being recorded, today, Tuesday, February 19, 2019, at 8.30 AM Eastern Time. I would now like to turn the meeting over to your host for today's call, Erin Power, Manager, Investor Relations, for Emera. Please go ahead, Ms. Power.

Thank you, Sharon, and thank you all for joining us this morning for Emera's Fourth Quarter 2018 Conference Call and Live Webcast. Emera's fourth 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. This morning Scott will begin with an update on the business and our strategic initiatives and Greg will follow with an overview of the financial results. We expect the prepared remarks to last about 15 minutes. Following the prepared remarks, we will open up the lines to take questions from analysts. I will take a moment to advise you that this conference call will contain forward-looking information and statements with respect to Emera. Forward-looking statements involve significant risks, uncertainties and assumptions. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. Generally, these factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations. Such risk factors or assumptions include, but are not limited to, regulation, operations and maintenance, energy prices, global economic conditions, weather, derivatives and hedging, capital resources, loss of service area, licenses and permits, environment, insurance, labor relations, human resources and liquidity risk. A number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. And now, I will turn things over to Scott.

Thank you, Erin, and good morning, everyone. 2018 was a strong year for Emera. We made significant progress on our growth strategy, especially in Nova Scotia and Florida; continued to deliver cleaner, affordable and reliable energy to our customers and also delivered record adjusted earnings per share and cash flow for our shareholders. Our business has never been stronger and it showed in the financial performance we saw in 2018 across all our businesses. Our Florida and New Mexico utilities posted record earnings and Emera Energy had an exceptional year. Nova Scotia Power, once again, delivered strong earnings. Emera Maine overcame challenging weather conditions and delivered results largely in line with 2017 and our other regulated businesses delivering consistent growth. Overall, I'm pleased with the performance by our regulated utilities and how our strategic positioning has enabled us to capitalize on earnings and growth opportunities. And in Florida, we are well advanced on our solar program and these investments are contributing to the growth we are seeing in our bottom line. The first phase of the program will see us construct 600 megawatts of new solar. In September, we placed the first 145 megawatts into service and customer rates were increased accordingly. Over the course of 2018, Tampa Electric collected $8 million of new revenue related to those projects. Since September, we've continued to advance construction and so in 2019 we placed an additional 175 megawatts into service, bringing our total new solar capacity to 320 megawatts. We look forward to placing an additional 85 megawatts in into service later this spring. Customer rates continued to be adjusted as projects come into service and solar-related revenues are expected to be $70 million in 2019 adding net earnings of $30 million. In total by the end of 2019 we would've invested…

Thank you, Scott and thank you all for joining us this morning. As Scott highlighted 2018 was a record EPS and cash flow year for Emera. Our business has never been stronger and our affiliates have delivered strong financial results for the quarter and for the year. For the fourth quarter of 2018 Emera reported adjusted net income, which excludes mark-to-market adjustments and for 2017 excludes the revaluation of U.S. non-regulated deferred income taxes of $167 million or $0.71 per share compared to adjusted net income of $137 million and $0.64 per share in Q4 of 2017. For the full year our adjusted net income was $671 million or $2.88 per share, compared to $524 million or $2.46 per share for the same period in 2017. I will note that in Q3 we recorded a $0.10 gain on a change in our Florida tax deployment factors. Absent that non-recurring item adjusted EPS would've been $2.78 for the year, a 13% increase on a year-over-year basis. In addition to our strong earnings, we also reported significant increase in our annual operating cash flow before changes in net working capital. For the year, our annual cash flow increased by $509 million or 39% to $1.8 billion compared to $1.3 billion in 2017. Operating cash flow is the fourth metric for our business as it is the basis of how our credit metrics are calculated. And as I'll take you through in a few moments, our improved cash flow combined with our funding initiatives has translated into improved cash flows debt metrics for the year. Growth in fourth quarter EPS was largely driven by our Florida, New Mexico, Emera Energy and Caribbean segments. At Tampa Electric as Scott noted, our investments in solar and the Big Bend increased quarterly earnings compared to 2018.…

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

[Operator Instructions] And your first question comes from Linda Ezergailis with TD Securities. Your line is open.

Thank you. I'm just wondering with respect to asset sales I realized you can't really comment much, but I'm wondering under what scenario might your proceeds potentially exceed the range of what you're targeting if at all. And are you going through processes that some of them might not conclude? Or are you looking at selling maybe more depending on the conversations that you've had?

Hey Linda, it's Scott. So, thanks for the question. It's a bit difficult to answer without getting into more details than we'd like to at this course. Of course when we're going through a process, we have a view as to what sort of the expected range of proceeds we could expect when running through a market-driven process, but we don't know how that will conclude and so we see a market response. And so it's hard to be much clearer beyond providing range at this point as to what our target is for proceeds. As I said early in this process the advantage of the portfolio that we have is we have some optionality as to how we would proceed if market response wasn't what we would hope or expect to a particular initiative. But at this point, we're comfortable with the progress that we're making and comfortable that we'll have something further to report within the timelines that Greg mentioned in the call.

Thank you. And maybe I realized that -- I don't think that's hard to predict is higher energy services business will unfold for the year, the year is young, but we have seen some weather in the U.S. Northeast. So I'm wondering if you can comment on kind of what you've seen so far in Q1 specifically.

Linda, it’s Judy. I would say that Q1 2019 is solid, but Q1 2018 was superb, but still quite reasonably strong for Q1 2019. So, we would still -- at this early point in the year, the only guidance we could really say is within our $15 million to $30 million.

That's helpful. And maybe just as a follow-up. Can we get a sense of the aggregate approximate weather effects on net income for the year last year, if you look at it kind of across the business?

So, Linda we don't have that available to you. We could probably try to take it offline. So I think it's probably best that we follow up with you offline because that's something that we would to track in the aggregate.

That would be helpful. Thank you. I’ll jump back in the queue.

Next question comes from Nicholas Campanella with Bank of America Merrill Lynch. Your line is open.

Hey, good morning. Congrats on the strong year.

Thanks, Nick.

Hey. So – just starting with 2019 expectation you listed a few negative items to consider year-over-year on slide 19. Can you just kind of sum up quickly? Should we be thinking of 2019 as flattish up or down relative to 2018 to be clear?

We came out with our dividend growth guidance and forecast to rate base growth. We talked about EPS over the funding period kind of approximating our rate base growth, obviously, if you adjust for the $0.10 for the Florida tax apportionment factors. In 2018 EPS was up 13%, so obviously slightly stronger in 2018 than we would expect over the period. I think when we look at everything in total in 2019 we wouldn't be unrealistic to expect EPS to be relatively in line with 2018 and then getting back to growth in 2020 off of that base that's in line with our rate base growth.

Got it. And then just on the asset sale program, can you just kind of shed light on your discussion with the agencies since you introduced the program and kind of their feedback and then any sense of the time that you need to execute on this plan? I think you kind of mentioned making some type of announcement in the spring and kind of wrapping this up by year-end. Is that kind of within their window?

Yeah. I mean, obviously both rating agencies are insiders. So they have full visibility in terms of our expectations and timing. And at this point with the announcement of NEGG – the sale of NEGG in the fourth quarter expect to close in Q1 and as we indicated on track for spring announcement. The second announcement of sale that would be in whole alignment with the expectations of both agencies.

Got it. And then last one just real quick. We've all seen kind of the anti-hybrid proposals out there from the IRS just want to confirm no material impact on your end.

Yeah. No we can confirm that Nick we do have some cross-border structures in place but we have not been booking any accounting benefit as a result of that. So as a result of the changes there's no impact on our going forward earnings or cash flow.

Thank you very much.

You're welcome.

The next question comes from Rob Hope with Scotiabank. Your line is open.

Yes. Good morning, everyone. Just want to switch attention over to Maine for a second. We have a few senators there proposing that Central Maine and Emera Maine be expropriated into a public-owned utility. Just want to get your thoughts on that potential. And I know you haven't highlighted specific asset sales, but if Emera Maine was for sale could that slow down that process?

Yes. It's Scott, Rob. Thanks for the question. So look I mean it's something obviously that's caught our attention as it has our colleagues in the state. There has been no legislation that's proposed at this point. And so well obviously, we'll pay attention to it seriously. There's nothing at this point to seriously respond to or to address. So, I think unless and until there's legislation that's drafted, it will be possible to continue to watch but nothing for us to specifically take action on at this time.

All right, appreciate that. And then just taking -- moving over to the 2019 outlook, appreciate the commentary on EPS. How do you expect CFO to trend in 2019 versus 2018 just given the very strong CFO growth we saw in 2018?

Yeah, we would expect Rob that it would be pretty consistent on a year-over-year basis. And then, obviously, with the asset sales and redeploying that capital pay down all the company debt, we'll see a measurable uptick in the credit metrics. And so probably, whereas, the focus might have been on the numerator in 2018 it will be more on the denominator in 2019.

All right. I appreciate the color. Thank you.

Thanks, Rob.

Your next question comes from Robert Catellier with CIBC Capital Markets. Your line is open.

All right. Just a couple of follow-ups on the financing. There's comments in the MD&A about interest deductibility and your expectations that U.S. based plans will be deductible under the act. Is that contingent in anyway on success on the asset sales or issued preferred shares or anything of that nature to get the HoldCo down as a percentage?

No. No, it's not, Robert.

Okay. And then I just want a clarification on the solar. It looks like you've maintained your earnings expectations there, but might be some change in wording as to in-service dates. Now, I think you're expecting that 85 megawatts in service in the spring versus January previously. So can you help us square up the consistent earnings? What can seemingly change in in-service date?

Sure. Nancy, do you want to respond to that?

Sure. Thanks for the question. So, yes, we are a little later in in-service date, but the -- we are already getting the revenue from customers. But we will, of course, true that up at the end for the later in-service date. But we are protected contractually for the later in-service date and so we don't expect any net income impact on us.

Okay. And then maybe just…

Competitive…

Go ahead.

Sorry, Robert it's Scott. I'm just going to say so the protection with the contractor effectively to help to ensure that there's no negative impact to customers or to Tampa Electric through the completion and the projects are -- we'll expect to be online by the end of first quarter.

Right. So that then is -- we can interpret that as a construction variance as opposed to permitting or anything like that.

Yeah, that's right.

Yeah. That's all in construction.

Okay. Thank you.

Your next question comes from Ben Pham with BMO. Your line is open.

Okay, thanks. Good morning. I was wondering, if you can comment on the final impact of U.S. tax reform this year, the $100 million that you expected and then just whether if you're -- just how that looks relative to your core performance?

Yeah, Ben it's Greg. Obviously we made quite a bit of progress earlier in the year to mitigate the impact of tax reform from a cash flow perspective in particular Tampa Electric and reached a settlement to net the storm cost, which we would have expected to recover over both 2018 and 2019 effectively recover them all in 2018. And so, the most recent guidance that, I think, we're at $75 million to $125 million is still probably reflective from a cash flow perspective. From an earnings perspective, the impact to EPS in 2018 was not as large as we would've expected, predominantly because of the performance of Emera Energy. So that is the part of our business that would have the most benefit from U.S. tax reform. So as a result of that, we're probably more like in the $0.03 to $0.05 impact on EPS on a year-over-year basis.

Okay. That's great. And then on -- to follow on the Emera Energy results, when you look at it year-over-year, even on an annual basis was outperformance mostly in the trading business, rather than New England gas plants?

Yes. So, there's obviously a big uptick year-over-year in New England because of capacity prices, but that's something we could have calculated three years ago. So the real -- I guess what I'll say is that, of course it's harder to predict was Trading and Marketing business. And so it had very strong first quarter. So we had a solid start to the year. But then, again, as we said, Q3 was also very, very solid and we round the year up well too.

Okay. So it sounds like, I mean, the market's not going to give you the benefit of the volatility, but you're unnecessarily giving that away by selling the New England gas plants. So, okay, that's good to know. And then can you also talk about lastly, Linda had some questions on asset sales and funding. I'm just wondering at this stage though, are you at the point where you have flexibility not to sell more assets at this stage? Are you far along enough that you're generally committed to that asset sale range?

Yes. I mean I think, Ben, that we sit on a path that we described late in 2018 that we had started a little bit before we started talking about it and we continue to be on that path. So, I guess, on the one hand, theoretically, there's flexibility for us to do something different, but you've heard us today anchor our view and our intention of continuing along the path that we described late in 2018.

Okay. Thanks everybody.

Your next question comes from Andrew Kuske with Credit Suisse. Your line is open.

Good morning. So we've seen some other players in Florida announce a pretty big ramp-up in solar. So how do you think about that? Is that really a validation of the investment strategy you put forth a few years ago? Or do you see that as being also kind of a threat?

Hi, Andrew, it's Nancy. FPL, you're probably referring to FPL's big announcement on 30 to 30. I think it's a reflection in Florida's customers' desire for more solar and more renewables. And so, we were happy to see that FPL will do that in their service territory and I think it really paves the way for the rest of us in terms of adding more solar. And, of course, we've talked about adding our next 600 megawatts. So we think it will be good for customers and really good for the state.

And then on a longer-term basis how do you think about just the development of additional gas load in the state or battery usage?

So we've got a small battery project that we're going to do this year. We're going to put it next to our solar installation at Big Bend our smaller solar installation. So I think, we like others are going to look at batteries and look how they integrate with our system and how they integrate with solar. So we think that certainly will be part of our future. From a gas perspective, I'm not sure if I completely understand your question. The Big Bend modernization will increase our use of gas. Those units will be highly efficient natural gas combined cycle. And so we like other utilities in the stage are making that transformation from coal to gas.

Okay, that’s great. Thank you.

[Operator Instructions] Next question comes from Robert Kwan with RBC Capital Markets. Your line is open.

Great. Good morning. Just continuing on with solar in Florida and the Phase II, you've mentioned that you're securing land options and some of early regulatory. I'm just wondering in terms of actually sanctioning and trying to get approval for Phase II, do you need to attain certain milestones on the Big Bend modernization before sanctioning, just to ensure that you can balance the generation?

Robert, it's Nancy. We are -- so just from that second 600 megawatts, we're making our way as Scott said buying land and looking at regulatory strategy and we were putting together the business case and looking forward to that. Yes, we do have to get -- so from a timing perspective it will probably be a little bit past the current -- we'll be doing -- we'll be looking at sort of 2021, 2022, 2023 that timeframe. And by that time we will have the simple cycle phase of the Big Bend in place and so more fast-acting generation will help us integrate that second 600 megawatts of solar.

Okay. So but in terms of actually getting into regulatory how far along the Big Bend modernization do you need to be that you're confident you're going to be in there on timing and ability to kind of phase the solar, the Phase II?

So I think we would look at -- so first phase of Big Bend 2021 in service and so we wouldn't be looking to add solar more than the 600 megawatts before then. And as you will remember the final tranche of the first 600 comes into service in January 1 2021. So really we would fall along the next 600 from that -- from sort of later than '21.

Got it. Okay.

Yes. I think – Robert, it's Scott. I think once we get our permits in place this summer then we'll be on path with Big Bend modernization that gives us the confidence in that generation capacity being available to support the solar and that's the timeframe that Nancy laid out for that investment.

Understood. Just in terms of the directional 2019 segment guidance is all of that before any assumed asset sales? Or do you actually color coded something behind that guidance?

Yes. So I think – Robert, it's Greg. Really the asset sales that would have a material impact on 2019 would be the already announced sale of NEGG. So where we would have had contribution from those three gas plants for 12 months in 2018, we're likely not to have it for nine months in 2019. Other than that, we wouldn't see asset sales of having any impact in 2019.

Okay. And maybe just to finish on a little more granular. Maritime Link equity earnings were down in the quarter. Just wondering what's in behind that. And if do you have how much cash it actually generated in 2018?

So, the answer to your first question there's a little nuance that happens with Maritime Link is that Nova Scotia Power through the regulatory decision had to demonstrate the ability to generate $10 million a year in value for customers in both 2018 and 2019. We were a little slow getting ahead of the gate and working with our partners in 2018. And as a result of that we had an adjustment in Q4 and reflect the actual performance of the year. It was low single-digit millions of dollars Robert and so that's really what's driving the quarter-over-quarter change from Maritime Link. From a cash perspective, it was around $40 million to $50 million.

Okay, that's great. Thank you very much.

You're welcome.

[Operator Instructions] And we do not have any phone questions at this time. I will turn the call over to the presenters.

Well, thank you for all the questions and participation in the call. And we look forward to speaking with all of you as part of our Q1 results and hopefully see some of you at our Annual General Meeting as well. Thank you.

This concludes today's conference call. You may now disconnect.