ALLETE (ALE) 3 May 232023 Q1 Earnings call transcript

Good day, and welcome to the ALLETE First Quarter 2023 Financial Results Call. Today’s call is being recorded. Certain statements contained in this conference call that are not descriptions of historical fact are forward-looking statements, such as terms defined in the Private Securities Litigation Reform Act of 1995. Because such statements can include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.

Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in filings made by the company with the Securities and Exchange Commission. that ability the or of factors are future predict. the the beyond management of will company's determine results Many to control

all reflect At or undertakes result future no are Listeners forward-looking listen-only to as revise participants of undue a put any obligation this any date management's forward-looking events mode. forward-looking update which whether statements the company should information, as make a reviews or of Instructions] The reliance hereof. time, new or otherwise. only to not in statements, [Operator on statements,

like to now President would to Owen, CEO. I turn the over and Bethany call Chair,

begin. may You

call Scissons, Thank good Financial Vice and Corresponding of Clean Investors Officer; on website and Vice Services. at Power's joining allete.com ALLETE's are Energy's and as today's slides presentation. appreciate for We'll you each Experience Engineering Strategy Senior Minnesota Frank the us Jeff today. available President Customer and you morning's call Officer, ALLETE we everyone. go me our Financial out are morning President Chief With in through Chief page number Frederickson, and We this Morris; Steve section.

first per income $XX.X earnings This share results net per quarter Last of quarter million. share $X.XX year's morning, $XX.X XXXX of were on on net million. of ALLETE first reported $X.XX income

will original Steve in in a earnings share. guidance quarter did weather are $X.XX financial providing affect ALLETE's $X.XX performance quarter and on the our per reaffirming full-year the Although on range conditions our additional moment. results, track during we to details of be

through X X. Slides to refer Please

advancing in a to We as continue be energy. leader recognized clean

ALLETE's the relative X has is in utilities. not about capitalization year all to renewable investor proud U.S. statistics, ranked a adding just in the ALLETE for independent fact, but energy that In study of row, We're energy. among strategy investor-owned market renewable second Number as an

and in right projects is future. sustainable the energy ensure our the customers, important making we we mean truly communities way right, to when our transition to leading our for this a what describe clean we as It's energy also help climate. about investments purpose get clean This

On our sustainability which and action while supporting for meet long-term our Slide details to these is X, of value the providing strategy, goals, shareholders. dividend critical can earnings some you of and see in growth designed

Our Minnesota work Power executing more at CapEx team $X plan. our is billion hard than

month. We're selection of technology Utilities provider making with modernization Public rights. including securing certificate we application this Minnesota need significant and the key progress our on to expect the project, HVDC And file land of later Commission the

attributes of year, the the Power half solar this In included wind nearly and were labor integrated workforce focus of our begin recently addition, in and initial will RFPs as for Minnesota a all of the XXX that meaningful diversity. second phases the use reinvestment communities, and will such host resource supplier the in in of plan. These RFPs local increasing on megawatts approved emphasize

advancing clean This All and progress. privileged the transition looking are projects sharing just as I'm customers, it truly to the energy is inequitable. information of to ensure value mean company projects are to the important important will us overall ways because additional best will we communities our these in ALLETE growing that forward help this strengthening to deliver these while at serve. energy

and Wind As sale the in we sale the announced more projects its January has build last Public anniversary Barn of family Gas Wisconsin recently, Minnesota of in the with facility Red Corporation. of and Madison Energy project New ALLETE joining the one-year transfer Electric companies. April, in marked And XX-megawatt month Service equity and in early Clean completed Northern two Energy its wind XXX-megawatt ALLETE its of to Wisconsin of

proud of Virginia, that the is pipeline the top in closings, We're very future the and leading solar Energy of they quarter a already the companies and of of grow project continue development one company to New nation's and record is their talented development strong team states had Energy Minnesota. New first solar Illinois, projects.

first Now, for it quarter results. financial XXXX I'll details over further Steve? turn on our to Steve

I morning, Thanks net remind comparison Today, like and for $XX.X quarter filed we good XXXX items more million. you $X.XX first everyone. for encourage reported variances Bethany, to Slides of income refer it our to consideration. of I to XX-Q and per earnings would details. and share ALLETE on to Please that X morning significant and other refer you X for this

were Earnings Net per reserves rates million rate million. the tax income $X.XX in Minnesota $X.X of case. share, of Power's in XXXX included first and due net to interim $XX.X $X.XX from of XXXX after timing general XXXX resulting income the on quarter for

our earnings recall interim the year-end entire in in was reserve of you may XXXX. rate quarter call XXXX fourth the February, from As recorded

final by to So, expected you similar fourth be in the the rates third versus will which implemented, reversing in year. the earnings quarter also Overall approximately quarter rates second and see year. fully third ALLETE's until $X.XX weather per occur will share impacted this continue to timing is differences are and quarters Interim consolidated year. in collected this conditions last

XXXX compared previously due at Also conditions expense. segment Regulated XXXX as to mentioned million, the of Minnesota net rate to to Power, compared timing Operations year. first income operating $XX.X higher kilowatt Earnings in XXXX and sales lower million to quarter reflect reserves ALLETE's lower net primarily milder winter for and XXXX. hour impacting was $XX.X last recorded weather maintenance of income interim due

Northern much sale and lower higher year and as XXXX $X.X to income which XXXX earnings wind net Energy's availability last facilities, project. income wind in maintenance ALLETE decommissioned million quarter Net also across Clean Repower April expense, XXXX. $XX.X compared recorded and from were million, fleet Net operating of XXXX Clean in to of the the XXXX. Energy income Wind first resources included ALLETE Northern compared of of part the in legacy and reflects

second be Red offset quarter the quarter sale by We do first the of to the negative year. expect project weather some the impacts this in of the profitable in Barn

net which and in businesses, of recorded other BNI energy, facilities Energy $X.X million and a to million, loss income of corporate investments new include renewable our compared in energy Our $X.X XXXX. net

The first $X.X of megawatts. in $X.X related included XX from net tax included the of energy new of closings New April costs income million and XXXX of after acquisition over year which of XXXX. acquired to quarter million had transaction this record was Energy, of

due in We March also into of approximately shares outstanding offering Earnings projects in per additional from XX, solar common our stock XXXX. first to was share as placed secondary completed recorded in April quarter earnings the last of Minnesota $X.XX, service from of resulting late dilution year.

in guidance. the for operations taconite sales. impacts our internal were negative on as expectations a weather XXXX on line Next, with Overall, few regulated comments and quarter higher regulated offset outlook other margins

production restarted to its and where Mining with XXXX half the it part from levels and through Our Northshore taconite began customers that months. of they with operation Cleton strong Cliffs of last customers week the had similar were taconite summer other announcement year nominations last the

full-year expect our production estimates now forecast million higher be sales of tons. XX Taconite initial than approximately will We

be of announcement positive Wisconsin have restarted week have they mid-year. Another refinery plan rebuild last and by came operations and when full the production at to announced completed Superior, in Synovus the

impacts by was Clean to and across resources expectations approximately of primarily availability causing the fleet. Energy for more share, quarter ALLETE weather much $X.XX the wind below our due per

a quarter the April will Barn However, build transfer impact Red project results. profitable financial positive in of the be our $XXX million to second sale

pleased quarter strong quarters. Energy closings robust in provides quite coming of growing are closings the project we gigawatts confidence further over a of and had Also, New and project that another pipeline as X record for

track guidance per our to on share. to is Energy to achieve year earnings full-year of reflected our New remain guidance. items $X.XX track such, total, in we initial these Considering earnings $X.XX $XX in XXXX million on As achieve as of million full to $XX

credit, Finally, capital financial that sheet XX% of was and $XX available cash by balance consolidated XX, $XXX in supported and lines position is ALLETE's our million, to debt XXXX. as cash million includes ratio equivalents March strong of a of

at addition, rate from ALLETE Red In than sale interest $XXX [ph] April, of project, less ALLETE bonds the last month received million] first Barn an approximately in the in proceeds Energy of in million and mortgage issued Clean X%. [$XXX

now turn for to it Bethany? additional back I'll Bethany comments.

Thanks for update, Steve. that

Minnesota before providing the utility in your only we're conservation exceed our Just for XX and customers, energy we a the state questions. to the leads Minnesota's to additional comments energy goals few open consecutive Power renewable for line years.

Our while outcomes the in record regulatory low as providing while energy maintaining track the ability to clean team and to long Power, service reliable of continuing this rates of transition, financial constructive rate case file to our health we our to all year. our that next has And done of safe November because plan Minnesota are and keeping as of customers possible. critical our continue

us but and significant, the and an to addition part our and we fleet, transforming to In the clean which our Power's will goals, includes believe strengthening investments energy distribution, transmission of meet important Minnesota grid. maintaining resiliency system while generation regional of enable our strategy in our reliability and prudent

to make customers. Infrastructure we Act and our and Reduction providing always Jobs the best on these costs we're As reduce and providing our inflation Act customers focused for help investments, value and are the opportunities

River add front, is the we'll Power Minnesota iron So, projects in transmission million funding which Central Northern the Energy. we line Project federal expand Also innovative the Minnesota, transmission and to recently transmission filed own from requests Northland and energy great $XXX with to support two for state XXXkV storage. a jointly Minnesota on range Reliability to

the is Public engagement Grid enhance the project United and progress route forward, of This and And project, later X moving to MISO and our need kind on to part with of North file the and interregional west. permit markets reliability Utilities we Commission as we of its between which Connector capacity the is transfer summer. the this energy country Tranche the certificate with also expect first of middle continues make Plains to Minnesota

forward a strategy the examples These you we're quarters. in project coming progress to are making how with of and this foundation prosperity. its people, sharing of and We at the growth just ALLETE our in planet, all look of on very exciting the sustainability more forms, is few

links committed we're this updated including contains our important right the recently in always, doing work, to information As on sustainability Slide absolutely corporate report. X everything way. the to

Finally, be strategic, our success, innovative, are reason team. diligent for resilient the and but importantly, our ALLETE’s and talented, couldn't very proud more people I of

of the XXXX culture our and in public only in energy of that two just are but This recently and and team. unique one Minnesota in companies Women Census leadership our gender example recognized with in our state was on executive unique. in senior team Our one entire only is special, the not the industry. Directors as in is the fact of parity ALLETE corporate our ALLETE Board And state, at

culture and work a statistics, for where individuals forms. But numbers stronger result. all more record, in advance track this important company and it's continuing of team, a proud innovative or and we're about are [ph] this creating and our self] diversity about work valued our to [whole are even as I'm our communities strengthening their our isn't and

As updating our you our you significant in investment you year. as the hear, ALLETE. pleased we're and throughout with forward growth, execution interest look and to in positioning we early for stage we and can XXXX are for and the your Thank your strategic setting on progress here

your At for line time, the ask this I'll operator open the to questions.

question [Operator you. first Our Morgan. with comes from J.P. Thank Richard Sunderland Instructions]

Your open. line is

Hi, good and today. the you thank time for morning

Rich. morning, Good

XQ, the parse here, with to Shore the of weather and on guidance read the plan? midpoint XQ. you're to you trying the the at the right industrial XQ, offset and currently? That those all that with frame side, Is regulated it language of would Starting guidance, ramp to the of and refinery Synovus those then least there. XQ relative the like How sounds ahead sounds strength North impacts of meaning net all incremental the factors headwinds on

Hi Rich, here. Steve Morris

other we when entities Synovus, Cliffs did roughly to also talked expect ST did. you start about, So, the and up Paper, that they

our in guidance factored year really this it's So,

it. got Okay,

XQ what So, of impacts are you speak in the that those on terms you a from just terms offsets, Could in separate weather leave saw for that the trends XQ little of to these regulated? offsetting you more items. those bit

of I'll here. Synovus and come Paper case And jump our mentioned, that expect Good terms also rate a ST as little the into morning, bit. we was factored sales did Rich. in forecast. this year, in of Frederickson Frank outcome It's Steve recent that and online to

as demand we Cleveland-Cliffs see, we North Shore than little and On well. pleased starting a budgeted, stronger have with up to side, the taconite we're what we mentioned, for as seen

the more end back a pricing bit little coming with steel demand at back a Lowe's been has taconite we've there budgeted our So, automotive than pick of up from up seen little of we markets steel confidence sales robust last bit from as customers and year.

with offset bit we So, well area, where Husky, relatively in in back we've online expecting in as taconite of and little the really come coming seen terms paper. ST expected what that's that as a stronger refinery Synovus

side, in very guess fleet That’s on how of I driving you do resource ACE impacts, a terms from more turning improvement? there Red away really Got offset, you're the it. in were ACE performance how helpful. of matter focused of very availability and operationally recently? think Barn terms as you the of terms seeing it anything comes in? the clear in just regulated overall on the the Is the Or is that about that

Rich. This is morning, Good Jeff.

our the events control and by high on we to be I were and the in We think out to and we've us. previously continues SPP see What is some the are impacted icing difficult fleet projects market budget. that operationally, strong. our of for a there, area being focus that somewhat mentioned

have be some the markets energy to volatile. exposure continue do and we to they So,

continue [pacing] And [ph] the on so, we'll performance. to

just And one one me. last Understood. for

You conductor few Plains some the announce coming referenced next position the updates Could and be quarters? North near-term you priorities there might what to are outline you in quarters. what the the over in

This is Bethany, Rich. Yes.

the the conversations, kind in initial entities of having, are great with other with itself, we're those. to in interest and we meeting process So, conversations garner of project

that updating beginning we're process forward looking So, to coming just quarters. more really and in

Thank today. for you Understood, time understood. the

Thanks, Rich.

moment. Thank you. One

Our next comes Dariusz from of Bank Lozny from question America.

open. line Your is

balance sort since results less question. it. reported, you on seems results it that seasonality Should developing year is of be too you for more ratable? acquired words, for how guidance. – Hey the much in-line with energy start-off part around of of they're like new my question the comments right Maybe would guys, we the good to that morning. full-year your wanted or assume just Thank In B other is and that the not you taking business your the

It sounds exceeding been expectations. have think positive. consistently I rather like it's

could conservatism earnings be a of baked on for into So, full-year bit there guidance energy? your new

is Dariusz. Jeff. morning, This Good

there, pleased some it's that's to be of projects are necessarily extremely of family. with seasonality, And so the timing the we ability across the guidance will team are as in Energy great the performance mentioned, been not it's confident laid meet a the We talented close But year. Bethany has of ALLETE their Group. the There out. the equitable to been the new add

continue does chain headwinds some grow, well of but as to you're face market aware it the does that That on supply side and others.

be they that to we're to acquisition as that's now. perform as far say would I continue right for So, as that us success story see But going a we and value. continues their

growing key business corporate is could obviously or ALLETE somewhat Is Excellent. now? part the there energy? the question. seems a that line of like It specific it's this And a fact reported in and if like just why I incongruent housekeeping a clarification in of add not is new energy just and with reason and other point Clean your

Yes.

two keeping point want them ALLETE businesses, So, clarity from get in just meet time, it new segment. and We its Dariusz. in at it Energy. get Right do big And will if now, be separate. to energy bury that one threshold you are enough, We gets it own standpoint. we didn't accounting could think the doesn't by They different question, lot. a good better Clean

the and it GAAP Clean meet bury effort other, guidance doesn't two that standpoint, everything to ALLETE default, up conscious it by really not in ends businesses. in corporate So, different from Energy, a a but

Excellent.

months of so cap to ask the some that. just of If is you repowering looking portfolio I otherwise your the portfolio? that's the around or specifically moving your recycling perhaps Clean non-regulated reevaluating – or Is portfolio? all assets at of of peers Okay. side seen over in or the larger things. renewable last divest that something otherwise ALLETE kind generation that on App wind for for some now Energy at? table opportunities clarifying XX could for We've you're any Thank

Dariusz. call do resources. assets, and developed we and what was Jeff we sale. expansion strong They the Recently, years wind have again, legacy a continuously got the a XX the is And are Northern XX strong. to Wind which evaluate repower were We've ago This project portfolio. they

the other around IRA of it's helped, of been community domestic Some clarification the energy whether or has content. opportunities

those on what larger our and some we redevelopment to So, but with strategic the past. continue fit continue we'll proven of ALLETE. to of whether assets, a peers, work build cap strong all different aware transfers methods, We're evaluate like PPAs certainly the or that it's we've believe of long-term in

lot overall clean and platforms sustainability the across a of the all energy businesses the organization. actions value see you provide As to lead and

always strategy, the the value and consider it but evaluate we of again, platform. ALLETE to So, the continue along will with seeing

Excellent. Okay.

And sorry, one. just one last

Red If you sale us EPS the can is that's embedded from just the in XXXX what approximate impact remind your Barn guidance?

haven't called it say a few in for it bit items of working couple would list budget making mentioned little Steve have outstanding, we million potentially a quarter, a that that Yes. punch but Dariusz, or dollars, still we it out and the in-line better. Last was specifically. towards it's we

Okay, the very thank here. it you much will I color. leave for

Dariusz. Thanks,

Thank you.

Russo question Sidoti. Brian Our next comes from with

open. Your line is

morning. Good

morning, Good Brian.

these wondering still I'm it portfolio the or doing ACE of wind So, would megawatts leaning need to re-contracting profitable transfers? And seem recall, or follow-up assets of that there's or If if efforts. towards on that's case. are the legacy either approximately other under PPA a just just or build-on way you re-contracted one some be to XXX repowered. optimization And I the

And This would we're of at Good above all evaluating Brian. the Jeff. point. is say, still morning, I this

call we opportunities. will to provide and legacy what will at what over that PPAs continue the the that for XXX look we market of evaluate repowering accurate You're there's the and megawatts fleet

pleased out communities, were update as our energy the So, as see energy to Wisconsin Oregon. on one prized our the in some including assets, Media of we Mountain community of

competitiveness what go. regardless And so, we direction provide those enhanced of

we'll to updates. more and those it would to come, provide be expect both. there's So, But a combination I of

Okay, to think of XXX megawatts New of frame that already one-third the the of accurate? guidance way Is your way project there. you're then clearly, got it? about I And Energy, just Is full-year on assumes also it. that closings. kind So

That's is Jeff. correct, This Brian.

profiles, XXX is but regions. Sorry. are not start. and and megawatts, every say different XXX to megawatts different They that is megawatt off would depending a roughly good We a have – the that's same, we guideline on

utility, last detail And wind you and going final line on RFPs? competitive all us Or I solar? the this the then give plan bids could these get you Great. time PSC numerous XXX of be CapEx then to megawatts to quarterly the then year? Okay. call? just five-year RFPs going would with Is in some RFP that it for will approval are you in that be one to more for on what the And line-up what unchanged disclosed that the is assume be and later

Brian, morning, Frank Good Frederickson here.

into going out fall, February. regulatory all CapEx year. the be second time shared of in And aligned looking the then consistent as to period, done, as we're of with is, we as solar our be and table gets to separate this a it's as get both winter two half have tranche well to RFPs, getting wind. those out, and we And that we it's what we're spelled XXXX, likely at On tranche RFPs of process the

it Like Okay, lastly, curious. seems to tracking better said, be expected. you on I'm great. industrial than sales. And the then just

than in million on So, and XX guidance, megawatt than better that's tracking utility hours of the you're that, production? tons better taconite that's X.X based million your

We was right that came here and North you Frank, expectations X.X million and XX puts the that megawatt north winter that with us budget North [only] of of in strong. correct, And north of Shore, ton now it That's [ph] Yes. again. quoted. million restart out hours

Okay.

– Minnesota and the is that remind final So order? embedded me, what's rate in Power

million in we with million tons had with some taconite high the are getting ton Shore XX and in production coming the we of XX to restart stronger like than the assumed So, area. close rate XX, of are strengths up North we seeing and are production the order

So, that. it to getting closer is us

it. the as I months. forward just the April due large four for Is in then near Got that And full for Okay. us, remind well? production can customers the you think nominations power were

That's correct. Yes.

months, have come we're nominations August. and full the and more we'll summer We there, near about fall production know through the

you Thank very great. much. Okay,

Brian. Thanks,

you. Thank

Our Mizuho. next with question from Mortimer Alex comes

Your line is open.

Thank you. morning. good Hi,

Alex. Good morning,

I closing Just was how work dynamics on as of new or are how bit can those them? you of the completion as through of of a hoping, on, earnings sort you from you projects And a through? percentage little energy? work upon touch recognized recognized they

Morris. upon Steve Alex, here, right proceed these close. Yes, notice to Hi, you're recognized is projects on you typically,

Okay. Understood. to And flipping utility. the back then

the that run with to your weather balance the used Can of kind we've warm guidance. historically the for, the you've in they've of Given weather confidence for year the weather contingency for for their hit year to the to of of you we've be industry, are others able favorable across front of your and much to how seen, contingency looking to full-year? guidance regards have normal sort much to still the seen on your weather ability through touch hit on state

Yes.

at about some $X.XX. the we as utility. the was It on about, So, talked we look Alex, had weather the first impacts we it, quarter, way

of year as it it I track on taconite. for We mentioned, made with normal weather terribly the year. So, assume material. was rest But the by our wasn't guidance up higher the

second load Okay, industry, large of from you think then in many half as larger on C&I the about year? your understood. to the of how load an decrease just a your have economic to potential coming in slowdown in were And compared given share side, this to you if exposure we enter the customers a industrial others do

Frank here. Thanks, Alex, Frederickson

that and and as of as as industry steel starting Shore. Cliffs the with off pleased, a mentioned, we're strong in announced continuing we is well sales North we're So, taconite restart

I production. production stronger to year, helpful we're We're very than the of that and first sales anticipated all starting-off but half. automotive seeing customers it back watch which anything the does in of for just add-on? that Steve, our So, is the you steel half lot have do else don't pick-up, know, driving as a

know We'll which August No. there nominations about, call. second our have quarter more we get when will the by have conference we Xst time we

you Look to congrats quarter. and Alright. again update very the then much. for on your Thank

Thanks, Alex.

queue. And the back like Bethany you. the remarks. no turn showing to in call I’d for to Thank I’m Owen other questions closing

Thank many you. in at enjoy thank other morning and being Steve, forward Jeff, of We the Frank, and of I for to this day. for and we investment us interest the with you to year, you you your and rest speaking ALLETE. your again look investor venues throughout hope

for call. This today's conference concludes Thank you participating.

disconnect. You may now