DULUTH, Minn.--ALLETE, Inc. (NYSE: ALE) today reported 2004 income from continuing operations of $39.1 million. Excluding a one-time charge for the early repayment of debt and a one-time gain realized by an employee stock ownership fund, income from continuing operations was $38.5 million, an increase of 29 percent over 2003.
"Our company went through a significant transformation in 2004 and at the same time performed exceptionally well," said ALLETE President and CEO Don Shippar. "We are stronger as a result, and from what we've accomplished are poised for substantial earnings growth in 2005."
Net income from ALLETE's Regulated Utility business grew by 13 percent in 2004 and kilowatthour sales to Minnesota Power's industrial customers were 8 percent higher than last year. Higher benefit and maintenance expenses were more than offset by other lower expenses during 2004.
Nonregulated Energy Operations posted a slight loss in 2004. The net income contributions of the Taconite Harbor energy facility and BNI Coal were offset by losses incurred at the Kendall County facility. ALLETE recently announced that it has reached an agreement to transfer its Kendall County purchased power agreement to a subsidiary of Constellation Energy. The transfer is expected to close in April 2005.
Net income from ALLETE's Real Estate business increased by 4 percent in 2004. Demand for Florida property remained strong through the year. "We are excited about our future earnings prospects in this business," said Shippar.
Year-end results for ALLETE's Other business segment improved by $7.8 million in 2004 over 2003, mainly due to reduced interest expense resulting from lower debt balances. The aforementioned fourth quarter gain of $11.5 million related to the fourth quarter sale of securities held by an employee stock ownership plan offset a third quarter charge of $10.9 million for the early repayment of debt.
During 2004, ALLETE spun off its Automotive Services business and substantially completed the sale of its Water Services business. Net income from these Discontinued Operations was $73.1 million in 2004. On February 4, 2005, ALLETE closed on the sale of its last wastewater system.
For the quarter, income from continuing operations was 5 percent higher than the fourth quarter of 2003, excluding the previously mentioned one-time gain. Increased electric sales and lower interest and other expenses offset outage expenses at the Square Butte and the Taconite Harbor energy facilities.
"We expect ALLETE's earnings per share from continuing operations to grow by 45 to 50 percent in 2005," said Shippar. The company expects the increase to come from continued strong real estate sales, lower interest expense, and the transfer of the Kendall County purchased power agreement. The earnings expectation excludes an anticipated one-time charge related to the Kendall County agreement.
ALLETE's corporate headquarters are located in Duluth, Minnesota. ALLETE provides energy services in the upper Midwest and has significant real estate holdings in Florida. More information about the company is available on ALLETE's Web site located at www.allete.com.
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.