May 1, 2014
ITC Holdings Corp. (NYSE: ITC) announced its results for the quarter ended March 31, 2014. Reported net income for the period, measured in accordance with Generally Accepted Accounting Principles (GAAP), was $69.1 million, or $0.43 per diluted common share, compared to $50.2 million, or $0.32 per diluted common share, for the first quarter of 2013.
Operating earnings for the first quarter were $69.8 million, or $0.44 per diluted common share, compared to operating earnings of $58.8 million, or $0.37 per diluted common share for the first quarter of 2013. Operating earnings are non-GAAP measures that exclude the impact of after-tax expenses associated the Entergy Corporation transaction of approximately $0.6 million, or $0.01 per diluted common share, and $8.5 million, or $0.05 per diluted common share, for the first quarter of 2014 and 2013, respectively. In addition, operating earnings for both the first quarter of 2014 and 2013 exclude approximately $0.1 million associated with certain acquisition accounting adjustments for ITC Midwest, ITCTransmission and METC resulting from the FERC audit order on ITC Midwest issued in May 2012.
Operating earnings for the first quarter of 2014 increased by $11.0 million, or $0.07 per diluted common share, compared with the same period last year. The increase was largely attributable to higher income associated with increased rate base at our operating companies.
ITC invested $200.4 million in capital projects at its operating companies during the three months ended March 31, 2014, including $72.8 million at ITCTransmission, $41.8 million at METC, $50.4 million at ITC Midwest and $35.4 million at ITC Great Plains.
"We had very solid performance in the first quarter of 2014 despite the challenging weather conditions that impacted much of our operating region," said Joseph L. Welch, chairman, president and CEO of ITC. "I am very pleased with how our systems performed during the severe winter weather that we experienced this year, which reflects one of the important benefits of investing in a robust and resilient transmission system. Importantly, we also made good progress with respect to our annual capital investment plan during the quarter and are on track to achieve our overall objectives for the year."
EPS and Capital Expenditure Guidance
For 2014, ITC is reaffirming its full year operating earnings per share guidance in the range of $1.83 to $1.90. ITC is also reaffirming its 2014 capital guidance of $730 to $840 million, which includes $250 to $285 million for ITCTransmission, $130 to $150 million for METC, $255 to $290 million for ITC Midwest and $95 to $115 million for ITC Great Plains, respectively.
First Quarter 2014 Operating Earnings Financial Results Detail
ITC's operating revenues for the first quarter of 2014 increased to $258.6 million compared to $217.3 million for the first quarter of 2013. This increase 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 the Midcontinent ISO (MISO) as eligible for regional cost sharing.
Operation and maintenance (O&M) expenses of $24.9 million were consistent with the same period in 2013.
General and administrative (G&A) expenses of $27.0 million were $3.1 million higher compared to the same period in 2013. Amounts reported for the first quarter 2014 and 2013 exclude $1.0 million and $11.0 million, respectively, of pre-tax expenses related to the Entergy transaction. The increase in G&A expenses was primarily due to higher compensation-related expenses resulting from personnel additions and increases in other professional fees associated with information technology and engineering services.
Depreciation and amortization expenses of $31.4 million increased by $2.9 million compared to the same period in 2013 due to a higher depreciable asset base resulting from property, plant and equipment additions.
Taxes other than income taxes of $21.2 million were $4.5 million higher than the same period in 2013. This increase was due to 2013 capital additions at our regulated operating subsidiaries, which are included in the tax base for 2014 personal property tax calculations.
Interest expense of $45.2 million increased by $6.4 million compared to the same period in 2013. Amounts reported for the first quarter 2014 and 2013 exclude $0.1 million and $0.3 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 2014 was 38.3 percent compared to 36.8 percent for the same period last year. Amounts reported for the first quarter of 2014 and 2013 exclude approximately $0.4 million and $2.7 million, respectively, associated with adjustments to operating earnings.
Other Available Information
More detail about first quarter 2014 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, investor.itc-holdings.com. Paper copies can also be made available by contacting us through our website.
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. ITC's regulated operating subsidiaries include ITCTransmission, Michigan Electric Transmission Company, ITC Midwest and ITC Great Plains. Through these subsidiaries, 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 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.
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ITC Holdings Corp.
27175 Energy Way
United States, 48377