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ITC Holdings Reports Increased First Quarter 2013 Results



          ITC Holdings Reports Increased First Quarter 2013 Results

PR Newswire

NOVI, Mich., April 23, 2013

NOVI, Mich., April 23, 2013 /PRNewswire/ --

Highlights

  o Operating 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
  o Capital investments of $212.0 million for the three months ended March 31,
    2013
  o Reaffirmed 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,      December 31,
(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,
gholloway@itctransco.com; Media contact: Robert Doetsch, 248-946-3493,
rdoetsch@itctransco.com
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