ALLETE, Inc. (NYSE: ALE) today reported 2017 earnings of $3.38
per share on net income of $172.2 million and operating
revenue of $1.42 billion. Results from 2016 were $3.14 per share on
net income of $155.3 million and operating revenue of $1.34
billion.
“I am pleased with our financial performance and accomplishments
in 2017 as we continued to execute on our multi-faceted strategy
for growth while returning more than $100 million to shareholders
in the form of dividends; our businesses are well positioned as we
move into 2018 and beyond,” said ALLETE Chairman, President and CEO
Al Hodnik, “We believe our unique mix of businesses will continue
to deliver a strong value proposition to shareholders as supported
by our recent announcement to increase our long-term average annual
earnings growth target to 5 percent to 7 percent from 5 percent
previously, and increase our dividend by approximately 5 percent
over 2017.”
Results in 2017 were positively impacted by $13.0 million
after-tax, or $0.25 per share, for the remeasurement of ALLETE’s
deferred income tax assets and liabilities resulting from the Tax
Cuts and Jobs Act (TCJA) that was enacted on
December 22, 2017. While immediate and future net tax
benefits for the regulated businesses are expected to return to our
utility customers over time, the immediate net tax benefits
attributable to ALLETE Clean Energy and U.S. Water Services
positively affected 2017 results and are expected to benefit future
after-tax earnings. Results for 2017 also reflect a benefit of
$7.9 million after-tax, or $0.16 per share, for the Minnesota
Public Utilities Commission’s (MPUC) modification of its November
2016 order on the allocation of North Dakota investment tax credits
in a MPUC order dated December 7, 2017. These benefits
were partially offset by a non-cash $11.4 million after-tax
charge, or $0.22 per share, for the MPUC’s decision in Minnesota
Power’s rate case in January 2018, disallowing recovery of
Minnesota Power’s regulatory asset for deferred fuel adjustment
clause costs due to the anticipated adoption of a forward-looking
fuel adjustment clause methodology.
Net income for 2016 was impacted by an after-tax gain of $13.6
million, or $0.28 per share, related to the change in fair value of
the contingent consideration liability, offset by the adverse
impact of $8.8 million after-tax, or $0.18 per share, for the
November 2016 MPUC order on the allocation of North Dakota
investment tax credits, a $3.3 million after-tax, or $0.07 per
share, goodwill impairment charge related to ALLETE Clean Energy,
and $0.9 million after-tax expense, or $0.02 per share, related to
the repayment of long-term debt at ALLETE Clean Energy.
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 $128.4 million, a decrease of $7.1 million compared
to 2016. Net income at Minnesota Power decreased $9.8 million
after-tax reflecting the previously mentioned non-cash $11.4
million after-tax charge for the MPUC’s decision disallowing
recovery of Minnesota Power’s regulatory asset for deferred fuel
adjustment clause costs. In addition, net income decreased due to
lower sales to other power suppliers as a result of higher
industrial sales coupled with lower market prices, higher interest
and taxes other than income taxes, and lower kWh sales to
residential, commercial and municipal customers due to milder
temperatures in 2017. These decreases were partially offset by
lower depreciation expense of $14.6 million after-tax resulting
from the MPUC’s decision to modify the depreciable lives at Boswell
Energy Center, and higher industrial kWh sales. Interim retail rate
refund reserves fully offset the interim retail rates recognized
during 2017 due to the regulatory outcome of the MPUC’s decision in
Minnesota Power’s 2016 general rate case in January 2018. Our
equity earnings in ATC increased $2.6 million after-tax in 2017,
primarily due to additional investments in ATC and
period-over-period changes in ATC’s estimate of a refund liability
related to the 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 $41.5 million and $10.7 million, respectively.
Earnings at ALLETE Clean Energy in 2017 included a favorable
impact of $23.6 million after-tax for the remeasurement of deferred
income tax assets and liabilities resulting from the TCJA,
increased production tax credits due to the requalification of
certain wind turbine generators for production tax credits at its
Storm Lake I, Storm Lake II and Lake Benton wind energy facilities,
lower operating and maintenance expenses, and lower interest
expense. Results for 2016 at ALLETE Clean Energy included a $3.3
million after-tax goodwill impairment charge and a $0.9 million
after-tax expense related to the repayment of long-term debt.
Earnings at U.S. Water Services in 2017 increased $9.2 million
reflecting a favorable impact of $9.2 million after-tax for the
remeasurement of deferred income tax assets and liabilities
resulting from the TCJA, and higher operating revenue, partially
offset by increased operating expenses as a result of investments
for future growth in waste treatment and water safety applications.
2017 earnings also reflected a net loss of $0.8 million primarily
for transaction fees and amortization expense of a recent
acquisition. Cash flow from operations remained strong for the year
at approximately $12 million.
Our Corporate and Other businesses, which include BNI Energy and
ALLETE Properties, recorded a net loss of $8.4 million for the
year, compared to net income of $4.9 million in 2016. The net loss
in 2017 included additional income tax expense of $19.8 million
after-tax for the remeasurement of deferred income tax assets and
liabilities resulting from the TCJA. The net loss in 2017 also
included the previously mentioned favorable impact of $7.9 million
after-tax for the MPUC’s modification of its November 2016 order on
the allocation of North Dakota investment tax credits, lower
accretion expense relating to the contingent consideration
liability, and lower interest expense. Net income in 2016 included
the after-tax gain of $13.6 million related to the change in fair
value of the U.S. Water Services contingent consideration
liability, partially offset by the adverse impact of $8.8 million
after-tax for the regulatory outcome of the November 2016 MPUC
order.
Earnings were diluted by $0.11 per share in 2017, due to
additional shares of common stock outstanding as of
December 31, 2017.
The Company expects 2018 earnings per share to be within a range
of $3.20 to $3.50 with earnings from our Energy Infrastructure and
Related Services businesses expected to increase further in 2019
and become a more meaningful contributor to ALLETE’s earnings in
the coming years. Details of the Company’s 2018 earnings guidance
were also filed as part of today’s Form 8-K filing.
ALLETE will host a conference call and webcast at 10 a.m.
Eastern Time this morning to discuss details of its financial
performance and earnings guidance. 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
February 19, 2018 by calling (855) 859-2056, pass code 9977768. 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., U.S. Water
Services headquartered in St. Michael, Minn., 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 may include
presentations of earnings (loss) per share and earnings before
interest, taxes, depreciation and amortization. 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, 2017 and 2016
Quarter Ended Year to Date
2017 2016
2017 2016 Millions Except Per
Share Amounts Operating
Revenue Utility $239.7 $260.2 $1,063.8 $1,000.7 Non-utility
98.2 81.3
355.5 339.0 Total Operating Revenue
337.9 341.5 1,419.3 1,339.7
Operating Expenses Fuel,
Purchased Power and Gas – Utility 113.7 89.3 396.9 339.9
Transmission Services – Utility 18.1 15.7 71.2 65.2 Cost of Sales –
Non-utility 41.7 29.2 147.8 137.7 Operating and Maintenance 91.7
93.2 339.9 334.1 Depreciation and Amortization 26.0 50.1 177.5
195.8 Taxes Other than Income Taxes 14.2 13.2 56.9 53.8 Other
(0.7 ) (10.3 ) (0.7 )
(10.3 ) Total Operating Expenses 304.7
280.4 1,189.5
1,116.2
Operating Income
33.2 61.1 229.8
223.5
Other Income (Expense) Interest
Expense (17.3 ) (17.3 ) (67.8 ) (70.3 ) Equity Earnings in ATC 5.2
3.5 22.5 18.5 Other 0.4 1.1
2.4 3.9
Total Other Expense
(11.7 ) (12.7 ) (42.9 )
(47.9 )
Income Before Non-Controlling Interest and
Income Taxes 21.5 48.4 186.9 175.6
Income Tax Expense
(Benefit) (19.9 ) 4.1
14.7 19.8
Net Income
41.4 44.3
172.2 155.8 Less: Non-Controlling
Interest in Subsidiaries — —
— 0.5
Net
Income Attributable to ALLETE $41.4
$44.3 $172.2
$155.3
Average Shares of Common Stock Basic 51.1 49.5
50.8 49.3 Diluted 51.3 49.7
51.0 49.5
Basic
Earnings Per Share of Common Stock $0.81 $0.89 $3.39 $3.15
Diluted Earnings Per Share of Common Stock $0.81 $0.89 $3.38
$3.14
Dividends Per Share of Common Stock
$0.535 $0.52 $2.14
$2.08
Consolidated Balance
Sheet
Millions
Dec. 31, Dec. 31, Dec. 31, Dec.
31, 2017 2016
2017
2016 Assets Liabilities and Equity Cash and
Cash Equivalents $98.9 $27.5 Current Liabilities $351.2 $399.5
Other Current Assets 268.6 267.0 Long-Term Debt 1,439.2 1,370.4
Property, Plant and Equipment – Net 3,822.4 3,741.2 Deferred Income
Taxes 230.5 554.6 Regulatory Assets 384.7 330.1 Regulatory
Liabilities 532.0 125.8 Investment in ATC 118.7 135.6 Defined
Benefit Pension & Other Postretirement Benefit Plans 191.8
210.9 Other Investments 53.1 55.6 Other Non-Current Liabilities
267.1 322.7 Goodwill and Intangibles – Net 225.9 213.4 Equity
2,068.2 1,893.0 Other Non-Current Assets 107.7
106.5
Total Assets $5,080.0
$4,876.9
Total Liabilities and Equity
$5,080.0 $4,876.9
Quarter Ended Year to Date ALLETE,
Inc. December 31, December 31, Income
(Loss) 2017 2016
2017 2016 Millions
Regulated Operations $18.3 $25.5 $128.4 $135.5
Energy Infrastructure and Related Services ALLETE Clean
Energy 30.4 3.7 41.5 13.4 U.S. Water Services 9.1 (0.5 ) 10.7 1.5
Corporate and Other (16.4 ) 15.6
(8.4 ) 4.9 Net Income
Attributable to ALLETE $41.4
$44.3 $172.2 $155.3
Diluted Earnings Per Share $0.81
$0.89 $3.38 $3.14
Statistical Data
Corporate Common
Stock High $81.24 $66.92 $81.24 $66.92 Low $72.96 $56.48 $61.64
$48.26 Close $74.36 $64.19 $74.36 $64.19 Book Value $40.46 $38.17
$40.46 $38.17
Kilowatt-hours Sold
Millions Regulated Utility Retail and Municipal Residential
305 286 1,096 1,102 Commercial 359 352 1,420 1,442 Municipal 208
205 799 816 Industrial 1,890
1,716 7,327 6,456 Total
Retail and Municipal 2,762 2,559 10,642 9,816 Other Power Suppliers
1,017 860
4,039 4,316 Total Regulated Utility
3,779 3,419 14,681
14,132
Regulated Utility Revenue
Millions Regulated Operations Retail and
Municipal Residential $33.5 $30.6 $119.9 $115.8 Commercial 35.6
33.6 139.5 133.7 Municipal 12.8 17.2 57.9 67.6 Industrial 123.7
110.0 486.5 412.5 Reserve for Interim Rate Refunds
(31.6 ) — (31.6 )
— Total Retail and Municipal 174.0 191.4 772.2 729.6 Other Power
Suppliers 37.8 41.9 161.8 175.1 Other 27.9
26.9 129.8
96.0 Total Regulated Utility Revenue $239.7
$260.2 $1,063.8
$1,000.7
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version on businesswire.com: http://www.businesswire.com/news/home/20180215005177/en/
ALLETE, Inc.Investor Contact:Vince Meyer,
218-723-3952vmeyer@allete.com
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