ITC Holdings Reports Increased First Quarter 2013 Results
NOVI — ITC Holdings Corp. (NYSE: ITC), the nation’s largest manager of the power grid, reported higher revenue and profit for the first quarter of 2013.
Operating revenue was $217.3 million, up from $196.7 million a year earlier.
Net income was $50.2 million or 95 cents a share, up from $46.1 million or 88 cents a share a year earlier.
Operating earnings for the quarter were $58.8 million, or $1.12 a share, up from operating earnings of $48.6 million, or 93 cents a share for the first quarter of 2012. Operating earnings exclude the impact of after-tax expenses associated with the Entergy transaction of approximately $8.5 million, or 17 cents a share, and $2.6 million, or 5 cents a share, for the first quarter of 2013 and 2012, respectively. In addition, operating earnings for the first quarter of 2013 also exclude approximately $100,000 in 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.
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 Novi-based 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.”
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.
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 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 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 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 $300,000 of interest expense associated with adjustments to operating earnings, increased by $900,000 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.
ITC will conduct a webcast and conference call at 11 a.m. Eastern on Wednesday, April 24, 2013. Welch 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 in the United States or (914) 495-8555 elsewhere. 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, can be accessed by dialing (855) 859-2056 in the U.S. or (404) 537-3406, passcode 31787042. The webcast will also be archived on the ITC Web site.
ITC Holdings is the nation’s largest independent electric transmission company. Based in Novi, 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 Co., ITC Midwest and ITC Great Plains. Through these subsidiaries, ITC owns and operates high-voltage transmission lines and stations 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.
More at http://investor.itc-holdings.com.