ALE Allete Inc

ALLETE, Inc. (NYSE: ALE) today reported second quarter 2017 earnings of 72 cents per share on net income of $36.9 million and operating revenue of $353.3 million. Last year’s results were 50 cents per share on net income of $24.8 million and operating revenue of $314.8 million.

“ALLETE’s businesses continue to make significant progress on key initiatives that will strategically position us for success in 2017 and beyond. On July 28, 2017, Minnesota Power submitted a resource package to the Minnesota Public Utilities Commission requesting approval for a 250 MW wind energy power purchase agreement, a 10 MW solar energy power purchase agreement and 250 MW of natural gas-fired generation and also filed a request to delay the filing deadline of its next integrated resource plan to February 2019. This resource package is the next step in Minnesota Power’s EnergyForward strategic plan. Minnesota Power and Superior Water, Light and Power’s respective rate reviews are progressing as planned and ALLETE Clean Energy is actively bidding into many renewable investment opportunities,” said ALLETE Chairman, President and CEO Al Hodnik.

ALLETE’s Regulated Operations segment, which includes Minnesota Power, Superior Water, Light and Power, and the Company’s investment in the American Transmission Co. (ATC), recorded net income of $32.4 million, an increase of $9.8 million over 2016 net income. Earnings increased primarily due to higher net income at Minnesota Power resulting from the implementation of interim retail rates at the beginning of the year, higher kilowatt-hour sales primarily due to increased sales to Minnesota Power’s industrial customers and timing of the recognition of a conservation improvement program financial incentive following Minnesota Public Utilities Commission approval in the second quarter. These increases were partially offset by higher operating and maintenance, depreciation, and interest expenses. Our equity earnings in ATC increased $0.8 million from 2016 primarily due to additional investments in ATC and period over period changes in ATC’s estimate of a refund liability related to MISO return on equity complaints.

ALLETE’s Energy Infrastructure and Related Services businesses, which include ALLETE Clean Energy and U.S. Water Services, recorded net income of $3.8 million and $0.6 million, respectively. Earnings at ALLETE Clean Energy increased $1.2 million, or 46 percent, from 2016. Net income in 2017 included higher operating revenue and lower operating and maintenance expense compared to the same period in 2016. Earnings from U.S. Water Services decreased $0.4 million from 2016 primarily due to increased operating expenses as a result of investments for future growth in waste treatment and water safety applications, partially offset by higher operating revenue.

Corporate and Other, which includes BNI Energy and ALLETE Properties, increased $1.5 million from 2016 primarily due to lower interest expense and lower accretion expense relating to the contingent consideration liability.

Earnings per share for the quarter was diluted by 3 cents due to additional shares of common stock outstanding as of June 30, 2017.

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, or by accessing the webcast at www.allete.com. A replay of the call will be available through August 6, 2017 by calling (855) 859-2056, pass code 48275932. 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, U.S. Water Services headquartered in St. Michael, Minn., 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

        Quarter Ended Six Months Ended June 30, June 30,       2017     2016     2017     2016         Operating Revenue Utility $264.9 $234.9 $546.5 $487.2 Non-utility     88.4       79.9       172.4       161.4   Total Operating Revenue 353.3 314.8 718.9 648.6 Operating Expenses Fuel, Purchased Power and Gas – Utility 93.1 79.0 189.7 158.9 Transmission Services – Utility 17.6 16.1 34.2 32.9 Cost of Sales – Non-utility 38.4 32.5 70.0 62.8 Operating and Maintenance 84.9 82.0 168.2 160.1 Depreciation and Amortization 50.1 48.7 100.6 96.8 Taxes Other than Income Taxes     14.2       14.3       28.6       28.1   Total Operating Expenses 298.3 272.6 591.3 539.6 Operating Income     55.0       42.2       127.6       109.0   Other Income (Expense) Interest Expense (16.7 ) (17.4 ) (33.9 ) (34.3 ) Equity Earnings in ATC 5.3 4.1 11.4 8.9 Other     0.6       0.6       1.2       1.6   Total Other Expense     (10.8 )     (12.7 )     (21.3 )     (23.8 ) Income Before Non-Controlling Interest and Income Taxes 44.2 29.5 106.3 85.2 Income Tax Expense     7.3       4.7       20.4       14.0   Net Income     36.9       24.8       85.9       71.2   Less: Non-Controlling Interest in Subsidiaries     —       —       —       0.5   Net Income Attributable to ALLETE     $36.9       $24.8       $85.9       $70.7   Average Shares of Common Stock Basic 50.9 49.3 50.5 49.2 Diluted     51.1       49.5       50.7       49.3   Basic Earnings Per Share of Common Stock $0.73 $0.50 $1.70 $1.44 Diluted Earnings Per Share of Common Stock $0.72 $0.50 $1.69 $1.43 Dividends Per Share of Common Stock     $0.535       $0.52       $1.07       $1.04       Consolidated Balance Sheet

Millions - Unaudited

                    Jun. 30, Dec. 31, Jun. 30, Dec. 31,       2017     2016           2017     2016 Assets Liabilities and Shareholders’ Equity Cash and Cash Equivalents $84.2 $27.5 Current Liabilities $305.4 $399.5 Other Current Assets 262.3 267.0 Long-Term Debt 1,401.4 1,370.4 Property, Plant and Equipment - Net 3,745.6 3,741.2 Deferred Income Taxes 577.0 554.6 Regulatory Assets 324.5 330.1 Regulatory Liabilities 125.8 125.8 Investment in ATC 143.1 135.6 Defined Benefit Pension & Other 195.8 210.9 Other Investments 56.2 55.6 Other Non-Current Liabilities 309.1 322.7 Goodwill and Intangibles - Net 210.8 213.4 Shareholders’ Equity 2,017.0 1,893.0 Other Non-Current Assets     104.8     106.5                   Total Assets     $4,931.5     $4,876.9     Total Liabilities and Shareholders’ Equity     $4,931.5     $4,876.9           Quarter Ended Six Months Ended ALLETE, Inc. June 30, June 30, Income (Loss)     2017     2016     2017     2016 Millions         Regulated Operations $32.4 $22.6 $75.9 $65.0   Energy Infrastructure and Related Services ALLETE Clean Energy 3.8 2.6 10.5 8.7 U.S. Water Services 0.6 1.0 0.3 0.5   Corporate and Other     0.1     (1.4 )     (0.8 )     (3.5 ) Net Income Attributable to ALLETE     $36.9     $24.8       $85.9       $70.7   Diluted Earnings Per Share     $0.72     $0.50       $1.69       $1.43     Statistical Data                         Corporate Common Stock High $74.59 $64.69 $74.59 $64.69 Low $66.81 $53.47 $61.64 $48.26 Close $71.68 $64.63 $71.68 $64.63 Book Value $39.58 $37.51 $39.58 $37.51   Kilowatt-hours Sold                         Millions Regulated Utility Retail and Municipal Residential 229 237 552 566 Commercial 328 339 697 707 Municipal 181 187 396 406 Industrial     1,816     1,513       3,578       3,107   Total Retail and Municipal 2,554 2,276 5,223 4,786 Other Power Suppliers     1,004     1,185       2,045       2,315   Total Regulated Utility Kilowatt-hours Sold     3,558     3,461       7,268       7,101     Regulated Utility Revenue                         Millions Regulated Utility Revenue Retail and Municipal Residential $25.1 $24.9 $59.8 $57.8 Commercial 32.6 31.5 68.6 64.0 Municipal 12.3 15.3 30.5 31.2 Industrial     120.8     96.6       241.3       196.5   Total Retail and Municipal 190.8 168.3 400.2 349.5 Other Power Suppliers 41.6 44.2 82.8 86.4 Other     32.5     22.4       63.5       51.3   Total Regulated Utility Revenue     $264.9     $234.9       $546.5       $487.2    

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