ALLETE reports second quarter 2011 financial results; reaffirms earnings guidance
ALLETE, Inc. (NYSE: ALE) today reported second quarter 2011 earnings of 48 cents per share and net income of $17 million, compared to earnings of 57 cents per share and net income of $19.4 million in last year's second quarter. Revenue for the quarter increased four percent to $219.9 million from $211.2 million a year ago.
Income from ALLETE's Regulated Operations segment was similar to last year's second quarter at $18.3 million, and reflected a $2.9 million, or eight cents per share, income tax benefit. This non-recurring benefit resulted from the Minnesota Public Utilities Commission's approval of our request to defer the retail portion of last year's tax charge for the Patient Protection and Affordable Care Act (PPACA).
Regulated Operations income for the quarter also included a $2.6 million benefit from the implementation of final electric rates and cost recovery rider revenue, and a $1.5 million impact from higher retail and municipal electric sales.
Operating and maintenance expenses for the segment increased by $7.9 million, compared to the same period a year ago. The second quarter of 2011 also recorded higher depreciation and interest expenses related to the company's recent investments in environmental improvements, renewable energy production and transmission assets.
"Results for the quarter were consistent with our expectations," said ALLETE Chairman, President and CEO Alan R. Hodnik. "It is important to note that the year-to-date increase in operating and maintenance expenses was anticipated, and was primarily related to scheduled maintenance projects at Minnesota Power's generating stations. For the full year, however, we expect operations and maintenance expenses to be comparable to those in 2010."
In the Investments and Other segment, ALLETE recorded a net loss of $1.3 million in the second quarter of 2011, compared to income of $1.2 million in the year-ago period. Last year's quarterly income included a $1.1 million benefit from the successful resolution of a state income tax audit. Income from BNI Coal was about the same as in 2010. ALLETE Properties recorded no sales during the period, but reduced its operating expenses compared to last year. Quarterly results for this segment also included an increase in investment-related expenses for 2011.
An increase in the average number of common shares outstanding, with proceeds used to fund the company's capital investment program, had a dilutive impact of two cents per share for the quarter.
"I'm pleased with our progress this year, both financially and operationally, and ALLETE is in great position to meet its 2011 earnings guidance of between $2.40 and $2.60 per share, excluding the tax benefit related to the PPACA," Hodnik said.
"Since the beginning of the year, we've made significant strides in executing a strategy that will build value over the long term. We've signed a long-term power purchase agreement with Manitoba Hydro; announced plans to build the Bison 2 and 3 wind energy projects; signed new wholesale electric service contracts with 16 municipal customers through at least 2019; participated in negotiations resulting in a long-term electric service contract between Essar Steel Minnesota and one of our municipal customers, the City of Nashwauk; and launched a new business, ALLETE Clean Energy. It is an exciting time for ALLETE."
The company will host a conference call and webcast at 10:00 a.m. Eastern time today to discuss details of its performance for the year. Interested parties may listen live by calling (877) 303-5852, or by accessing the webcast at www.allete.com. A replay of the call will be available through August 2, 2011 by dialing (800) 642-1687, pass code 78840521.
ALLETE's corporate headquarters are in Duluth, Minn. In addition to its electric utilities, Minnesota Power and Superior Water, Light & Power Co. of Wisconsin, ALLETE owns BNI Coal in Center, N.D., ALLETE Clean Energy, also based in Duluth, and has an eight percent equity interest in the American Transmission Co. More information about the company is available 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.
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.