ITC Holdings Corp. Reports First Quarter 2008 Results
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NOVI, Mich., April 30 /PRNewswire-FirstCall/ — ITC Holdings Corp. today announced its first quarter results for the period ended March 31, 2008. Net income for the quarter was $25.5 million, or $0.53 per diluted share, compared to $16.9 million, or $0.39 per diluted share for the first quarter of 2007.
“We are very pleased with ITC’s 2008 first quarter results,” said Joseph L. Welch, president and CEO of ITC. “These results continue to demonstrate our ability to meet our commitments for the benefits of our customers and shareholders. 2008 is expected to be another strong year for ITC as we continue on our mission of investing in the electric transmission grid to improve electric power quality and reliability, enable the entrance of renewable resources and provide customers with equal access to wholesale power markets.”
In the first quarter of 2008, ITCTransmission invested $52.1 million, METC invested $26.2 million and ITC Midwest invested $17.8 million in their respective transmission systems.
ITC reported operating revenues of $141.9 million for the first quarter 2008, an increase of $40.6 million over the comparable period last year. Network revenues increased by $28.2 million due to the December 2007 acquisition by ITC Midwest of the electric transmission assets of Interstate Power & Light (IPL), for which no revenues were included in our results of operations for the three months ended March 31, 2007. Additionally, METC and ITCTransmission recognized additional network revenues of $3.9 million and $2.0 million, respectively, due to higher net revenue requirements primarily due to higher rate base as a result of property, plant and equipment placed in service, among other factors. Point-to-point, scheduling, control and dispatch revenues increased primarily due to $1.7 million of ITC Midwest revenues.
Operation & Maintenance (O&M) expenses of $21.5 million during the first quarter of 2008 were $2.9 million higher than the same period in 2007. O&M expenses increased primarily due to expenses incurred by ITC Midwest that were not included in our results of operations for the three months ended March 31, 2007.
General and administrative (G&A) expenses of $18.0 million for the first quarter of 2008 were $3.0 million higher than the same period in 2007. G&A expenses increased primarily due to higher compensation and benefits mainly resulting from personnel additions and higher business expenses, all of which include incremental costs incurred by ITC Midwest.
Depreciation and amortization expenses increased $6.2 million in the three months ended March 31, 2008 compared to the same period in 2007. ITC Midwest recognized depreciation expenses of $4.1 million for the three months ended March 31, 2008. Depreciation and amortization also increased at ITCTransmission and METC primarily due to a higher depreciable asset base resulting from property, plant and equipment additions.
Taxes other than income taxes of $10.9 million in the first quarter of 2008 increased by $2.1 million compared to the same period in 2007. Taxes other than income taxes primarily increased due to property tax expense at ITC Midwest of $1.6 million.
In the first quarter of 2008 interest expense increased $11.6 million compared to the same period in 2007 primarily due to higher borrowing levels to finance our capital expenditures and the acquisition of the IPL transmission assets in December of 2007.
Guidance for 2008
For 2008 earnings per diluted share are expected to be between $1.90 and $2.00, as previously disclosed. Capital expenditures for 2008 are expected to be approximately $95-110 million, $105-130 million and $85-100 million for ITCTransmission, METC and ITC Midwest, respectively.
First Quarter Conference Call
ITC will conduct a conference call to discuss first quarter 2008 earnings results at 11:00 a.m. ET Thursday, May 1, 2008. Joseph L. Welch, president and CEO, will provide a business overview and Edward M. Rahill, senior vice president and CFO, will provide a financial update of the first quarter of 2008. Individuals wishing to participate in the conference call may dial toll-free (877) 675-4749 (domestic) or (719) 325-4905 (international); there is no passcode. The conference call replay, available through May 8, 2008 can be accessed by dialing toll-free (888) 203-1112 (domestic) or (719) 457-0820 (international), passcode 8240784. Investors, the news media and the public may listen to a live internet broadcast of the meeting at . The webcast also will be archived on the ITC website at .
Other Available Information
More detail about the 2008 first quarter results may be found in ITC’s Form 10-Q filing. Once filed with the SEC, an electronic copy of the 10-Q can be found at ITC’s website, . Written copies can also be made available by contacting us either through our website or the phone listings below.
About ITC Holdings Corp.
ITC Holdings Corp. invests in the electricity transmission grid to improve electric reliability, improve access to markets, and lower the overall cost of delivered energy. ITC is the largest independent electricity transmission company in the country. Through its subsidiaries, ITCTransmission, Michigan Electric Transmission Company, LLC (METC) and ITC Midwest LLC, ITC operates regulated, high-voltage transmission systems in Michigan’s Lower Peninsula and portions of Iowa, Minnesota, Illinois and Missouri serving a combined peak load in excess of 25,000 megawatts. ITC is also focused on new areas where significant transmission system improvements are needed through subsidiaries ITC Grid Development, ITC Great Plains and ITC Panhandle Transmission. For more information, please visit: . (itc-ITC)
Safe Harbor Statement
This press release contains certain statements that describe our management’s beliefs concerning future business conditions 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 “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 other things the risks and uncertainties disclosed in our annual report on Form 10-K and our quarterly reports on Form 10-Q filed with the Securities and Exchange Commission from time to time.
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. They 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, unless required by law.
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share and per share data)
Three months ended
March 31,
2008 2007
OPERATING REVENUES $141,914 $101,274
OPERATING EXPENSES
Operation and maintenance 21,455 18,540
General and administrative 17,982 15,023
Depreciation and amortization 22,324 16,122
Taxes other than income taxes 10,885 8,770
Total operating expenses 72,646 58,455
OPERATING INCOME 69,268 42,819
OTHER EXPENSES (INCOME)
Interest expense 30,770 19,132
Allowance for equity funds
used during construction (3,096) (1,240)
Loss on extinguishment of debt - 349
Other income (514) (702)
Other expense 841 333
Total other expenses (income) 28,001 17,872
INCOME BEFORE INCOME TAXES 41,267 24,947
INCOME TAX PROVISION 15,746 8,092
NET INCOME $25,521 $16,855
Basic earnings per share $0.54 $ 0.40
Diluted earnings per share $0.53 $ 0.39
Weighted-average basic shares 47,296,243 42,091,356
Weighted-average diluted shares 48,497,189 43,293,874
Dividends declared per common share $0.290 $0.275
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(in thousands, except share data)
ASSETS March 31, December 31,
Current assets 2008 2007
Cash and cash equivalents $19,305 $2,616
Accounts receivable 45,021 40,919
Inventory 22,459 26,315
Deferred income taxes 2,828 2,689
Other 6,669 3,518
Total current assets 96,282 76,057
Property, plant and equipment (net of
accumulated depreciation and
amortization of $893,774 and
$879,843, respectively) 2,043,164 1,960,433
Other assets
Goodwill 960,022 959,042
Intangible assets (net of accumulated
amortization of $3,781 and $3,025
respectively) 54,626 55,382
Regulatory assets - acquisition adjustments 84,707 86,054
Regulatory assets - Attachment O
revenue accrual (including accrued
interest of $800 and $552, respectively) 38,764 20,537
Other regulatory assets 30,126 29,449
Deferred financing fees (net of accumulated
amortization of $6,500 and
$5,138 respectively) 19,850 14,201
Other 10,321 12,142
Total other assets 1,198,416 1,176,807
TOTAL ASSETS $3,337,862 $3,213,297
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable $53,395 $47,627
Accrued payroll 5,869 8,928
Accrued interest 14,153 23,088
Accrued taxes 14,218 15,065
ITC Midwest acquisition additional
purchase price accrual 5,033 5,402
Other 8,751 6,317
Total current liabilities 101,419 106,427
Accrued pension liability and
postretirement liabilities 16,629 13,934
Deferred income taxes 106,785 90,617
Regulatory liabilities 191,741 189,727
Other 9,768 6,093
Long-term debt 2,027,690 2,243,424
STOCKHOLDERS’ EQUITY
Common stock, without par value,
100,000,000 shares authorized, 43,398,488
and 42,916,852 shares issued and
outstanding at March 31, 2008 and
December 31, 2007, respectively 841,644 532,103
Retained earnings 43,062 31,864
Accumulated other comprehensive loss (876) (892)
Total stockholders’ equity 883,830 563,075
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $3,337,862 $3,213,297
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Three months ended
March 31,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $25,521 $16,855
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization expense 22,324 16,122
Attachment O revenue accrual -
including accrued interest (18,222) (17,140)
Deferred income tax expense 14,423 8,092
Allowance for equity funds
used during construction (3,096) (1,240)
Stock-based compensation expense 1,762 1,127
Amortization of loss on reacquired debt,
deferred financing fees and debt discounts 1,976 953
Other 117 (31)
Changes in assets and liabilities,
exclusive of changes shown separately (10,125) (14,737)
Net cash provided by
operating activities 34,680 10,001
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property,
plant and equipment (94,564) (73,788)
IP&L transmission assets
direct acquisition fees (933) -
Other - 925
Net cash used in
investing activities (95,497) (72,863)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt 557,895 -
Repayment of long-term debt (765,000) -
Borrowings under revolving
credit agreements 164,500 235,900
Repayments of revolving credit agreements (173,200) (141,700)
Issuance of common stock 308,904 341
Common stock issuance costs (734) -
Dividends on common stock (14,319) (11,655)
Repurchase and retirement of common stock - (1,841)
Debt issuance costs (4,123) (333)
Refundable deposits from generators
for transmission network upgrades 3,583 -
Net cash provided by
financing activities 77,506 80,712
NET INCREASE IN CASH AND CASH EQUIVALENTS 16,689 17,850
CASH AND CASH EQUIVALENTS - Beginning of period 2,616 13,426
CASH AND CASH EQUIVALENTS - End of period $19,305 $31,276
ITC Holdings Corp.
