ALLETE, Inc.
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May 2, 2019

ALLETE, Inc. Reports First Quarter 2019 Earnings of $1.37 Per Share

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DULUTH, Minn.--(BUSINESS WIRE)--May 2, 2019-- ALLETE, Inc. (NYSE: ALE) today reported first quarter 2019 earnings of $1.37 per share on net income of $70.5 million and operating revenue of $357.2 million. Last year’s results were 99 cents per share on net income of $51.0 million and operating revenue of $358.2 million. Results in the first quarter of 2019 included a 19 cents per share gain from the sale of U.S. Water Services.

“We are pleased with our strong financial results for the quarter and the advancement of major strategic initiatives which will drive industry leading growth in coming years. During the first quarter we completed the sale of U.S. Water Services which provides us with over $260 million of added liquidity to fund our clean energy growth initiatives across the Company,” said ALLETE Chairman and CEO Al Hodnik. “We are excited about our positioning for further clean energy expansion across all of the ALLETE businesses which will continue to capture value for our shareholders.”

ALLETE’s Regulated Operations segment, which includes Minnesota Power, Superior Water, Light and Power (SWL&P) and the Company’s investment in the American Transmission Co. (ATC), recorded net income of $51.5 million, compared to $43.9 million in the first quarter of 2018. Earnings reflect higher net income at Minnesota Power primarily due to lower operating and maintenance expenses, increased cost recovery rider revenue, lower property tax expense, and higher sales to residential customers resulting from cooler weather conditions than in the first quarter of 2018. These increases were partially offset by lower industrial sales and the timing of fuel adjustment clause recoveries. Net income at SWL&P increased over last year due to higher rates implemented the first of this year, and lower operating and maintenance expense. ALLETE’s earnings in ATC were higher than in 2018 primarily due to additional equity investments.

ALLETE’s Energy Infrastructure and Related Services businesses, which include ALLETE Clean Energy and U.S. Water Services, recorded first quarter 2019 net income of $5.8 million and a net loss of $1.1 million, respectively. Earnings at ALLETE Clean Energy decreased $2.3 million from 2018, primarily due to lower wind resources and availability at its wind energy facilities which negatively impacted revenue, slightly offset by higher production tax credits generated during the quarter. The net loss at U.S. Water Services was similar to 2018.

Corporate and Other, which includes BNI Energy and ALLETE Properties, recorded net income of $14.3 million for the quarter, compared to net income of $0.4 million in 2018. Net income in 2019 included the gain on the sale of U.S. Water Services of approximately $10 million after-tax. Net income in 2019 also included additional income tax benefits to record income taxes at the estimated annual effective tax rate.

ALLETE will host a conference call and webcast at 10 a.m. Eastern Time this morning to discuss details of its financial performance. Interested parties may listen live by calling (877) 303-5852, passcode 8686276, or by accessing the webcast at www.allete.com. A replay of the call will be available through May 6, 2019 by calling (855) 859-2056, pass code 8686276. 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. Management believes that the presentation of the 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.

 
ALLETE, Inc.
Consolidated Statement of Income

Millions Except Per Share Amounts - Unaudited

   
Three Months Ended
March 31,
      2019     2018
Operating Revenue    
Contracts with Customers – Utility $282.2 $270.2
Contracts with Customers – Non-utility 72.1 82.0
Other – Non-utility     2.9       6.0  
Total Operating Revenue     357.2       358.2  
Operating Expenses
Fuel, Purchased Power and Gas – Utility 109.8 100.9
Transmission Services – Utility 18.3 18.4
Cost of Sales – Non-utility 30.6 32.9
Operating and Maintenance 76.2 86.5
Depreciation and Amortization 51.9 45.8
Taxes Other than Income Taxes     13.6       16.3  
Total Operating Expenses     300.4       300.8  
Operating Income     56.8       57.4  
Other Income (Expense)
Interest Expense (16.5 ) (16.9 )
Equity Earnings in ATC 5.6 4.7
Gain on Sale of U.S. Water Services 20.1 —
Other     7.4       2.1  
Total Other Income (Expense)     16.6       (10.1 )
Income Before Income Taxes 73.4 47.3
Income Tax Expense (Benefit)     2.9       (3.7 )
Net Income     $70.5       $51.0  
Average Shares of Common Stock
Basic 51.6 51.2
Diluted     51.7       51.4  
Basic Earnings Per Share of Common Stock $1.37 $1.00
Diluted Earnings Per Share of Common Stock $1.37 $0.99
Dividends Per Share of Common Stock     $0.5875       $0.56  
 
 
Consolidated Balance Sheet

Millions - Unaudited

                   
Mar. 31, Dec. 31, Mar. 31, Dec. 31,
      2019     2018           2019     2018
Assets Liabilities and Shareholders’ Equity
Cash and Cash Equivalents $353.3 $69.1 Current Liabilities $322.4 $405.1
Other Current Assets 203.1 265.2 Long-Term Debt 1,525.0 1,428.5
Property, Plant and Equipment – Net 3,940.5 3,904.4 Deferred Income Taxes 215.5 223.6
Regulatory Assets 385.1 389.5 Regulatory Liabilities 504.1 512.1
Equity Investments 154.8 161.1 Defined Benefit Pension and Other Postretirement Benefit Plans 165.2 177.3
Goodwill and Intangibles – Net 1.1 223.3 Other Non-Current Liabilities 287.9 262.6
Other Non-Current Assets     180.9     152.4     Shareholders’ Equity     2,198.7     2,155.8
Total Assets     $5,218.8     $5,165.0     Total Liabilities and Shareholders’ Equity     $5,218.8     $5,165.0
 
   
Three Months Ended
ALLETE, Inc. March 31,
Income (Loss)     2019     2018
Millions    
Regulated Operations $51.5 $43.9
 
Energy Infrastructure and Related Services
ALLETE Clean Energy 5.8 8.1
U.S. Water Services (1.1 ) (1.4 )
 
Corporate and Other     14.3       0.4  
Net Income     $70.5       $51.0  
Diluted Earnings Per Share     $1.37       $0.99  
 
Statistical Data            
Corporate
Common Stock
High $84.26 $74.42
Low $72.50 $66.64
Close $82.23 $72.25
Book Value     $42.59       $40.91  
 
Kilowatt-hours Sold            
Millions
Regulated Utility
Retail and Municipal
Residential 349 342
Commercial 366 367
Industrial 1,814 1,843
Municipal     203       219  
Total Retail and Municipal 2,732 2,771
Other Power Suppliers     822       1,003  
Total Regulated Utility Kilowatt-hours Sold     3,554       3,774  
 
Regulated Utility Revenue            
Millions
Regulated Utility Revenue
Retail and Municipal Electric Revenue
Residential $39.7 $35.5
Commercial 36.5 34.0
Industrial 120.6 113.3
Municipal     15.4       14.0  
Total Retail and Municipal Electric Revenue 212.2 196.8
Other Power Suppliers 39.4 43.7
Other (Includes Water and Gas Revenue)     30.6       29.7  
Total Regulated Utility Revenue     $282.2       $270.2  
 

Source: ALLETE, Inc.

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