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ALLETE, Inc. Reports 2024 Earnings

1. ALLETE's 2024 EPS was $3.10, down from $4.30 in 2023. 2. Transaction expenses related to a merger affected 2024 results significantly. 3. Regulated Operations segment showed improved net income, benefiting from interim rates. 4. ALLETE Clean Energy reported lower income due to outages and declines in solar projects. 5. Merger with Canada Pension Plan is on track for completion in 2025.

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FAQ

Why Bearish?

The significant decrease in EPS and net income could negatively affect investor sentiment, similar to past declines after disappointing earnings reports.

How important is it?

The earnings report directly impacts ALLETE's financial standing, influencing potential investor decisions.

Why Short Term?

Immediate market reactions to earnings misses are typically short-lived but impactful, as seen in previous ALLETE earnings announcements.

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ALECPXGIP
DULUTH, Minn.--(BUSINESS WIRE)--ALLETE, Inc. (NYSE: ALE) today reported 2024 earnings of $3.10 per share on net income of $179.3 million and operating revenue of $1.5 billion. Reported results from 2023 were $4.30 per share on net income of $247.1 million and operating revenue of $1.9 billion. Results for 2024 reflect approximately 39 cents per share of transaction expenses related to the merger agreement entered into May 5, 2024, with Canada Pension Plan Investment Board and Global Infrastructure Partners. Earnings in 2024 were positively impacted by the implementation of interim rates on January 1, 2024, net of reserves, related to Minnesota Power’s rate case settlement. Net income in 2023 included approximately 6 cents per share for transaction expenses and 71 cents per share related to the arbitration award at ALLETE Clean Energy including consolidated income tax impacts recorded at Corporate and Other. Earnings per share dilution in 2024 was two cents due to additional shares of common stock outstanding in 2024. “I am pleased and extremely proud of our entire ALLETE team this past year, working diligently on many fronts to execute our Sustainability in Action strategy in tandem with initiatives as part of the merger agreement with Canada Pension Plan Investment Board and Global Infrastructure Partners,” said ALLETE Chair, President, and Chief Executive Officer Bethany Owen. “The merger continues to progress as planned, and we remain on track for a 2025 closing, subject to all necessary approvals. With the Federal Energy Regulatory Commission approval in December, we met another important milestone that brings us closer to realizing the benefits of this transaction for our customers, our communities, our co-workers, and our shareholders, and we held the first of multiple public hearings in January.” Owen continued, “At Minnesota Power and Superior Water, Light & Power, our teams continue to execute on our commitments to provide safe, resilient, reliable, and affordable service to our customers. We were pleased that the Minnesota Public Utilities Commission approved Minnesota Power’s 2023 rate case settlement agreement in the fourth quarter, with final rates expected to be implemented in the first quarter of 2025. In addition, Superior Water, Light & Power implemented new rates on January 1, 2025, and our New Energy Equity team continues to execute on its strategy and robust pipeline of projects.” “Overall results for 2024 were slightly above expectations excluding transaction expenses and interim rate refund reserves resulting from the Minnesota Power rate case settlement,” said ALLETE Senior Vice President and Chief Financial Officer Steve Morris. “While earnings were lower at ALLETE Clean Energy, primarily due to a longer than expected forced outage near its Caddo wind energy, earnings from the American Transmission Company and New Energy Equity slightly exceeded expectations.” ALLETE’s Regulated Operations segment, which includes Minnesota Power, Superior Water, Light &Power and the Company’s investment in the American Transmission Company (“ATC”), recorded 2024 net income of $160.9 million, compared to $147.2 million in 2023. Net income at Minnesota Power was higher compared to 2023 reflecting the implementation of interim rates on January 1, 2024, net of reserves related to Minnesota Power’s rate case settlement. Also included in 2024 were higher transmission margins, partially offset by higher depreciation and property tax expenses, as well as lower margins from industrial customers. Earnings at Superior Water, Light & Power were lower in 2024 compared to 2023 primarily due to higher operating and maintenance expenses. Our after-tax equity earnings at ATC were higher than 2023 reflecting period over period changes in ATC’s estimate of a refund liability related to a FERC decision on MISO return on equity complaints in 2024. ALLETE Clean Energy recorded 2024 net income of $17.8 million compared to $71.7 million in 2023. Net income in 2024 reflected impacts from a forced network outage near its Caddo wind energy facility as well as a transformer outage at its Diamond Springs wind energy facility during the first half of the year. These decreases were partially offset by a $3.5 million after-tax gain on the sale of the Whitetail wind project and lower operating and maintenance expenses. Net income in 2023 included a $44.3 million, after-tax gain recognized for the favorable arbitration award, as well as the gain on sale of the Red Barn project and higher interest income related to interest awarded as part of the arbitration ruling. Corporate and Other businesses, which include New Energy Equity, BNI Energy, ALLETE Properties and our investments in renewable energy facilities, recorded net income of $0.6 million in 2024, compared to net income of $28.2 million in 2023. Net income in 2024 included higher transaction expenses of approximately 33 cents per share, related to the merger agreement entered into in May of 2024, as well as lower earnings from Minnesota solar projects as investment tax credits were recognized in 2023, and lower earnings at ALLETE Properties due to higher land sales in 2023. These were partially offset by higher earnings at New Energy Equity in 2024 compared to 2023. ALLETE is an energy company headquartered in Duluth, Minn. In addition to its electric utilities, Minnesota Power and Superior Water, Light & Power of Wisconsin, ALLETE owns ALLETE Clean Energy, based in Duluth, BNI Energy in Bismarck, N.D., New Energy Equity in Annapolis, MD, 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 For the Periods Ended December 31, 2024 and 2023 Quarter Ended Year to Date 2024 2023 2024 2023 Millions Except Per Share Amounts Operating Revenue Contracts with Customers – Utility $314.1 $319.2 $1,242.7 $1,238.3 Contracts with Customers – Non-utility 49.5 82.3 282.1 636.4 Other – Non-utility 1.2 1.2 5.0 5.1 Total Operating Revenue 364.8 402.7 1,529.8 1,879.8 Operating Expenses Fuel, Purchased Power and Gas – Utility 120.3 132.1 477.6 482.9 Transmission Services – Utility 20.7 21.9 64.6 88.2 Cost of Sales – Non-utility 26.0 36.8 129.2 473.5 Operating and Maintenance 74.9 91.1 361.4 345.3 Depreciation and Amortization 69.7 63.6 271.5 251.8 Taxes Other than Income Taxes 15.1 14.1 65.4 57.2 Total Operating Expenses 326.7 359.6 1,369.7 1,698.9 Operating Income 38.1 43.1 160.1 180.9 Other Income (Expense) Interest Expense (20.9 ) (19.9 ) (81.7 ) (80.8 ) Equity Earnings 8.5 5.6 25.0 21.7 Other 3.0 9.7 23.0 85.0 Total Other Income (Expense) (9.4 ) (4.6 ) (33.7 ) 25.9 Income Before Non-Controlling Interest and Income Taxes 28.7 38.5 126.4 206.8 Income Tax Expense (Benefit) (3.6 ) 7.5 4.7 27.9 Net Income 32.3 31.0 121.7 178.9 Net Loss Attributable to Non-Controlling Interest (18.3 ) (20.5 ) (57.6 ) (68.2 ) Net Income Attributable to ALLETE $50.6 $51.5 $179.3 $247.1 Average Shares of Common Stock Basic 57.8 57.5 57.7 57.3 Diluted 58.0 57.6 57.8 57.4 Basic Earnings Per Share of Common Stock $0.88 $0.89 $3.11 $4.31 Diluted Earnings Per Share of Common Stock $0.87 $0.89 $3.10 $4.30 Dividends Per Share of Common Stock $0.71 $0.68 $2.82 $2.71 Consolidated Balance Sheet Millions Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2024 2023 2024 2023 Assets Liabilities and Equity Cash and Cash Equivalents $32.8 $71.9 Current Liabilities $404.2 $377.6 Other Current Assets 402.4 396.2 Long-Term Debt 1,704.7 1,679.9 Property, Plant and Equipment – Net 5,181.5 5,013.4 Deferred Income Taxes 253.4 192.7 Regulatory Assets 371.7 425.4 Regulatory Liabilities 570.5 574.0 Equity Investments 340.1 331.2 Defined Benefit Pension & Other Postretirement Benefit Plans 118.2 160.8 Goodwill and Intangibles – Net 155.3 155.4 Other Non-Current Liabilities 312.8 264.3 Other Non-Current Assets 270.5 262.9 Redeemable Non-Controlling Interest 0.4 0.5 Equity 3,390.1 3,406.6 Total Assets $6,754.3 $6,656.4 Total Liabilities and Equity $6,754.3 $6,656.4   Quarter Ended Year to Date ALLETE, Inc. December 31, December 31, Income (Loss) 2024 2023 2024 2023 Millions Regulated Operations         $49.0         $34.8       $160.9       $147.2 ALLETE Clean Energy             7.7             5.3           17.8           71.7 Corporate and Other            (6.1)           11.4              0.6           28.2 Net Income Attributable to ALLETE         $50.6         $51.5       $179.3       $247.1 Diluted Earnings Per Share         $0.87         $0.89         $3.10         $4.30   Statistical Data Corporate Common Stock High $65.67 $62.16 $65.86 $66.69 Low $63.80 $49.29 $55.86 $49.29 Close $64.80 $61.16 $64.80 $61.16 Book Value $49.20 $48.81 $49.20 $48.81   Kilowatt-hours Sold Millions Regulated Utility Retail and Municipal Residential 276 277 1,069 1,089 Commercial 323 325 1,322 1,347 Industrial 1,780 1,866 7,022 7,044 Municipal 119 116 469 466 Total Retail and Municipal 2,498 2,584 9,882 9,946 Other Power Suppliers 728 811 2,680 2,819 Total Regulated Utility 3,226 3,395 12,562 12,765   Regulated Utility Revenue Millions Regulated Utility Revenue Retail and Municipal Electric Revenue Residential         $42.2         $38.7       $163.3       $150.3 Commercial           44.9           42.0         184.0         177.5 Industrial         153.8         153.3         607.8         590.2 Municipal             8.6             8.2           34.2           33.4 Total Retail and Municipal         249.5         242.2         989.3         951.4 Other Power Suppliers           34.8           42.9         137.2         146.1 Other (Includes Water and Gas Revenue)           29.8           34.1         116.2          140.8 Total Regulated Utility Revenue       $314.1       $319.2    $1,242.7    $1,238.3 This exhibit has been furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

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