NOVI, Mich., April 28,
2016 /PRNewswire/ --
Highlights
- First quarter 2016 operating earnings of $0.55 per diluted common share increased over the
same period last year; first quarter 2016 reported earnings of
$0.42 per diluted common
share
- Capital investments of $176.6
million for the three months ended March 31, 2016
|
Three months
ended
|
(in thousands, except
per share data)
|
March
31,
|
|
2016
|
|
2015
|
OPERATING REVENUES
(GAAP)
|
$
|
280,133
|
|
$
|
272,487
|
REPORTED NET
INCOME (GAAP)
|
$
|
64,237
|
|
$
|
67,132
|
OPERATING EARNINGS
(Non-GAAP)
|
$
|
84,451
|
|
$
|
73,057
|
REPORTED DILUTED
EPS (GAAP)
|
$
|
0.42
|
|
$
|
0.43
|
OPERATING DILUTED
EPS (Non-GAAP)
|
$
|
0.55
|
|
$
|
0.47
|
ITC Holdings Corp. (NYSE: ITC) announced today its results for
the quarter ended March 31, 2016.
Reported net income for the first quarter, measured in
accordance with Generally Accepted Accounting Principles (GAAP),
was $64.2 million, or $0.42 per diluted common share, compared to
$67.1 million or $0.43 per diluted common share for the first
quarter of 2015.
Operating earnings for the first quarter were $84.5 million, or $0.55 per diluted common share, compared to
operating earnings of $73.1 million,
or $0.47 per diluted common share for
the first quarter of 2015.
ITC invested $176.6 million in
capital projects during the three month period ended March 31, 2016, including $41.1 million at ITCTransmission,
$47.0 million at METC, $74.8 million at ITC Midwest and $13.7 million at ITC Great Plains.
"We are pleased with our solid start to 2016," said Joseph L. Welch, chairman, president and CEO of
ITC. "We continue to deliver operational excellence to our
customers and superior growth to our shareholders while
concurrently focusing on the Fortis acquisition of ITC."
Operating Earnings
Operating earnings are non-GAAP
measures that exclude the impact of after-tax expenses associated
with the following items:
- Regulatory charges of approximately $1.1
million, or $0.01 per diluted
common share, for the first quarter of 2015 related to management's
decision to write off abandoned project costs at
ITCTransmission.
- The estimated refund liability associated with the Midcontinent
ISO (MISO) regional base ROE rate (the "base ROE") of $11.5 million, or $0.07 per diluted common share, and $4.8 million, or $0.03 per diluted common share, for the three
months ended March 31, 2016 and 2015,
respectively. The refund liability reflects the estimated refund
obligation associated with the base ROE 206 complaints.
- Fortis transaction related expenses of $8.7 million, or $0.06 per diluted common share, for the three
months ended March 31, 2016.
Operating earnings for the first quarter of 2016 increased by
$11.4 million, or $0.08 per diluted common share, compared with the
same period last year. The increase compared to the prior period
was largely attributable to higher income associated with increased
rate base at our operating companies as well as lower
non-recoverable bonus payments associated with the V-Plan project
in the first quarter of 2016 compared to the same period in 2015.
These beneficial factors were partially offset by the impact of
electing bonus depreciation at all of our operating
subsidiaries.
Balance Sheet Activities
On April 26, 2016, METC issued $200 million aggregate principal amount of 3.90%
Senior Secured notes due 2046. The proceeds from the issuance will
be used for general corporate purposes, including the repayment of
borrowings under METC's term loan agreement. METC's Senior Secured
Notes are issued under its first mortgage indenture and secured by
a first mortgage lien on substantially all of its real property and
tangible personal property.
First Quarter 2016 Operating Earnings Financial Results
Detail — Non-GAAP Measure
ITC's operating revenues
for the first quarter of 2016 increased to $297.6 million compared to $280.0 million for the first quarter of 2015.
Amounts reported for the first quarter of 2016 and 2015 exclude
approximately $17.5 million and
$7.5 million, respectively, in
reduced pre-tax revenues associated with the base ROE refund
liability. This increase was primarily due to higher revenue
requirements attributable to a higher rate base at our regulated
operating subsidiaries, as well as an increase in regional cost
sharing revenues.
Operation and maintenance (O&M) expenses of $24.6 million were $1.0
million lower than the same period in 2015. The decrease in
O&M expenses was primarily due to lower vegetation management
requirements.
General and administrative (G&A) expenses of $32.8 million were $6.6
million lower compared to the same period in 2015. Amounts
reported for the first quarter of 2016 exclude approximately
$12.9 million of pre-tax activity
related to the Fortis transaction. Amounts reported for the first
quarter of 2015 exclude approximately $1.5
million of pre-tax activity related to regulatory charges.
The decrease in G&A expenses was primarily due to lower
incentive-based compensation for bonus payments.
Depreciation and amortization expenses of $38.9 million increased by $4.5 million compared to the same period in 2015
due to a higher depreciable base resulting from property, plant and
equipment in-service additions.
Taxes other than income taxes of $23.4
million were $1.0 million
higher than the same period in 2015. This increase was due to 2015
capital additions at our regulated operating subsidiaries, which
are included in the assessment for 2016 personal property
taxes.
Interest expense of $48.9 million
increased by $0.8 million compared to
the same period in 2015. Amounts reported for the first quarter of
2016 and 2015 exclude $1.5 million
and $0.4 million, respectively, of
pre-tax expenses related to the adjustments to operating earnings.
The increase was due primarily to additional interest expense
associated with higher borrowing levels.
The effective income tax rate for the first quarter of 2016 was
37.9 percent compared to 37.6 percent for the same period last
year. Amounts reported for the first quarter of 2016 and 2015
exclude income taxes of approximately $11.7
million and $3.5 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 and CFO will discuss the first quarter results in a
conference call at 10 a.m. Eastern on
Thursday, April 28, 2016. 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 3,
2016, can be accessed by dialing 855-859-2056 (toll free) or
404-537-3406, passcode 83086632. The webcast will be archived on
the ITC website.
Other Available Information
More detail about first
quarter 2016 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.
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 15,700 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)
|
2016
|
|
2015
|
OPERATING
REVENUES
|
$
|
280,133
|
|
$
|
272,487
|
OPERATING
EXPENSES
|
|
|
|
Operation and
maintenance
|
24,596
|
|
25,562
|
General and
administrative
|
45,708
|
|
40,894
|
Depreciation and
amortization
|
38,872
|
|
34,435
|
Taxes other than
income taxes
|
23,449
|
|
22,380
|
Other operating
(income) and expenses — net
|
(264)
|
|
(236)
|
Total operating
expenses
|
132,361
|
|
123,035
|
OPERATING
INCOME
|
147,772
|
|
149,452
|
OTHER EXPENSES
(INCOME)
|
|
|
|
Interest expense —
net
|
50,417
|
|
48,474
|
Allowance for equity
funds used during construction
|
(7,519)
|
|
(7,549)
|
Other
income
|
(268)
|
|
(253)
|
Other
expense
|
1,162
|
|
1,188
|
Total other expenses
(income)
|
43,792
|
|
41,860
|
INCOME BEFORE
INCOME TAXES
|
103,980
|
|
107,592
|
INCOME TAX
PROVISION
|
39,743
|
|
40,460
|
NET
INCOME
|
$
|
64,237
|
|
$
|
67,132
|
Basic earnings per
common share
|
$
|
0.42
|
|
$
|
0.43
|
Diluted earnings per
common share
|
$
|
0.42
|
|
$
|
0.43
|
Operating diluted
earnings per common share
|
$
|
0.55
|
|
$
|
0.47
|
Dividends declared
per common share
|
$
|
0.1875
|
|
$
|
0.1625
|
RECONCILIATION OF
REPORTED NET INCOME (GAAP) TO OPERATING EARNINGS (NON-GAAP MEASURE)
- UNAUDITED
|
|
|
Three months
ended
|
|
March
31,
|
|
2016
|
|
2015
|
Reported net income
(GAAP)
|
$
|
64,237
|
|
$
|
67,132
|
After-tax regulatory
charges
|
29
|
|
1,083
|
After-tax MISO
regional base ROE rate refund liability
|
11,531
|
|
4,842
|
After-tax Fortis
transaction related expenses
|
8,654
|
|
—
|
Operating earnings
(Non-GAAP)
|
$
|
84,451
|
|
$
|
73,057
|
RECONCILIATION OF
REPORTED DILUTED EPS (GAAP) TO OPERATING DILUTED EPS (NON-GAAP
MEASURE) - UNAUDITED
|
|
|
Three months
ended
|
|
March
31,
|
|
2016
|
|
2015
|
Reported diluted EPS
(GAAP)
|
$
|
0.42
|
|
$
|
0.43
|
After-tax regulatory
charges
|
—
|
|
0.01
|
After-tax MISO
regional base ROE rate refund liability
|
0.07
|
|
0.03
|
After-tax Fortis
transaction related expenses
|
0.06
|
|
—
|
Operating diluted EPS
(Non-GAAP)
|
$
|
0.55
|
|
$
|
0.47
|
ITC HOLDINGS CORP.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
|
|
|
March
31,
|
|
December
31,
|
(in thousands,
except share data)
|
2016
|
|
2015
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
8,221
|
|
$
|
13,859
|
Accounts
receivable
|
120,533
|
|
104,262
|
Inventory
|
27,577
|
|
25,777
|
Regulatory
assets
|
16,937
|
|
14,736
|
Income tax
receivable
|
141,323
|
|
—
|
Prepaid and other
current assets
|
10,920
|
|
10,608
|
Total current
assets
|
325,511
|
|
169,242
|
Property, plant
and equipment (net of accumulated depreciation and
amortization of $1,512,637 and $1,487,713,
respectively)
|
6,246,320
|
|
6,109,639
|
Other
assets
|
|
|
|
Goodwill
|
950,163
|
|
950,163
|
Intangible assets
(net of accumulated amortization of $29,073 and $28,242,
respectively)
|
44,950
|
|
45,602
|
Regulatory
assets
|
249,264
|
|
233,376
|
Deferred financing
fees (net of accumulated amortization of $1,469 and
$1,277,
respectively)
|
3,343
|
|
2,498
|
Other
|
43,691
|
|
44,802
|
Total other
assets
|
1,291,411
|
|
1,276,441
|
TOTAL
ASSETS
|
$
|
7,863,242
|
|
$
|
7,555,322
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
|
117,461
|
|
$
|
124,331
|
Accrued
payroll
|
13,985
|
|
24,123
|
Accrued
interest
|
39,576
|
|
52,577
|
Accrued
taxes
|
33,475
|
|
44,256
|
Regulatory
liabilities
|
36,102
|
|
44,964
|
Refundable deposits
from generators for transmission network upgrades
|
16,744
|
|
2,534
|
Debt maturing within
one year
|
607,058
|
|
395,105
|
Other
|
28,374
|
|
31,034
|
Total current
liabilities
|
892,775
|
|
718,924
|
Accrued pension
and postretirement liabilities
|
65,907
|
|
61,609
|
Deferred income
taxes
|
898,858
|
|
735,426
|
Regulatory
liabilities
|
273,564
|
|
254,788
|
Refundable
deposits from generators for transmission network
upgrades
|
7,522
|
|
18,077
|
Other
|
27,848
|
|
23,075
|
Long-term
debt
|
3,947,954
|
|
4,034,352
|
Commitments and
contingent liabilities
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
Common stock, without
par value, 300,000,000 shares authorized, 152,766,017
and 152,699,077 shares issued and outstanding at
March 31, 2016 and
December 31, 2015, respectively
|
835,513
|
|
|
829,211
|
|
Retained
earnings
|
911,198
|
|
|
875,595
|
|
Accumulated other
comprehensive income
|
2,103
|
|
|
4,265
|
|
Total stockholders'
equity
|
1,748,814
|
|
|
1,709,071
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
7,863,242
|
|
|
$
|
7,555,322
|
|
ITC HOLDINGS CORP.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
|
|
Three months
ended
|
|
March
31,
|
(in
thousands)
|
2016
|
|
2015
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
Net income
|
$
|
64,237
|
|
$
|
67,132
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
and amortization expense
|
38,872
|
|
34,435
|
Recognition,
refund and collection of revenue accruals and deferrals —
including
accrued interest
|
(16,581)
|
|
(12,484)
|
Deferred
income tax expense
|
160,881
|
|
27,823
|
Allowance for
equity funds used during construction
|
(7,519)
|
|
(7,549)
|
Other
|
8,550
|
|
6,777
|
Changes in
assets and liabilities, exclusive of changes shown
separately:
|
|
|
|
Accounts
receivable
|
(10,778)
|
|
(3,826)
|
Inventory
|
(1,788)
|
|
(72)
|
Income tax
receivable
|
(141,323)
|
|
—
|
Prepaid and other
current assets
|
(66)
|
|
(9,920)
|
Accounts
payable
|
6,373
|
|
(4,855)
|
Accrued
payroll
|
(6,463)
|
|
(7,540)
|
Accrued
interest
|
(13,001)
|
|
(13,172)
|
Accrued
taxes
|
(10,781)
|
|
(11,140)
|
Other current
liabilities
|
(3,094)
|
|
(1,676)
|
Estimated potential
refund related to return on equity complaints
|
18,900
|
|
7,960
|
Other non-current
assets and liabilities, net
|
1,397
|
|
(4,960)
|
Net cash provided by
operating activities
|
87,816
|
|
66,933
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
Expenditures for
property, plant and equipment
|
(203,996)
|
|
(172,604)
|
Other
|
8,754
|
|
(5,637)
|
Net cash used in
investing activities
|
(195,242)
|
|
(178,241)
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
Borrowings under
revolving credit agreements
|
244,100
|
|
349,800
|
Net issuance of
commercial paper, net of discount
|
211,360
|
|
—
|
Repayments of
revolving credit agreements
|
(331,200)
|
|
(222,400)
|
Dividends on common
and restricted stock
|
(28,585)
|
|
(25,220)
|
Refundable deposits
from generators for transmission network upgrades
|
4,820
|
|
143
|
Repayment of
refundable deposits from generators for transmission
network
upgrades
|
—
|
|
(9,178)
|
Other
|
1,293
|
|
(464)
|
Net cash provided by
financing activities
|
101,788
|
|
92,681
|
NET DECREASE IN
CASH AND CASH EQUIVALENTS
|
(5,638)
|
|
(18,627)
|
CASH AND CASH
EQUIVALENTS — Beginning of period
|
13,859
|
|
27,741
|
CASH AND CASH
EQUIVALENTS — End of period
|
$
|
8,221
|
|
$
|
9,114
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/itc-reports-first-quarter-2016-results-300259071.html
SOURCE ITC Holdings Corp.