NOVI, Mich., April 30,
2015 /PRNewswire/ --
Highlights
- Increased first quarter 2015 operating earnings of
$0.47 per diluted common share; first
quarter 2015 reported earnings of $0.43 per diluted common share
- Capital investments of $168.7
million for the three months ended March 31, 2015
- Reaffirmed 2015 operating earnings per share guidance of
$2.00 to $2.15 per diluted share and
capital investment guidance of $710 to $810
million
|
Three months
ended
|
(in thousands, except
per share data)
|
March
31,
|
|
2015
|
|
2014
|
OPERATING
REVENUES
|
$
|
272,487
|
|
$
|
258,603
|
REPORTED NET
INCOME
|
$
|
67,132
|
|
$
|
69,136
|
OPERATING
EARNINGS
|
$
|
73,057
|
|
$
|
69,767
|
REPORTED DILUTED
EPS
|
$
|
0.43
|
|
$
|
0.43
|
OPERATING DILUTED
EPS
|
$
|
0.47
|
|
$
|
0.44
|
ITC Holdings Corp. (NYSE: ITC) announced today its results for
the quarter ended March 31, 2015.
Reported net income for the first quarter, measured in
accordance with Generally Accepted Accounting Principles (GAAP),
was $67.1 million, or $0.43 per diluted common share, compared to
$69.1 million or $0.43 per diluted common share for the first
quarter of 2014.
Operating earnings for the first quarter were $73.1 million, or $0.47 per diluted common share, compared to
operating earnings of $69.8 million,
or $0.44 per diluted common share for
the first quarter of 2014.
ITC invested $168.7 million in
capital projects at its operating companies during the three month
period ended March 31, 2015,
including $36.8 million at
ITCTransmission, $30.0 million
at METC, $95.0 million at ITC
Midwest, $5.8 million at ITC Great
Plains and $1.1 million of
Development.
"We had a solid start to 2015 and made good progress with our
plans," said Joseph L. Welch,
chairman, president and CEO of ITC. "I am pleased with the
performance and resiliency of our systems given the severe weather
conditions experienced in our regions in the first quarter. Our
efforts in the first quarter position us well to achieve our
operational and financial objectives for the year."
Operating Earnings
Operating earnings are non-GAAP
measures that exclude the impact of after-tax expenses associated
with the following items:
- The Entergy Corporation transaction expenses of approximately
$0.6 million, or $0.01 per diluted common share, for the first
quarter of 2014.
- Regulatory charges of approximately $1.1
million, or $0.01 per diluted
common share, for the first quarter of 2015 and $0.1 million for the same period in 2014. The
2015 charge relates to management's decision to write-off abandoned
project costs at ITCTransmission. The 2014 charge relates to
certain acquisition accounting adjustments for ITC Midwest,
ITCTransmission, and METC resulting from the FERC audit
order on ITC Midwest issued in May
2012.
- The estimated refund liability associated with the Midcontinent
ISO (MISO) regional base ROE rate (the "base ROE") of $4.8 million, or $0.03 per diluted common share, for the three
months ended March 31, 2015. The
refund liability reflects the estimated refund obligation
associated with the base ROE 206 complaint.
Operating earnings for the first quarter of 2015 increased by
$3.3 million, or $0.03 per diluted common share, compared with the
same period last year. The increase of approximately 7% compared to
the prior period was largely attributable to higher income
associated with increased rate base at our operating companies,
partially offset by non-recoverable bonus payments associated with
completion of the V-Plan project at ITC Great Plains in December of
2014. Absent the V-Plan project bonus payments in the first
quarter, year-over-year operating earnings would have increased by
approximately 15%.
Balance Sheet Activities
On April 7, 2015, ITC Midwest issued $225 million aggregate principal amount of 3.83%
First Mortgage Bonds, Series G, due 2055. The proceeds from the
issuance were used for general corporate purposes, including the
repayment of borrowings under ITC Midwest's revolving credit
agreement. ITC Midwest's First Mortgage Bonds are issued under its
first mortgage and deed of trust and secured by a first mortgage
lien on substantially all of its property.
2015 EPS and Capital Investment Guidance
For 2015,
ITC is reaffirming its full year operating earnings per share
guidance of $2.00 to $2.15. ITC
is also reaffirming its 2015 capital guidance range of $710 to $810 million, which includes $170 to $200 million for ITCTransmission,
$150 to $170 million for METC,
$380 to $405 million for ITC Midwest,
$10 to $25 million for ITC Great
Plains and up to $10 million of
Development.
First Quarter 2015 Operating Earnings Financial Results
Detail
ITC's operating revenues for the first quarter of
2015 increased to $280.0 million
compared to $258.6 million for the
first quarter of 2014. Amounts reported for the first quarter of
2015 exclude approximately $7.5
million in reduced pre-tax revenues associated with the base
ROE refund liability. The increase in operating revenues was
primarily due to higher revenue requirements attributable to higher
rate base at our regulated operating subsidiaries, as well as an
increase in regional cost sharing revenues resulting from
additional capital projects being placed in-service that have been
identified by MISO as eligible for regional cost sharing and higher
accumulated investment for the Kansas V-Plan Project.
Operation and maintenance (O&M) expenses of $25.6 million were consistent with the prior
period.
General and administrative (G&A) expenses of $39.4 million were $12.4
million higher compared to the same period in 2014. Amounts
reported for the first quarter of 2015 exclude approximately
$1.5 million of pre-tax expenses
related to regulatory charges and the first quarter of 2014 exclude
approximately $1.0 million of pre-tax
expenses related to the Entergy transaction. The increase in
G&A expenses was primarily due to incentive-based compensation
for bonus payments associated with completion of the V-Plan project
at ITC Great Plains in December of 2014.
Depreciation and amortization expenses of $34.4 million increased by $3.0 million compared to the same period in 2014
due to a higher depreciable base resulting from property, plant and
equipment additions.
Taxes other than income taxes of $22.4
million were $1.2 million
higher than the same period in 2014. This increase was due to 2014
capital additions at our regulated operating subsidiaries, which
are included in the tax base for 2015 personal property tax
calculations.
Interest expense of $48.1 million
increased by $2.9 million compared to
the same period in 2014. Amounts reported for the first quarter
2015 and 2014 exclude $0.4 million
and $0.1 million, respectively, of
pre-tax expenses related to the adjustments to operating earnings.
The increase was due primarily to higher borrowing levels to
finance capital investments.
The effective income tax rate for the first quarter of 2015 was
37.6 percent compared to 38.3 percent for the same period last
year. Amounts reported for the first quarter of 2015 and 2014
exclude approximately $3.5 million
and $0.4 million, respectively,
associated with adjustments to operating earnings.
First Quarter Conference Call and Webcast
Joseph L. Welch, chairman, president and CEO and
Rejji P. Hayes, senior vice
president, CFO and treasurer will discuss the first quarter results
in a conference call at 11 a.m.
Eastern on Thursday, April 30, 2015. 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 May 5,
2015, can be accessed by dialing 855-859-2056 (toll free) or
404-537-3406, passcode 17824916. The webcast will be archived on
the ITC website.
Other Available Information
More detail about first
quarter 2015 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. Paper copies can also be made
available by contacting us through our website. Additionally, a
calendar of our future earnings calls can be found at our website,
http://investor.itc-holdings.com.
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. Through its regulated operating
subsidiaries ITCTransmission, Michigan Electric Transmission
Company, ITC Midwest and ITC Great Plains, 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 approximately 15,600 circuit miles
of transmission line. ITC's grid development focus includes growth
through regulated infrastructure investment as well as domestic and
international expansion through merchant and other commercial
development opportunities. For more information, please visit ITC's
website at www.itc-holdings.com (ITC-itc-F).
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 that operating earnings, or GAAP earnings adjusted for
specific items as described in the release that are generally not
indicative of our core operations, provides additional information
that is useful to investors in understanding ITC's underlying
performance, business and performance trends, and helps facilitate
period to period comparisons. However, non-GAAP financial measures
are not required to be uniformly applied, are not audited and
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 annual
reports on Form 10-K, quarterly reports on Form 10-Q and other
filings made 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. 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 (UNAUDITED)
|
|
|
|
|
|
Three months
ended
|
|
|
March
31,
|
(in thousands,
except per share data)
|
|
2015
|
|
2014
|
OPERATING
REVENUES
|
|
$
|
272,487
|
|
$
|
258,603
|
OPERATING
EXPENSES
|
|
|
|
|
Operation and
maintenance
|
|
25,562
|
|
24,861
|
General and
administrative
|
|
40,894
|
|
27,962
|
Depreciation and
amortization
|
|
34,435
|
|
31,378
|
Taxes other than
income taxes
|
|
22,380
|
|
21,193
|
Other operating
(income) and expenses — net
|
|
(236)
|
|
(232)
|
Total operating
expenses
|
|
123,035
|
|
105,162
|
OPERATING
INCOME
|
|
149,452
|
|
153,441
|
OTHER EXPENSES
(INCOME)
|
|
|
|
|
Interest expense —
net
|
|
48,474
|
|
45,309
|
Allowance for equity
funds used during construction
|
|
(7,549)
|
|
(5,012)
|
Other
income
|
|
(253)
|
|
(161)
|
Other
expense
|
|
1,188
|
|
1,333
|
Total other expenses
(income)
|
|
41,860
|
|
41,469
|
INCOME BEFORE
INCOME TAXES
|
|
107,592
|
|
111,972
|
INCOME TAX
PROVISION
|
|
40,460
|
|
42,836
|
NET
INCOME
|
|
$
|
67,132
|
|
$
|
69,136
|
Basic earnings per
common share
|
|
$
|
0.43
|
|
$
|
0.44
|
Diluted earnings per
common share
|
|
$
|
0.43
|
|
$
|
0.43
|
Operating diluted
earnings per common share
|
|
$
|
0.47
|
|
$
|
0.44
|
Dividends declared
per common share
|
|
$
|
0.1625
|
|
$
|
0.1425
|
RECONCILIATION OF
REPORTED NET INCOME (GAAP) TO OPERATING EARNINGS (NON-GAAP MEASURE)
- UNAUDITED
|
|
|
|
|
|
Three months
ended
|
|
|
March
31,
|
|
|
2015
|
|
2014
|
Reported net income
(GAAP)
|
|
$
|
67,132
|
|
$
|
69,136
|
After-tax Entergy
transaction related expenses
|
|
—
|
|
565
|
After-tax regulatory
charges
|
|
1,083
|
|
66
|
After-tax MISO
regional base ROE rate refund liability
|
|
4,842
|
|
—
|
Operating earnings
(non-GAAP)
|
|
$
|
73,057
|
|
$
|
69,767
|
RECONCILIATION OF
REPORTED DILUTED EPS (GAAP) TO OPERATING DILUTED EPS (NON-GAAP
MEASURE) - UNAUDITED
|
|
|
|
|
|
Three months
ended
|
|
|
March
31,
|
|
|
2015
|
|
2014
|
Reported diluted EPS
(GAAP)
|
|
$
|
0.43
|
|
$
|
0.43
|
After-tax Entergy
transaction related expenses
|
|
—
|
|
0.01
|
After-tax regulatory
charges
|
|
0.01
|
|
—
|
After-tax MISO
regional base ROE rate refund liability
|
|
0.03
|
|
—
|
Operating diluted EPS
(non-GAAP)
|
|
$
|
0.47
|
|
$
|
0.44
|
ITC HOLDINGS CORP.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
|
|
|
|
|
|
March
31,
|
|
December
31,
|
(in thousands,
except share data)
|
2015
|
|
2014
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
9,114
|
|
$
|
27,741
|
Accounts
receivable
|
102,760
|
|
100,998
|
Inventory
|
30,964
|
|
30,892
|
Deferred income
taxes
|
18,085
|
|
14,511
|
Regulatory
assets
|
7,183
|
|
5,393
|
Prepaid and other
current assets
|
17,201
|
|
7,281
|
Total current
assets
|
185,307
|
|
186,816
|
Property, plant and
equipment (net of accumulated depreciation and amortization of
$1,414,073 and $1,388,217, respectively)
|
5,634,544
|
|
5,496,875
|
Other
assets
|
|
|
Goodwill
|
950,163
|
|
950,163
|
Intangible assets
(net of accumulated amortization of $25,748 and $24,917,
respectively)
|
47,971
|
|
48,794
|
Regulatory
assets
|
231,847
|
|
223,712
|
Deferred financing
fees (net of accumulated amortization of $14,535 and $15,972,
respectively)
|
31,516
|
|
30,311
|
Other
|
42,314
|
|
37,418
|
Total other
assets
|
1,303,811
|
|
1,290,398
|
TOTAL
ASSETS
|
$
|
7,123,662
|
|
$
|
6,974,089
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
|
95,149
|
|
$
|
107,969
|
Accrued
payroll
|
11,959
|
|
23,502
|
Accrued
interest
|
37,366
|
|
50,538
|
Accrued
taxes
|
30,473
|
|
41,614
|
Regulatory
liabilities
|
38,523
|
|
39,972
|
Refundable deposits
from generators for transmission network upgrades
|
3,104
|
|
10,376
|
Debt maturing within
one year
|
175,000
|
|
175,000
|
Other
|
4,383
|
|
14,043
|
Total current
liabilities
|
395,957
|
|
463,014
|
Accrued pension
and postretirement liabilities
|
71,876
|
|
69,562
|
Deferred income
taxes
|
690,789
|
|
656,562
|
Regulatory
liabilities
|
166,712
|
|
160,070
|
Refundable
deposits from generators for transmission network
upgrades
|
7,622
|
|
9,384
|
Other
|
19,104
|
|
17,354
|
Long-term
debt
|
4,056,131
|
|
3,928,586
|
Commitments and
contingent liabilities
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
Common stock, without
par value, 300,000,000 shares authorized, 155,197,816
and 155,140,967 shares issued and outstanding at March
31, 2015 and
December 31, 2014, respectively
|
927,814
|
|
923,191
|
Retained
earnings
|
783,462
|
|
741,550
|
Accumulated other
comprehensive income
|
4,195
|
|
4,816
|
Total stockholders'
equity
|
1,715,471
|
|
1,669,557
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
7,123,662
|
|
$
|
6,974,089
|
ITC HOLDINGS CORP.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
|
|
|
|
Three months
ended
|
|
March
31,
|
(in
thousands)
|
2015
|
|
2014
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
Net income
|
$
|
67,132
|
|
$
|
69,136
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expense
|
34,435
|
|
31,378
|
Recognition, refund
and collection of revenue accruals and deferrals —
including accrued interest
|
(12,484)
|
|
(5,139)
|
Deferred income tax
expense
|
27,823
|
|
28,243
|
Allowance for equity
funds used during construction
|
(7,549)
|
|
(5,012)
|
Other
|
6,777
|
|
3,841
|
Changes in assets and
liabilities, exclusive of changes shown separately:
|
|
|
|
Accounts
receivable
|
(3,826)
|
|
(11,555)
|
Inventory
|
(72)
|
|
1,775
|
Prepaid and other
current assets
|
(9,920)
|
|
(4,525)
|
Accounts
payable
|
(4,855)
|
|
(23,339)
|
Accrued
payroll
|
(7,540)
|
|
(8,011)
|
Accrued
interest
|
(13,172)
|
|
(24,079)
|
Accrued
taxes
|
(11,140)
|
|
(1,653)
|
Other current
liabilities
|
(1,676)
|
|
(7,299)
|
Other non-current
assets and liabilities, net
|
3,000
|
|
1,954
|
Net cash provided by
operating activities
|
66,933
|
|
45,715
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
Expenditures for
property, plant and equipment
|
(172,604)
|
|
(159,145)
|
Other
|
(5,637)
|
|
128
|
Net cash used in
investing activities
|
(178,241)
|
|
(159,017)
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
Borrowings under
revolving credit agreements
|
349,800
|
|
488,000
|
Borrowings under term
loan credit agreements
|
—
|
|
110,000
|
Repayments of
revolving credit agreements
|
(222,400)
|
|
(464,700)
|
Issuance of common
stock
|
1,246
|
|
2,906
|
Dividends on common
and restricted stock
|
(25,220)
|
|
(22,453)
|
Refundable deposits
from generators for transmission network upgrades
|
143
|
|
4,967
|
Repayment of
refundable deposits from generators for transmission network
upgrades
|
(9,178)
|
|
(22,155)
|
Other
|
(1,710)
|
|
(3,568)
|
Net cash provided by
financing activities
|
92,681
|
|
92,997
|
NET DECREASE IN
CASH AND CASH EQUIVALENTS
|
(18,627)
|
|
(20,305)
|
CASH AND CASH
EQUIVALENTS — Beginning of period
|
27,741
|
|
34,275
|
CASH AND CASH
EQUIVALENTS — End of period
|
$
|
9,114
|
|
$
|
13,970
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/itc-reports-first-quarter-2015-results-300074750.html
SOURCE ITC Holdings Corp.