Highlights
-Net income for the second quarter of $30.8 million, or $0.61 per diluted common share
-Net income for the six months ended June 30, 2009 of $59.5 million, or $1.17 per diluted common share
-Capital investments of $200.4 million for the six months ended June 30, 2009
-2009 EPS guidance range increased to $2.32 to $2.42 per diluted common share and 2009 capital expenditure guidance increased to $300 million to $345 million
(in thousands,
except per
share data) Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
OPERATING REVENUES $157,238 $160,616 $313,179 $302,530
NET INCOME $30,793 $28,661 $59,518 $54,182
DILUTED EPS (1) $0.61 $0.57 $1.17 $1.09
NOVI, Mich., July 29 /PRNewswire-FirstCall/ -- ITC Holdings Corp. (NYSE: ITC) today announced its second quarter and year-to-date results for the period ended June 30, 2009. Net income for the quarter was $30.8 million, or $0.61 per diluted common share, compared to $28.7 million, or $0.57 per diluted common share for the second quarter of 2008. Net income for the six months ended June 30, 2009 was $59.5 million, or $1.17 per diluted common share, compared to $54.2 million, or $1.09 per diluted common share for the same period last year.
"ITC experienced another quarter of strong operational and financial performance," said Joseph L. Welch, chairman, president and CEO of ITC. "Our earnings growth continues to be driven by our investments in our transmission systems which provide substantial customer benefits, such as enhanced reliability, enabling the interconnection of new renewable resources, lower system losses and reduced congestion."
For the six months ended June 30, 2009, ITCTransmission, METC and ITC Midwest's investments in their transmission systems were $42.1 million, $82.5 million and $75.8 million, respectively.
Reported net income for the second quarter of 2009 increased $2.1 million, or $0.04 per diluted common share compared to the same period in 2008. For the six months ended June 30, 2009, net income increased $5.3 million, or $0.08 per diluted common share, compared to the same period in 2008. Key drivers that contributed to these results include:
- Increases in net income in both the second quarter and year-to-date amounts primarily due to higher rate base at ITCTransmission, METC and ITC Midwest.
- These increases were partially offset by higher non-recoverable G&A expenses, including development expenses at ITC Great Plains, ITC Grid Development and Green Power Express and, in the second quarter, higher interest expense.
2009 Guidance
For 2009, ITC has increased expected full year earnings per diluted common share to a range of $2.32 to $2.42. The increase is primarily due to an increase in expected 2009 capital expenditures at ITC Midwest from $90-110 million to $120-130 million and the impact of recognizing $8.4 million of regulatory assets in July 2009 at ITC Great Plains for start-up, development and pre-construction costs which has the effect of reversing costs that were previously expensed. Earnings per share are as previously disclosed. The increases in earnings per share guidance are partially offset by the impact of adopting Financial Accounting Standards Board Staff Position No. EITF 03-6-1(1), which was not reflected in the original earnings guidance.
Capital investments for 2009 are now expected to be approximately $300-$345 million, including $70-$85 million, $110-$130 million and $120-$130 million for ITCTransmission, METC and ITC Midwest, respectively.
The table below identifies the impacts on diluted EPS guidance for 2009.
EPS Guidance
Low High
----- -----
Previous Guidance $2.20 - $2.30
Impact of Updated Capital Guidance 0.03 - 0.04
----- -----
Subtotal 2.23 - 2.34
Recognition of ITC Great Plains
Regulatory Asset
2009 Expenses 0.03
Pre-2009 Incurred Expenses 0.08
----
0.11
Impact of EITF 03-6-1(1) (0.02) - (0.03)
----- -----
Updated 2009 Guidance $2.32 - $2.42
===== =====
Second Quarter 2009 Financial Results Detail
ITC's operating revenues for the quarter decreased to $157.2 million from $160.6 million last year. Network and regional cost sharing revenues reflect increases due to the impacts of higher rate base in the quarter, but these increases were more than offset by reductions in net revenue requirements primarily due to expense mitigation efforts and the reductions to operating expenses resulting from higher expense capitalization. In addition, point-to-point and control and dispatch revenues decreased due to fewer point to point reservations and lower network peak load at ITCTransmission.
Operation & maintenance (O&M) expenses of $21.9 million were $11.0 million lower during the second quarter of 2009 compared to the same period in 2008. O&M expenses decreased by $4.2 million due to lower vegetation management expenses and $2.5 million due to lower tower painting, overhead structure maintenance and field operations and training expenses. Additionally, there was a $1.1 million decrease due to lower emergency station expenses at ITC Midwest that resulted from the 2008 floods in Iowa. O&M expenses also decreased by $2.1 million as a result of higher capitalization of O&M expenses in the second quarter of 2009 compared to the same period in 2008.
General and administrative (G&A) expenses of $20.3 million were $1.1 million lower during the second quarter of 2009 compared to the same period in 2008. G&A expenses decreased by $2.6 million due to lower business expenses primarily for information technology support and professional advisory and consulting services. In addition, there was a $3.1 million decrease as a result of higher capitalization of G&A expenses in the quarter. Partially offsetting these decreases were higher compensation and benefit related expenses of $3.3 million due in part to personnel additions and other benefit costs. G&A expenses also include $2.2 million of development costs at ITC Grid Development and its subsidiaries which were $1.2 million higher than the same period in 2008 as a result of increased development activities.
Depreciation and amortization expenses increased by $2.7 million during the second quarter of 2009 compared to the same period in 2008 due primarily to a higher depreciable asset base resulting from property, plant and equipment additions.
Interest expense increased for the three months ended June 30, 2009 compared to the same period in 2008 due primarily to additional interest expense associated with the December 2008 issuances of METC's $50.0 million Senior Secured Notes and ITC Midwest's $40.0 million and $35.0 million First Mortgage Bonds, Series B and Series C, respectively.
The effective income tax rate for the three months ended June 30, 2009 was 37.7 percent compared to 38.1 percent in the second quarter of 2008.
Second Quarter Year-To-Date 2009 Financial Results Detail
ITC's operating revenues for the six months ended June 30, 2009 increased to $313.2 million from $302.5 million last year. Network and regional cost sharing revenues increased due primarily to higher rate base resulting from higher balances of in-service property, plant and equipment and more capital projects being eligible for regional cost sharing under the Midwest ISO's tariff. These increases were partially offset by decreases in revenue requirements due to expense mitigation efforts and other reductions to operating expenses as a result of higher expense capitalization. Point-to-point and control and dispatch revenues decreased in the quarter due to fewer point to point reservations and lower network peak load at ITCTransmission. In addition, other revenues decreased due primarily to the elimination of ancillary service revenues as a result of the establishment of the Midwest ISO ancillary service market in January 2009.
O&M expenses of $45.7 million were $8.7 million lower in the first six months of 2009 compared to the same period in 2008. O&M expenses decreased by $3.3 million due to lower vegetation management expenses and $2.8 million due to lower tower painting, overhead structure and field operations and training expenses.
