Business Wire | Feb 17, 2021 06:30AM EST

ALLETE, Inc. Reports 2020 Earnings of $3.35 Per Share; Initiates 2021 Earnings Guidance; Anticipates Further Improvement In 2022

Feb. 17, 2021

DULUTH, Minn.--(BUSINESS WIRE)--Feb. 17, 2021--ALLETE, Inc. (NYSE: ALE) today reported 2020 earnings of $3.35 per share on net income of $174.2 million and operating revenue of $1.2 billion. Reported results from 2019 were $3.59 per share on net income of $185.6 million and operating revenue of $1.2 billion. 2020 results were impacted by lower sales due to the COVID-19 pandemic and settlement of the Minnesota Power rate case earlier in the year. Net income in 2019 includes 24 cents per share for impacts of the gain on the sale of U.S. Water Services offset by its partial year financial results.

"ALLETE's operating and financial results for 2020 exemplify our company's resilience in the face of unprecedented challenges brought on by the COVID19 pandemic," said ALLETE President and CEO Bethany Owen. "Our early action on safety and financial positioning will enable us to move beyond the pandemic, even stronger, with our clean energy strategy."

ALLETE's Regulated Operations segment, which includes Minnesota Power, Superior Water, Light and Power and the Company's investment in the American Transmission Co., recorded net income of $136.3 million, compared to $154.4 million 2019. Earnings reflect lower net income at Minnesota Power primarily due to: lower kilowatt-hour sales to retail customers due to COVID-19 impacts; lower revenue resulting from the expiration of certain municipal and power sale contracts; higher depreciation expense; and lower fuel adjustment clause recoveries in 2020 with the adoption of a new fuel adjustment clause methodology. These decreases were partially offset by higher rates resulting from Minnesota Power's rate case and increased earnings related to the GNTL. In addition, results in 2020 included a second quarter 16 cent per share charge from the Minnesota Power rate case resolution for the refund of interim rates collected through April 30, 2020.

ALLETE Clean Energy recorded 2020 net income of $29.9 million compared to $12.4 million in 2019. Net income in 2020 reflects additional production tax credits and earnings from the new Glen Ullin, South Peak and Diamond Spring wind energy facilities, and higher wind resources at other wind energy facilities.

Corporate and Other businesses, which include BNI Energy and ALLETE Properties, recorded net income of $8.0 million in 2020 compared to net income of $19.9 million in 2019. Net income in 2020 included earnings from the company's investment in the Nobles 2 wind facility which commenced operations in December 2020. Net income in 2019 included the gain on the sale of U.S. Water Services of $13.2 million after-tax.

"Our thoughtful positioning in the early stage of the COVID-19 crisis delivered on expectations in 2020, no small feat. Even with notable impacts lingering from the pandemic, our financial results exceeded our updated guidance range of $3.25 to $3.45 per share, which includes the 16 cent per share charge related to the Minnesota Power rate case resolution," said ALLETE Senior Vice President and Chief Financial Officer Bob Adams. "Although we expect continued impacts of the COVID-19 pandemic in 2021, we remain keenly focused on delivering value to our investors and customers as we advance our clean energy strategy and positioning. This will set the stage for financial improvement and growth in 2022 as we execute on ALLETE's key initiatives planned for 2021, including ALLETE Clean Energy's growth initiatives and the Minnesota Power rate case filing later this year."

Details of the Company's 2021 earnings guidance were filed as part of today's Form 8-K filing.

Live Webcast on February 17, 2021; financial slides posted on company website

ALLETE's earnings conference call will be at 10:00 a.m. (EST), February 17, 2021, at which time management will discuss 2020 financial results and 2021 earnings guidance. To participate in the call, analysts are asked to dial 877-303-5852, pass code 9387381, ten minutes prior to the start time and refer to the "ALLETE's Conference Call Announcing 2020 Financial Results." All interested parties may listen to the live audio-only webcast accompanied by financial slides, which will be available on ALLETE's Investor Relations website http://investor.allete.com/events-presentations. A replay of the call will be available through February 24, 2021 by calling (855) 859-2056, pass code 9387381. The webcast will be accessible for one year at www.allete.com.

ALLETE is an energy company headquartered in Duluth, Minn. In addition to its electric utilities, Minnesota Power and Superior Water, Light and Power of Wisconsin, ALLETE owns ALLETE Clean Energy, based in Duluth, BNI Energy in Bismarck, N.D., and has an eight percent equity interest in the American Transmission Co. More information about ALLETE is available at www.allete.com. ALE-CORP

The statements contained in this release and statements that ALLETE may make orally in connection with this release that are not historical facts, are forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties and investors are directed to the risks discussed in documents filed by ALLETE with the Securities and Exchange Commission.

ALLETE's press releases and other communications may include certain non-Generally Accepted Accounting Principles (GAAP) financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the company's financial statements.

Non-GAAP financial measures utilized by the company include presentations of earnings (loss) per share. ALLETE's management believes that these non-GAAP financial measures provide useful information to investors by removing the effect of variances in GAAP reported results of operations that are not indicative of changes in the fundamental earnings power of the company's operations, such as the charge for the recent Minnesota Power rate case resolution. Management believes that the presentation of non-GAAP financial measures is appropriate and enables investors and analysts to more accurately compare the company's ongoing financial performance over the periods presented. See page 5 in this release for a reconciliation of 2020 annual GAAP earnings guidance range to 2020 annual adjusted earnings guidance range (Non-GAAP).

ALLETE, Inc.

Consolidated Statement of Income

For the Periods Ended December 31, 2020 and 2019

Quarter Ended Year to Date

2020 2019 2020 2019

Millions Except Per Share Amounts

Operating Revenue

Contracts with Customer - Utility $266.1 $256.3 $987.3 $1,042.4

Contracts with Customer - Non-utility 51.5 45.4 170.5 186.5

Other - Non-utility 2.8 2.9 11.3 11.6

Total Operating Revenue 320.4 304.6 1,169.1 1,240.5

Operating Expenses

Fuel, Purchased Power and Gas - 106.9 94.8 358.6 390.7 Utility

Transmission Services - Utility 17.2 14.0 67.0 69.8

Cost of Sales - Non-utility 18.1 18.8 66.7 80.6

Operating and Maintenance 70.1 63.3 252.0 264.3

Depreciation and Amortization 56.5 50.4 217.8 202.0

Taxes Other than Income Taxes 15.2 13.5 56.1 53.3

Total Operating Expenses 284.0 254.8 1,018.2 1,060.7

Operating Income 36.4 49.8 150.9 179.8

Other Income (Expense)

Interest Expense (17.7 ) (16.0 ) (65.6 ) (64.9 )

Equity Earnings 5.4 6.4 22.1 21.7

Gain on Sale of U.S. Water Services - 3.0 - 23.6

Other 5.6 4.1 14.7 18.7

Total Other Expense (6.7 ) (2.5 ) (28.8 ) (0.9 )

Income Before Non-Controlling Interest 29.7 47.3 122.1 178.9 and Income Taxes

Income Tax Benefit (11.7 ) (2.3 ) (39.5 ) (6.6 )

Net Income 41.4 49.6 161.6 185.5

Net Loss Attributable to (5.7 ) (0.1 ) (12.6 ) (0.1 )Non-Controlling Interest

Net Income Attributable to ALLETE $47.1 $49.7 $174.2 $185.6

Average Shares of Common Stock

Basic 52.0 51.7 51.9 51.6

Diluted 52.1 51.8 51.9 51.7

Basic Earnings Per Share of Common $0.91 $0.96 $3.36 $3.59 Stock

Diluted Earnings Per Share of Common $0.90 $0.96 $3.35 $3.59 Stock

Dividends Per Share of Common Stock $0.6175 $0.5875 $2.47 $2.35

Consolidated Balance Sheet

Millions

Dec. 31,

Dec. 31,

Dec. 31,

Dec. 31,

2020

2019

2020

2019

Assets

Liabilities and Equity

Cash and Cash Equivalents

$44.3

$69.3

Current Liabilities

$459.6

$507.4

Other Current Assets

210.6

200.2

Long-Term Debt

1,593.2

1,400.9

Property, Plant and Equipment - Net

4,840.8

4,377.0

Deferred Income Taxes

195.7

212.8

Regulatory Assets

480.9

420.5

Regulatory Liabilities

524.8

560.3

Equity Investments

301.2

197.6

Defined Benefit Pension & Other Postretirement Benefit Plans

225.8

172.8

Other Non-Current Assets

206.8

218.2

Other Non-Current Liabilities

285.3

293.0

Equity

2,800.2

2,335.6

Total Assets

$6,084.6

$5,482.8

Total Liabilities and Equity

$6,084.6

$5,482.8

Consolidated Balance Sheet

Millions

Dec. 31, Dec. 31, Dec. 31, Dec. 31,

2020 2019 2020 2019

Assets Liabilities and Equity

Cash and Cash $44.3 $69.3 Current Liabilities $459.6 $507.4Equivalents

Other Current 210.6 200.2 Long-Term Debt 1,593.2 1,400.9Assets

Property,Plant and 4,840.8 4,377.0 Deferred Income Taxes 195.7 212.8Equipment -Net

Regulatory 480.9 420.5 Regulatory Liabilities 524.8 560.3Assets

Equity Defined Benefit PensionInvestments 301.2 197.6 & Other Postretirement 225.8 172.8 Benefit Plans

Other Other Non-CurrentNon-Current 206.8 218.2 Liabilities 285.3 293.0Assets

Equity 2,800.2 2,335.6

Total Assets $6,084.6 $5,482.8 Total Liabilities and $6,084.6 $5,482.8 Equity

Quarter Ended

Year to Date

ALLETE, Inc.

December 31,

December 31,

Income (Loss)

2020

2019

2020

2019

Millions

Regulated Operations

$25.3

$40.2

$136.3

$154.4

ALLETE Clean Energy

13.1

5.9

29.9

12.4

U.S. Water Services

-

-

-

(1.1

)

Corporate and Other

8.7

3.6

8.0

19.9

Net Income Attributable to ALLETE

$47.1

$49.7

$174.2

$185.6

Diluted Earnings Per Share

$0.90

$0.96

$3.35

$3.59

Quarter Ended Year to Date

ALLETE, Inc. December 31, December 31,

Income (Loss) 2020 2019 2020 2019

Millions

Regulated Operations $25.3 $40.2 $136.3 $154.4



ALLETE Clean Energy 13.1 5.9 29.9 12.4

U.S. Water Services - - - (1.1 )



Corporate and Other 8.7 3.6 8.0 19.9

Net Income Attributable to ALLETE $47.1 $49.7 $174.2 $185.6

Diluted Earnings Per Share $0.90 $0.96 $3.35 $3.59

Statistical Data

Corporate

Common Stock

High

$62.28

$87.83

$84.71

$88.60

Low

$50.75

$78.25

$48.22

$72.50

Close

$61.94

$81.17

$61.94

$81.17

Book Value

$44.06

$43.19

$44.06

$43.19

Statistical Data

Corporate

Common Stock

High $62.28 $87.83 $84.71 $88.60

Low $50.75 $78.25 $48.22 $72.50

Close $61.94 $81.17 $61.94 $81.17

Book Value $44.06 $43.19 $44.06 $43.19

Kilowatt-hours Sold

Millions

Regulated Utility

Retail and Municipal

Residential

299

301

1,134

1,130

Commercial

323

347

1,306

1,390

Industrial

1,645

1,888

6,192

7,277

Municipal

150

153

584

672

Total Retail and Municipal

2,417

2,689

9,216

10,469

Other Power Suppliers

1,544

891

4,039

3,185

Total Regulated Utility

3,961

3,580

13,255

13,654

Kilowatt-hours Sold

Millions

Regulated Utility

Retail and Municipal

Residential 299 301 1,134 1,130

Commercial 323 347 1,306 1,390

Industrial 1,645 1,888 6,192 7,277

Municipal 150 153 584 672

Total Retail and Municipal 2,417 2,689 9,216 10,469

Other Power Suppliers 1,544 891 4,039 3,185

Total Regulated Utility 3,961 3,580 13,255 13,654

Regulated Utility Revenue

Millions

Regulated Utility Revenue

Retail and Municipal Electric Revenue

Residential

$34.6

$31.9

$127.9

$125.9

Commercial

34.5

33.4

134.0

139.5

Industrial

115.6

117.9

430.6

473.9

Municipal

10.7

9.2

41.2

48.6

Total Retail and Municipal

195.4

192.4

733.7

787.9

Other Power Suppliers

42.2

41.8

138.8

153.7

Other (Includes Water and Gas Revenue)

28.5

22.1

114.8

100.8

Total Regulated Utility Revenue

$266.1

$256.3

$987.3

$1,042.4

Regulated Utility Revenue

Millions

Regulated Utility Revenue

Retail and Municipal Electric Revenue

Residential $34.6 $31.9 $127.9 $125.9

Commercial 34.5 33.4 134.0 139.5

Industrial 115.6 117.9 430.6 473.9

Municipal 10.7 9.2 41.2 48.6

Total Retail and Municipal 195.4 192.4 733.7 787.9

Other Power Suppliers 42.2 41.8 138.8 153.7

Other (Includes Water and Gas Revenue) 28.5 22.1 114.8 100.8

Total Regulated Utility Revenue $266.1 $256.3 $987.3 $1,042.4

A reconciliation of 2020 annual GAAP earnings guidance range to 2020 annual adjusted earnings guidance range (Non-GAAP) is as follows:

2020 Annual GAAP Earnings Guidance Range

$3.09 - $3.29

Rate Case Settlement Charge

$0.23

Less: Income Tax Benefit

$(0.07)

Rate Case Settlement Charge, Net of Income Tax Benefit

$0.16

2020 Annual Adjusted Earnings Guidance Range (Non-GAAP)

$3.25 - $3.45

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CONTACT: Investor Contact: Vince Meyer 218-723-3952 vmeyer@allete.com