Oct. 28, 2009 (PR Newswire) -- NOVI, Mich., Oct. 28 /PRNewswire-FirstCall/ --
Highlights
-- Net income for the third quarter of $37.8 million, or $0.74 per diluted
common share
-- Net income for the nine months ended September 30, 2009 of $97.3
million, or $1.92 per diluted common share
-- Capital investments of $300.4 million for the nine months ended
September 30, 2009
-- 2009 EPS guidance increased to $2.47 to $2.52 per diluted common share
and 2009 capital expenditure guidance revised to a range of $320 to $345
million
-- 2010 EPS guidance of $2.52 to $2.62 per common share and capital
expenditure guidance of $405 million to $460 million reaffirmed
Three months ended Nine months ended
(in thousands, except per share September 30, September 30,
data) ------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
OPERATING REVENUES $151,328 $163,279 $464,507 $465,809
NET INCOME $37,818 $28,045 $97,336 $82,227
DILUTED EPS (1) $0.74 $0.55 $1.92 $1.64
ITC Holdings Corp. (NYSE: ITC) today announced its third quarter and year-to-date results for the period ended September 30, 2009. Net income for the quarter was $37.8 million, or $0.74 per diluted common share, compared to $28.0 million, or $0.55 per diluted common share for the third quarter of 2008. Net income for the nine months ended September 30, 2009 was $97.3 million, or $1.92 per diluted common share, compared to $82.2 million, or $1.64 per diluted common share for the same period last year. Diluted earnings per share in the 2009 quarter and year-to-date periods includes $0.11 associated with the recognition of regulatory assets at ITC Great Plains.
For the nine months ended September 30, 2009, ITCTransmission, METC and ITC Midwest's investments in their transmission systems were $70.9 million, $110.2 million and $119.3 million, respectively.
"ITC's ability to continue to deliver strong financial results in a challenging economic environment is further testimony to the strength of our business model and growth strategy," said Joseph L. Welch, chairman, president and CEO of ITC. "Our capital investments are essential to developing a 21st century transmission grid capable of reliably supporting the energy needs of our customers while, at the same time, driving our growth for years to come."
Reported net income for the third quarter of 2009 increased $9.8 million, or $0.19 per diluted common share, compared to the same period in 2008. For the nine months ended September 30, 2009, net income increased $15.1 million, or $0.28 per diluted common share, compared to the same period in 2008.
Key drivers that contributed to these results include:
-- An increase in net income for the quarter and nine month periods due to
higher rate base at METC and ITC Midwest.
-- Higher AFUDC at ITC Midwest in both the quarter and year-to-date periods
resulting from our continued investments in this system to improve
reliability and interconnect new generating resources.
-- An increase in net income for both the quarter and year-to-date periods
due to the recognition of regulatory assets at ITC Great Plains which
included the reversal of $8.2 million of costs that were previously
recorded as expenses, including certain expenses from prior periods.
-- In the nine months ended September 30, the 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.
-- For the year-to-date period, the increase in EPS was partially offset by
higher weighted average diluted shares outstanding in 2009.
EPS and Capital Expenditure Guidance
For 2009, ITC has increased its guidance for full year earnings per diluted common share to a range of $2.47 to $2.52. The increase is primarily due to our updated capital guidance, lower forecasted non-recoverable expenses and a lower expected effective tax rate. Additionally, we have revised our 2009 capital expenditure guidance to a range of $320 to $345 million. We now expect capital expenditures to be approximately $75 to $85 million at ITCTransmission, $120 to $130 million at METC and $125 to $130 million at ITC Midwest.
For 2010, ITC continues to expect earnings per diluted common share of $2.52 to $2.62 as previously disclosed, although earnings are now expected to be at the high end of this guidance range due to progress made in 2009 on capital projects that will likely result in more projects going into service in 2010 than originally anticipated. Capital investments for 2010 are still expected to be approximately $405 to $460 million, including $50 to $60 million, $140 to $155 million, $205 to $225 million and $10 to $20 million for ITCTransmission, METC, ITC Midwest and ITC Great Plains, respectively.
Third Quarter 2009 Financial Results Detail
ITC's operating revenues for the quarter decreased to $151.3 million from $163.3 million last year. This decrease was primarily a result of lower net revenue requirements during the three months ended September 30, 2009 as compared to the same period in 2008 due to our expense mitigation efforts, other reductions to operating expenses resulting from higher capitalization, the impact of the depreciation study for ITCTransmission which reduced depreciation rates, as discussed below, and an increase in regional cost sharing revenues. Partially offsetting these decreases was an increase due to higher rate base primarily associated with higher balances of property, plant and equipment in-service.
Regional cost sharing revenues increased due primarily to capital projects placed in-service in 2007 and 2008, or those that are expected to be in-service in 2009, that have been identified by Midwest ISO (MISO) as eligible for regional cost sharing.
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 $22.1 million were $11.1 million lower during the third quarter of 2009 compared to the same period in 2008. O&M expenses decreased mainly due to our cost mitigation efforts and higher capitalization of O&M expenses in the quarter.
General and administrative (G&A) expenses of $9.5 million were $11.1 million lower during the third quarter of 2009 compared to the same period in 2008 mainly due to the recognition of regulatory assets relating to development activities of ITC Great Plains as well as pre-construction costs for the KETA project which reduced G&A expenses by $8.0 million. G&A expenses also decreased due to our cost mitigation efforts and higher capitalization of G&A expenses in the quarter. G&A expenses for the quarter include $1.9 million of development costs at ITC Grid Development and its subsidiaries which were $0.5 million higher than the same period in 2008 as a result of increased development activities.
Depreciation and amortization expenses decreased by $4.3 million during the third quarter of 2009 compared to the same period in 2008. Depreciation and amortization expense decreased due primarily to the FERC approval in September 2009 of a depreciation study for ITCTransmission which revised the depreciation rates used to calculate depreciation expense for the entire 2009 calendar year at ITCTransmission and resulted in a reduction of depreciation expense of $7.0 million. The effect of the change in the depreciation rate on net income and earnings per share amounts in the quarter is insignificant. Partially offsetting this reduction are increases primarily related to a higher depreciable asset base resulting from property, plant and equipment additions.
Interest expense increased for the three months ended September 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, ITC Holdings' $100 million two year Term Loan Agreement executed in April 2009 and the April 2008 issuance of ITCTransmission's $100.0 million First Mortgage Bonds, Series D. These increases were partially offset by lower interest expense as a result of lower interest rates under our revolving credit agreements.
The effective income tax rate for the three months ended September 30, 2009 was 37.6 percent compared to 38.9 percent in the third quarter of 2008.
