ITC Holdings posts higher 1Q12 earnings

NOVI, Mich., April 24, 2012 /PRNewswire/ —

Highlights

  • Full-year 2011 operating earnings of $3.35 per diluted common share; full-year 2011 reported earnings of $3.31 per diluted common share
  • Fourth quarter 2011 operating earnings of $0.86 per diluted common share; fourth quarter 2011 reported earnings of $0.82 per diluted common share
  • Full-year 2011 capital investments of $632.9 million
  • Reaffirmed 2012 operating earnings per share guidance of $3.90 to $4.05 per diluted common share, which excludes any Entergy transaction related expenses
  • Initiated 2012 capital expenditure guidance of $730 to $830 million
  • Updated stand-alone five-year capital investment plan of approximately $4.2 billion for 2012 through 2016














(in thousands, except per share data)

Three months ended March 31,

 

2012

 

2011

OPERATING REVENUES

$   196,713

 

$   179,386

       

REPORTED NET INCOME

46,051

 

42,002

       

OPERATING EARNINGS

48,580

 

42,002

       

DILUTED EPS

$         0.88

 

$         0.81

       

OPERATING DILUTED EPS

$         0.93

 

$         0.81

 

ITC Holdings Corp. (NYSE: ITC) today announced its first quarter results for the period ended March 31, 2012.  Reported net income for the quarter, measured in accordance with Generally Accepted Accounting Principles (GAAP), was $46.1 million, or $0.88 per diluted common share, compared to $42.0 million, or $0.81 per diluted common share for the first quarter of 2011. 

Operating earnings for the quarter were $48.6 million, or $0.93 per diluted common share, compared to operating earnings of $42.0 million, or $0.81 per diluted common share for the first quarter of 2011.  Operating earnings are non-GAAP measures that exclude the impact of after-tax expenses of approximately $2.5 million, or $0.05 per share, associated with the previously announced transaction with Entergy Corporation (Entergy).

For the three months ended March 31, 2012, ITC invested $203.0 million in capital projects at its operating companies, including $41.1 million, $39.8 million, $92.4 million and $29.7 million at ITCTransmission, METC, ITC Midwest and ITC Great Plains, respectively.

“Overall, we are quite pleased with our start to 2012,” said Joseph L. Welch, chairman, president and CEO of ITC. “During the first quarter, we experienced strong operational and financial performance, while making solid headway against our annual capital investment plans, which represent the largest in our history.  In addition, we also made good progress with the implementation of our Entergy transaction, including initiating our integration activities and preparing to effectively execute the regulatory approval process.” 

Operating earnings for the first quarter of 2012 increased $6.6 million, or $0.12 per diluted common share, compared to the same period in 2011.  This increase was largely attributable to higher income associated with increased rate base and AFUDC at all of our operating companies, partially offset by 1) lower revenues associated with the amortization of the ITCTransmission rate freeze revenue deferral which expired in May 2011 and 2) lower general and administrative expenses in the first quarter of 2011 due to the recognition of a regulatory asset associated with the Kansas V-Plan Project, which did not reoccur in the first quarter of 2012. 

EPS and Capital Expenditure Guidance

For 2012, ITC is reaffirming its full year operating earnings guidance of $3.90 to $4.05 per share, excluding expenses associated with implementing the transaction with Entergy.  Capital investment guidance for 2012 is also being maintained at $730 to $830 million, which includes $185 to $210 million, $155 to $180 million, $295 to $325 million and $95 to $115 million for ITCTransmission, METC, ITC Midwest and ITC Great Plains, respectively.

First Quarter 2012 Financial Results Detail

ITC’s operating revenues for the first quarter increased to $196.7 million from $179.4 million for the same period last year.  This increase was primarily due to higher network revenues attributable to higher rate base at our regulated operating subsidiaries and higher recoverable expenses associated with operating expenses.  In addition, the increase resulted from higher regional cost sharing revenues due primarily to additional capital projects that have been identified by the Midwest ISO as eligible for regional cost sharing and these projects being placed-in-service.  Partially offsetting these increases was the impact of the elimination of the amortization of the ITCTransmission rate freeze revenue deferral in 2011. 

Operation and maintenance expenses of $28.7 million were $2.4 million higher during the first quarter of 2012 compared to the same period in 2011.  This increase was primarily due to increased vegetation management requirements and increased NERC compliance activities associated with surveying transmission overhead lines.

General and administrative expenses of $19.1 million, which excludes $3.9 million of pre-tax expenses related to the Entergy transaction, were $2.6 million higher compared to the same period in 2011.  This increase was primarily due to the recognition of the Kansas V-Plan Project regulatory asset, which reduced expenses in 2011 and did not reoccur in 2012, and higher general business expenses primarily related to increased information technology support.

Depreciation and amortization expenses of $25.0 million increased by $1.9 million during the first quarter of 2012 compared to the same period in 2011.  This increase was primarily due to a higher depreciable asset base resulting from property, plant and equipment additions.

Taxes other than income taxes of $14.3 million were $0.7 million higher for the first quarter of 2012 compared to the same period in 2011.  This increase was due to 2011 capital additions at our regulated operating subsidiaries, which are included in the tax base for 2012 personal property taxes.

Interest expense of $37.9 million for the first quarter of 2012 increased $1.6 million compared to the same period in 2011 due primarily to higher borrowing levels to finance capital expenditures.   

The effective income tax rate for the first quarter of 2012 was 36.9 percent, excluding a reduction to income taxes of approximately $1.3 million associated with the Entergy transaction expenses, compared to 37.1 percent for the same period last year.