Business Wire | Nov 9, 2020 06:30AM EST

ALLETE, Inc. Reports Third Quarter Earnings of 78 Cents

Nov. 09, 2020

DULUTH, Minn.--(BUSINESS WIRE)--Nov. 09, 2020--ALLETE, Inc. (NYSE: ALE) today reported third quarter 2020 earnings of 78 cents per share on net income of $40.7 million. Last year's results were 60 cents per share on net income of $31.2 million.

"ALLETE's strong financial performance for this quarter and significant progress made on two of our large renewable energy projects representing over 500 megawatts of new, carbon free wind generation, demonstrate our resilience and resourcefulness while we work to mitigate the effects of the pandemic on our customers and the economy," said ALLETE President and CEO Bethany Owen. "ALLETE remains focused on delivering essential energy services to our customers and value to our shareholders, while leading the transition to cleaner energy and reducing carbon as part of our sustainability in action 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 $42.4 million, compared to $32.4 million in the third quarter of 2019. Earnings reflect higher net income at Minnesota Power primarily due to higher rates, and year-over-year timing impacts related to income tax expense and fuel adjustment clause recoveries. The quarter also reflects lower kilowatt-hour sales to commercial and industrial customers due to COVID-19 impacts, partially offset by increased residential sales, and lower revenue from other power suppliers due to the expiration of a contract in the second quarter of 2020.

ALLETE Clean Energy recorded third quarter 2020 net income of $1.1 million compared to a net loss of $1.2 million in 2019. Net income in 2020 reflects additional production tax credits, higher kilowatt-hour sales due to higher wind resources compared to 2019, and earnings from the new Glen Ullin and South Peak wind energy facilities.

Corporate and Other, which includes BNI Energy and ALLETE Properties, recorded a loss of $2.8 million in 2020 primarily due to lower earnings on cash and short-term investments and year-over-year timing impacts related to the recording of income tax expense, which varies quarter to quarter based on an estimated annual effective tax rate.

"We continue to expect ALLETE's 2020 annual adjusted earnings guidance (Non-GAAP) to be in the range of $3.25 to $3.45 per share, excluding the 16 cent per share charge related to the Minnesota Power rate case resolution, net of tax." said ALLETE Senior Vice President and Chief Financial Officer Bob Adams. "This guidance reflects lower power demand and kilowatt-hour sales related to Keewatin Taconite and Verso Corporation operations that remain idled, as well as lower demand from other customers, partially offset by lower operating and maintenance expense."

ALLETE's earnings conference call will be at 10:00 a.m. (EST), November 9, 2020, at which time management will discuss the third quarter of 2020 financial results. Interested parties may listen live by calling 877-303-5852, pass code 5289685, ten minutes prior to the start time, or may listen to the live audio-only webcast and view supporting 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 November 16, 2020 by calling (855) 859-2056, pass code 5289685. 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 4 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

Millions Except Per Share Amounts - Unaudited

Quarter Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Operating Revenue

Contracts with Customers - $255.1 $254.1 $721.2 $786.1 Utility

Contracts with Customers - 35.9 31.3 119.0 141.1 Non-utility

Other - Non-utility 2.9 2.9 8.5 8.7

Total Operating Revenue 293.9 288.3 848.7 935.9

Operating Expenses

Fuel, Purchased Power and Gas - 93.4 98.2 251.7 295.9 Utility

Transmission Services - Utility 14.9 18.3 49.8 55.8

Cost of Sales - Non-utility 15.4 14.7 48.6 61.8

Operating and Maintenance 61.9 58.1 181.9 201.0

Depreciation and Amortization 53.4 49.5 161.3 151.6

Taxes Other than Income Taxes 13.3 12.5 40.9 39.8

Total Operating Expenses 252.3 251.3 734.2 805.9

Operating Income 41.6 37.0 114.5 130.0

Other Income (Expense)

Interest Expense (16.3 ) (16.1 ) (47.9 ) (48.9 )

Equity Earnings 5.1 4.9 16.7 15.3

Gain on Sale of U.S. Water - - - 20.6 Services

Other 2.9 3.0 9.1 14.6

Total Other Income (Expense) (8.3 ) (8.2 ) (22.1 ) 1.6

Income Before Income Taxes 33.3 28.8 92.4 131.6

Income Tax Expense (Benefit) (5.5 ) (2.4 ) (27.8 ) (4.3 )

Net Income 38.8 31.2 120.2 135.9

Net Loss Attributable to (1.9 ) - (6.9 ) - Non-Controlling Interest

Net Income Attributable to $40.7 $31.2 $127.1 $135.9 ALLETE

Average Shares of Common Stock

Basic 51.9 51.7 51.8 51.6

Diluted 52.0 51.8 51.9 51.7

Basic Earnings Per Share of $0.78 $0.60 $2.45 $2.63 Common Stock

Diluted Earnings Per Share of $0.78 $0.60 $2.45 $2.63 Common Stock

Dividends Per Share of Common $0.6175 $0.5875 $1.8525 $1.7625 Stock

Consolidated Balance Sheet

Millions - Unaudited

Sep. 30

Dec. 31,

Sep. 30

Dec. 31,

2020

2019

2020

2019

Assets

Liabilities and Equity

Cash and Cash Equivalents

$79.0

$69.3

Current Liabilities

$630.0

$507.4

Other Current Assets

186.1

200.2

Long-Term Debt

1,608.0

1,400.9

Property, Plant and Equipment - Net

4,697.5

4,377.0

Deferred Income Taxes

204.8

212.8

Regulatory Assets

427.9

420.5

Regulatory Liabilities

547.1

560.3

Equity Investments

291.8

197.6

Defined Benefit Pension and Other Postretirement Benefit Plans

157.5

172.8

Other Non-Current Assets

196.2

218.2

Other Non-Current Liabilities

285.5

293.0

Equity

2,445.6

2,335.6

Total Assets

$5,878.5

$5,482.8

Total Liabilities and Equity

$5,878.5

$5,482.8

Consolidated Balance Sheet

Millions - Unaudited

Sep. 30 Dec. 31, Sep. 30 Dec. 31,

2020 2019 2020 2019

Assets Liabilities and Equity

Cash and Cash $79.0 $69.3 Current Liabilities $630.0 $507.4Equivalents

Other Current 186.1 200.2 Long-Term Debt 1,608.0 1,400.9Assets

Property, Plantand Equipment - 4,697.5 4,377.0 Deferred Income Taxes 204.8 212.8Net

Regulatory 427.9 420.5 Regulatory Liabilities 547.1 560.3Assets

Equity Defined Benefit PensionInvestments 291.8 197.6 and Other Postretirement 157.5 172.8 Benefit Plans

Other Other Non-CurrentNon-Current 196.2 218.2 Liabilities 285.5 293.0Assets

Equity 2,445.6 2,335.6

Total Assets $5,878.5 $5,482.8 Total Liabilities and $5,878.5 $5,482.8 Equity

Quarter Ended

Nine Months Ended

ALLETE, Inc.

September 30,

September 30,

Income (Loss)

2020

2019

2020

2019

Millions

Regulated Operations

$42.4

$32.4

$111.0

$114.2

ALLETE Clean Energy

1.1

(1.2)

16.8

6.5

U.S. Water Services

-

-

-

(1.1)

Corporate and Other

(2.8)

-

(0.7)

16.3

Net Income Attributable to ALLETE

$40.7

$31.2

$127.1

$135.9

Diluted Earnings Per Share

$0.78

$0.60

$2.45

$2.63

Quarter Ended Nine Months Ended

ALLETE, Inc. September 30, September 30,

Income (Loss) 2020 2019 2020 2019

Millions

Regulated Operations $42.4 $32.4 $111.0 $114.2

ALLETE Clean Energy 1.1 (1.2) 16.8 6.5

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

Corporate and Other (2.8) - (0.7) 16.3

Net Income Attributable to ALLETE $40.7 $31.2 $127.1 $135.9

Diluted Earnings Per Share $0.78 $0.60 $2.45 $2.63

Statistical Data

Corporate

Common Stock

High

$61.32

$88.60

$84.71

$88.60

Low

$49.91

$82.38

$48.22

$72.50

Close

$51.74

$87.41

$51.74

$87.41

Book Value

$43.89

$42.73

$43.89

$42.73

Statistical Data

Corporate

Common Stock

High $61.32 $88.60 $84.71 $88.60

Low $49.91 $82.38 $48.22 $72.50

Close $51.74 $87.41 $51.74 $87.41

Book Value $43.89 $42.73 $43.89 $42.73

Kilowatt-hours Sold

Millions

Regulated Utility

Retail and Municipal

Residential

268

248

835

829

Commercial

345

361

983

1,043

Industrial

1,410

1,802

4,547

5,389

Municipal

147

146

434

519

Total Retail and Municipal

2,170

2,557

6,799

7,780

Other Power Suppliers

967

758

2,495

2,294

Total Regulated Utility Kilowatt-hours Sold

3,137

3,315

9,294

10,074

Kilowatt-hours Sold

Millions

Regulated Utility

Retail and Municipal

Residential 268 248 835 829

Commercial 345 361 983 1,043

Industrial 1,410 1,802 4,547 5,389

Municipal 147 146 434 519

Total Retail and Municipal 2,170 2,557 6,799 7,780

Other Power Suppliers 967 758 2,495 2,294

Total Regulated Utility Kilowatt-hours Sold 3,137 3,315 9,294 10,074

Regulated Utility Revenue

Millions

Regulated Utility Revenue

Retail and Municipal Electric Revenue

Residential

$32.2

$27.6

$93.3

$94.0

Commercial

36.5

36.0

99.5

106.1

Industrial

109.3

115.4

315.0

356.0

Municipal

11.2

11.8

30.5

39.4

Total Retail and Municipal Electric Revenue

189.2

190.8

538.3

595.5

Other Power Suppliers

30.9

37.3

96.6

111.9

Other (Includes Water and Gas Revenue)

35.0

26.0

86.3

78.7

Total Regulated Utility Revenue

$255.1

$254.1

$721.2

$786.1

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

Regulated Utility Revenue

Millions

Regulated Utility Revenue

Retail and Municipal Electric Revenue

Residential $32.2 $27.6 $93.3 $94.0

Commercial 36.5 36.0 99.5 106.1

Industrial 109.3 115.4 315.0 356.0

Municipal 11.2 11.8 30.5 39.4

Total Retail and Municipal Electric Revenue 189.2 190.8 538.3 595.5

Other Power Suppliers 30.9 37.3 96.6 111.9

Other (Includes Water and Gas Revenue) 35.0 26.0 86.3 78.7

Total Regulated Utility Revenue $255.1 $254.1 $721.2 $786.1

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