ITC Holdings Reports Increase In 2009 First Quarter Earnings of 12.6 Percent Over 2008

Apr 29, 2009

Highlights

  • Net income for the first quarter of $28.7 million, or $0.57 per diluted common share
  • Capital investments of $85.2 million for three months ended March 31, 2009
  • 2009 EPS guidance of $2.20 to $2.30 per common share and capital expenditure guidance of $270 million to $325 million reaffirmed

 

 

NOVI, Mich., April 29, 2009 -- ITC Holdings Corp. (NYSE: ITC)today announced its first quarter results for the period ended March 31, 2009. Net income for the quarter was $28.7 million, or $0.57 per diluted common share, compared to $25.5 million, or $0.52 per diluted common share for the first quarter of 2008.

"In the first quarter of 2009, ITC experienced strong earnings growth compared to the first quarter of 2008 resulting from our on-going capital investment program," said Joseph L. Welch, chairman, president and CEO of ITC. "We are pleased that we continue to deliver solid financial performance year over year, particularly in light of the difficult economic environment in which we are operating."

In the first quarter of 2009, ITCTransmission invested $20.4 million, METC $31.0 million and ITC Midwest $33.8 million in their respective transmission systems.

Reported net income for the first quarter of 2009 increased $3.2 million, or $0.05 per fully diluted common share compared to the same period in 2008. Key drivers that contributed to these results include:

  • Net income increased primarily due to higher rate base at ITCTransmission, METC and ITC Midwest, partially offset by lower allowance for funds used during construction (AFUDC).
  • Net income also benefited in 2009 due to lower interest expense at ITC Holdings. The first quarter of 2008 had higher interest expense as a result of the $765 million bridge loan associated with ITC Midwest's asset acquisition that was outstanding most of January. On January 24, 2008, the full amount outstanding under the bridge facility was repaid using the proceeds of ITC Holdings' $385 million senior notes, ITC Midwest's $175 million first mortgage bonds and the issuance of 6.4 million shares of common equity.
  • These increases in net income were partially offset by higher non-recoverable G&A expenses, including development expenses at ITC Great Plains, ITC Grid Development and Green Power Express.
  • Diluted earnings per common share increased due to the higher net income, partially offset by the impact of higher weighted average common shares outstanding as a result of the equity issuance noted above.

2009 Guidance
For 2009, ITC continues to expect earnings per diluted common share of $2.20 to $2.30 as previously disclosed. Capital investments for 2009 are expected to be approximately $270 million - $325 million, including $70-$85 million, $110-$130 million and $90-$110 million for ITCTransmission, METC and ITC Midwest, respectively.

First Quarter 2009 Financial Results Detail
ITC's operating revenues for the quarter increased $14.0 million to $155.9 million from $141.9 million last year. Network revenues increased by $10.3 million primarily due to higher rate base resulting from higher balances of in-service property, plant and equipment. Regional cost sharing revenues were $5.8 million higher in the first quarter of 2009 compared to 2008. These revenues increases in 2009 resulted from more capital projects being eligible for regional cost sharing under the Midwest ISO's tariff.

Operation & maintenance (O&M) expenses of $23.7 million were $2.3 million higher in the first quarter of 2009 compared to the same period in 2008. O&M expenses increased due primarily to higher transmission equipment inspections, vehicle expenses and vegetation management.

General and administrative (G&A) expenses of $19.9 million for the first quarter of 2009 were $1.9 million higher than the same period in 2008. G&A expenses increased by $2.1 million due to higher professional advisory and consulting services, $0.9 million due to higher compensation expenses primarily resulting from personnel additions and $0.8 million due to higher business expenses primarily for information technology support. General and administrative expenses also increased by $2.1 million at ITC Grid Development and its subsidiaries as a result of increased development activities. Partially offsetting these increases were lower expenses of $2.8 million as a result of higher capitalization of G&A expenses in the quarter and lower bonus-related expenses of $1.6 million.

Depreciation and amortization expenses increased by $4.2 million in the first quarter of 2009 compared to the first quarter of 2008 due primarily to a higher depreciable asset base resulting from property, plant and equipment additions.

The effective income tax rate for the three months ended March 31, 2009 was 37.1 percent compared to 38.2 percent in the first quarter of 2008.

First Quarter Conference Call
ITC will conduct a conference call to discuss first quarter 2009 earnings results at 11:00 a.m. ET on April 30, 2009. Joseph L. Welch, chairman, president and CEO, will provide a business overview and Cameron M. Bready, senior vice president, treasurer and CFO, will discuss the financial results of the first quarter 2009. Individuals wishing to participate in the conference call may dial toll-free (877) 419-6591 (domestic) or (719) 325-4868 (international); there is no passcode. The conference call replay, available through May 8, 2009 can be accessed by dialing toll-free (888) 203-1112 (domestic) or (719) 457-0820 (international), passcode 8144728. Investors, the news media and the public may listen to a live internet broadcast of the meeting at https://www.itc-holdings.com/itc/about-us/fixed-income-investors. The webcast also will be archived on the ITC website at https://www.itc-holdings.com/itc/about-us/fixed-income-investors.

Other Available Information
More detail about the 2009 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, https://www.itc-holdings.com/itc/about-us/fixed-income-investors. 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. (NYSE: ITC) 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: http://www.itc-holdings.com. (itc-ITC)

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 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. 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.

1 During 2009, ITC adopted Financial Accounting Standards Board Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities ("FSP EITF 03-6-1"). The retroactive application required under FSP EITF 03-6-1 resulted in a decrease to both basic and diluted earnings per common share amounts of $0.01 per share for the 1st quarter 2008 as compared to the previously reported amounts for that period.

Investor/Analyst contact: Pat Wenzel (248.946.3570, pwenzel@itc-holdings.com)
Media contact: Cheryl Eberwein (248-767-1068,
ceberwein@itctransco.com)