ITC Holdings Reports Increased First Quarter 2013 Results PR Newswire NOVI, Mich., April 23, 2013 NOVI, Mich., April 23, 2013 /PRNewswire/ -- Highlights oOperating earnings for the first quarter of $1.12 per diluted common share; reported earnings for the first quarter of $0.95 per diluted common share oCapital investments of $212.0 million for the three months ended March 31, 2013 oReaffirmed operating earnings per share guidance of $4.80 to $5.00 per diluted share and capital investment guidance of $760 to $860 million Three months ended (in thousands, except per share data) March 31, 2013 2012 OPERATING REVENUES $217,304 $196,713 REPORTED NET INCOME $50,190 $46,051 OPERATING EARNINGS $58,798 $48,614 REPORTED DILUTED EPS ^ $0.95 $0.88 OPERATING DILUTED EPS $1.12 $0.93 ITC Holdings Corp. (NYSE: ITC) announced today its first quarter results for the period ended March 31, 2013. Reported net income for the quarter, measured in accordance with Generally Accepted Accounting Principles (GAAP), was $50.2 million, or $0.95 per diluted common share, compared to $46.1 million or $0.88 per diluted common share for the first quarter of 2012. Operating earnings for the quarter were $58.8 million, or $1.12 per diluted common share, compared to operating earnings of $48.6 million, or $0.93 per diluted common share for the first quarter of 2012. Operating earnings are a non-GAAP measure that excludes the impact of after-tax expenses associated with the Entergy transaction of approximately $8.5 million, or $0.17 per diluted common share, and $2.6 million, or $0.05 per diluted common share, for the first quarter of 2013 and 2012, respectively. In addition, operating earnings for the first quarter of 2013 also exclude approximately $0.1 million of interest expense associated with the estimated refund liability recorded for certain acquisition accounting adjustments for ITC Midwest, ITCTransmission and METC resulting from the FERC audit order on ITC Midwest issued in May 2012. Operating earnings increased by $10.2 million, or $0.19 per diluted common share, for the first quarter compared to the same period in 2012. The increase was largely attributable to higher income associated with increased rate base and AFUDC at our operating companies. ITC invested $212.0 million in capital projects at its operating companies during the first three months of 2013, including $53.4 million at ITCTransmission, $32.3 million at METC, $92.2 million at ITC Midwest and $34.1 million at ITC Great Plains. "Overall, we are pleased with our solid start for 2013," said Joseph L. Welch, chairman, president and CEO of ITC. "Despite the impacts of inclement winter weather, we were able to make good progress in the quarter against our annual capital investment plans, which positions us well to meet our overall operational and financial objectives for the year. In addition, we continued to advance our Entergy transaction towards an expected successful close in 2013." EPS and Capital Expenditure Guidance For 2013, ITC is reaffirming its full year operating earnings per share guidance of $4.80 to $5.00, which excludes any impact of the Entergy transaction. Capital investment guidance for 2013 is also being maintained in a range of $760 to $860 million, which includes $200 to $230 million for ITCTransmission, $160 to $180 million for METC, $270 to $300 million for ITC Midwest and $130 to $150 million for ITC Great Plains. First Quarter 2013 Operating Earnings Financial Results Detail ITC's operating revenues for the first quarter increased to $217.3 million from $196.7 million for the first quarter of 2012. This increase was primarily due to higher revenue requirements attributable to a higher rate base at our regulated operating subsidiaries and higher recoverable operating expenses. In addition, regional cost sharing revenues increased due to additional capital projects being placed in-service that have been identified by the Midwest ISO as eligible for regional cost sharing. Operation and maintenance (O&M) expenses of $24.5 million decreased by $4.2 million compared to the same period in 2012. This decrease was primarily due to realized cost efficiencies associated with substation and transmission line maintenance activities and lower vegetation management expenses. General and administrative (G&A) expenses of $23.9 million were $4.7 million higher compared to the first quarter of 2012. Amounts reported in the first quarter of 2013 and 2012 exclude approximately $11.0 million and $3.8 million, respectively, of expenses associated with the Entergy transaction. This increase in G&A expenses was due primarily to higher compensation-related expenses associated with personnel additions and project bonuses, higher professional services expenses and increased general business expenses. Depreciation and amortization expenses of $28.5 million increased by $3.5 million compared to the same period in 2012 due to a higher depreciable base resulting from property, plant and equipment additions. Taxes other than income taxes of $16.7 million were $2.4 million higher than the same period in 2012. This increase was due to 2012 capital additions at our regulated operating subsidiaries, which are included in the tax base for 2013 personal property tax calculations. Interest expense of $38.8 million, which excludes approximately $0.3 million of interest expense associated with adjustments to operating earnings, increased by $0.9 million compared to the same period in 2012 due primarily to higher borrowing levels to finance capital investments. The effective income tax rate for the first quarter of 2013 was 36.8 percent compared to 36.9 percent for first quarter of 2012. Amounts reported in the first quarter of 2013 and 2012 exclude approximately $2.7 million and $1.4 million, respectively, of tax effects associated with Entergy transaction expenses. First Quarter Conference Call ITC will conduct a webcast and conference call at 11 a.m. Eastern on Wednesday, April 24, 2013. Joseph L. Welch, chairman, president and CEO, will provide a business overview, and Cameron M. Bready, executive vice president and CFO, will discuss the financial results. Individuals wishing to participate in the conference call may dial toll-free 877-644-1296 (domestic) or 914-495-8555 (international); there is no passcode.A listen-only live webcast of the conference call, including accompanying slides and the earnings release, will be available on the company's investor information page. The conference call replay, available through Monday, April 29, 2013, can be accessed by dialing 855-859-2056 (toll free) or 404-537-3406, passcode 31787042. The webcast will also be archived on the ITC website. Other Available Information More detail about the first quarter results may be found in ITC's Form 10-Q filing. Once filed with the Securities and Exchange Commission, an electronic copy of our 10-Q can be found at our website, http://investor.itc-holdings.com. Written copies can also be made available by contacting us through our website. About ITC Holdings Corp. ITC Holdings Corp. (NYSE: ITC) is the nation's largest independent electric transmission company. Based in Novi, Michigan, ITC invests in the electric transmission grid to improve reliability, expand access to markets, lower the overall cost of delivered energy and allow new generating resources to interconnect to its transmission systems. ITC's regulated operating subsidiaries include ITCTransmission, Michigan Electric Transmission Company, ITC Midwest and ITC Great Plains. Through these subsidiaries, ITC owns and operates high-voltage transmission facilities in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma, serving a combined peak load exceeding 26,000 megawatts along 15,000 circuit miles of transmission line. Through ITC Grid Development and its subsidiaries, the company also focuses on expansion in areas where significant transmission system improvements are needed. For more information, please visit ITC's website at www.itc-holdings.com. (itc-ITC) GAAP v. Non-GAAP Measures ITC's reported earnings are prepared in accordance with GAAP and represent earnings as reported to the Securities and Exchange Commission. ITC's management believes the company's operating earnings, or GAAP earnings adjusted for specific items as described in the release, provide a more meaningful representation of the company's fundamental earnings power. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Safe Harbor Statement This press release contains certain statements that describe our management's beliefs concerning future business conditions, plans and prospects, growth opportunities and the outlook for our business and the electricity transmission industry based upon information currently available. Such statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Wherever possible, we have identified these forward-looking statements by words such as "will," "may," "anticipates," "believes," "intends," "estimates," "expects," "projects" and similar phrases. These forward-looking statements are based upon assumptions our management believes are reasonable. Such forward looking statements are subject to risks and uncertainties which could cause our actual results, performance and achievements to differ materially from those expressed in, or implied by, these statements, including, among others, the risks and uncertainties disclosed in our Form 10-Q filed with the Securities and Exchange Commission. Because our forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different and any or all of our forward-looking statements may turn out to be wrong. Forward-looking statements speak only as of the date made and can be affected by assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this release and in our annual and quarterly reports will be important in determining future results. Consequently, we cannot assure you that our expectations or forecasts expressed in such forward-looking statements will be achieved. Actual future results may vary materially. Except as required by law, we undertake no obligation to publicly update any of our forward-looking or other statements, whether as a result of new information, future events, or otherwise. ITC HOLDINGS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended March 31, (in thousands, except per share data) 2013 2012 OPERATING REVENUES $ 217,304 $ 196,713 OPERATING EXPENSES Operation and maintenance 24,513 28,712 General and administrative 34,926 23,009 Depreciation and amortization 28,486 25,011 Taxes other than income taxes 16,670 14,280 Other operating (income)and expense — net (172) (193) Total operating expenses 104,423 90,819 OPERATING INCOME 112,881 105,894 OTHER EXPENSES (INCOME) Interest expense 39,063 37,910 Allowance for equity funds used during construction (8,733) (5,624) Other income (236) (306) Other expense 1,037 831 Total other expenses (income) 31,131 32,811 INCOME BEFORE INCOME TAXES 81,750 73,083 INCOME TAX PROVISION 31,560 27,032 NET INCOME $ 50,190 $ 46,051 Basic earnings per common share $ 0.96 $ 0.90 Reported diluted earnings per common share $ 0.95 $ 0.88 Operating diluted earnings per common share $ 1.12 $ 0.93 Dividends declared per common share $ 0.378 $ 0.353 RECONCILIATION OF REPORTED NET INCOME (GAAP) TO OPERATING EARNINGS (NON-GAAP MEASURE) Three months ended March 31, 2013 2012 Reported net income $ 50,190 $ 46,051 Pre-tax Entergy transaction related expenses 11,230 3,916 Pre-tax interest expense on FERC audit related 103 - refunds Income taxes on adjustments (2,725) (1,353) Operating earnings $ 58,798 $ 48,614 RECONCILIATION OF REPORTED DILUTED EPS (GAAP) TO OPERATING DILUTED EPS (NON-GAAP MEASURE) Three months ended March 31, 2013 2012 Reported diluted EPS $ 0.95 $ 0.88 Pre-tax Entergy transaction related expenses 0.22 0.08 Pre-tax interest expense on FERC audit related 0.00 - refunds Income taxes on adjustments (0.05) (0.03) Operating diluted EPS $ 1.12 $ 0.93 ITC HOLDINGS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION March 31, December31, (in thousands, except share data) 2013 2012 ASSETS Current assets Cash and cash equivalents $ 67,582 $ 26,187 Accounts receivable 78,412 72,192 Inventory 37,092 37,357 Deferred income taxes 21,094 23,014 Regulatory assets — revenue accruals, including 6,310 7,489 accrued interest Prepaid assets 18,367 29,235 Other 5,179 2,752 Total current assets 234,036 198,226 Property, plant and equipment (net of accumulated depreciation and amortization of $1,289,769 and 4,317,746 4,134,579 $1,269,810, respectively) Other assets Goodwill 950,163 950,163 Intangible assets ( net of accumulated 47,701 48,492 amortization of $19,188 and $18,397, respectively) Regulatory assets – revenue accruals, including 14,594 2,719 accrued interest Other regulatory assets 181,797 180,378 Deferred financing fees (net of accumulated amortization of $18,742 and $17,838, 18,721 19,293 respectively) Other 30,729 30,959 Total other assets 1,243,705 1,232,004 TOTAL ASSETS $ 5,795,487 $ 5,564,809 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 109,646 $ 123,022 Accrued payroll 10,174 20,740 Accrued interest 44,722 44,708 Accrued taxes 23,221 28,117 Regulatory liabilities — revenue deferrals, 47,736 53,763 including accrued interest Refundable deposits from generators for 30,083 40,745 transmission network upgrades Debt maturing within one year 901,962 651,929 Other 38,408 40,287 Total current liabilities 1,205,952 1,003,311 Accrued pension and postretirement liabilities 55,349 53,243 Deferred income taxes 484,577 460,072 Regulatory liabilities — revenue deferrals, 33,479 28,613 including accrued interest Regulatory liabilities — accrued asset removal 74,549 75,477 costs Refundable deposits from generators for 6,019 7,623 transmission network upgrades Other 23,088 26,317 Long-term debt 2,458,881 2,495,298 STOCKHOLDERS' EQUITY Common stock, without par value, 100,000,000 shares authorized, 52,317,093 and 52,248,514 995,509 989,334 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively Retained earnings 474,026 443,569 Accumulated other comprehensive loss (15,942) (18,048) Total stockholders' equity 1,453,593 1,414,855 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,795,487 $ 5,564,809 ITC HOLDINGS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended March 31, (in thousands) 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 50,190 $ 46,051 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 28,486 25,011 Recognition, refund and collection of revenue accruals (11,857) (16,779) and deferrals — including accrued interest Deferred income tax expense 21,329 16,191 Allowance for equity funds used during construction (8,733) (5,624) Other 3,992 2,974 Changes in assets and liabilities, exclusive of changes shown separately: Accounts receivable (4,341) 1,232 Inventory 265 1,771 Prepaid and other current assets 10,857 (4,421) Accounts payable (5,193) (4,840) Accrued payroll (7,040) (6,726) Accrued interest 14 (19,448) Accrued taxes (4,896) (6,505) Other current liabilities (839) (3,641) Other non-current assets and liabilities, net (266) 4,429 Net cash provided by operating activities 71,968 29,675 CASH FLOWS FROM INVESTING ACTIVITIES Expenditures for property, plant and equipment (214,111) (224,079) Other (103) (50) Net cash used in investing activities (214,214) (224,129) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of long-term debt - 100,000 Borrowings under revolving credit agreements 369,500 342,250 Borrowings under term loan credit agreement 250,000 - Repayments of revolving credit agreements (406,000) (268,500) Issuance of common stock 2,632 1,050 Dividends on common stock (19,733) (18,101) Refundable deposits from generators for transmission 8,058 9,636 network upgrades Repayment of refundable deposits from generators for (20,325) (5,661) transmission network upgrades Other (491) (1,512) Net cash provided by financing activities 183,641 159,162 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 41,395 (35,292) CASH AND CASH EQUIVALENTS — Beginning of period 26,187 58,344 CASH AND CASH EQUIVALENTS — End of period $ 67,582 $ 23,052 SOURCE ITC Holdings Corp. Website: http://www.itc-holdings.com Contact: Investor/Analyst contact: Gretchen Holloway, 248-946-3595, email@example.com; Media contact: Robert Doetsch, 248-946-3493, firstname.lastname@example.org
ITC Holdings Reports Increased First Quarter 2013 Results
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