ALLETE (ALE) 8 Aug 232023 Q2 Earnings call transcript

Good day, and welcome to the ALLETE Second Quarter 2023 Financial Results Call. Today's call is being recorded.

Certain statements contained in this conference call that are not descriptions of historical facts 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 or 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 reflect Listeners forward-looking of undue put date management which the should as reviews reliance hereof. only not statements, on or future no to statements events other statements or revise any result a any whether forward-looking otherwise. The company as to of update undertakes forward-looking obligation or make new information,

in time, [Operator a a Second to mode. Quarter Call XXXX all the participants call All Results. question-and-answer a welcome speakers' are So the this Announcing this listen-only be After being presentation, Instructions] ALLETE's Financial will recorded. is reminder, Conference there As session.

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

You may begin.

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

income our Steve in to performance last strong This year quarter share. quarter $XX.X will share a year's the guidance and of net New reaffirming of $XX.X full are per million. reported second $X.XX for quarter April million. The per at Equity, results earnings highlight details providing quarter $X.XX the moment. morning, which of additional ALLETE during or track Energy we $X.XX of XXXX ALLETE's acquired or year. earnings share Last second financial on be per We net on income of financial remain results results were in range original $X.XX

across serve year our innovation with expertise I'm of and all as and execute We're single to every excellence truly our through in all for We're future we first closely as diverse team And advance strategy. with energy with day. dedication, customers entire grateful family ways. for of our sustainable the very stakeholders of our do to businesses progress Action half they the the their Sustainability clean in of all our we pleased our working

On opportunities X, of earnings of all this of see you strategy, and is investment can to meaningful for Slide for designed value shareholders. and employees our some providing our our long-term our do our dividend the communities, customers, while in which to details growth

way is are say of we when what sustainable ALLETE we we leading All truly that clean at future. mean the to energy a

an XXX-mile Minnesota. regulatory million the resiliency transmission Our pending for system $X North and terminal outstanding billion to diligently working the plan later reliability An with next as is This Minnesota in-service important our project and Power infrastructure project. Dakota Center $XXX modernizing by begin running of will line to from than more Dakota improve million as date execute DC year, to in decade. this replacing aging $XXX part our Construction early expected this approvals stations that project plan. modernization CapEx continues HVDC could transmission Minnesota on North and team of the Duluth,

great team project. The is on progress this making

Minnesota. contested Need XX, of process rather approved than the the application X, report July certificate on to application the informal complete, Need request technology together earlier the Minnesota the June In addition the in approved as on process of key our Public to filed case. Utilities an year, Commission and Permit Route jointly permit to a the And we and and use accepted review selecting provider pleased Route we're securing land of rights this and certificate that

continue Commission decisions the bring and moving fruition. Public as Permit our an to We're exciting the Dakota Commissioners North important this Minnesota later project to our process efficient Power with and regulatory these important plan manner. fall to this regulators to forward separate effective file Minnesota look application will and We in Minnesota for grateful they with in forward a to Route Service all to of working allow

is another team combined great important River of which with Central Reliability Great on is Northern progress the kV XXX Our Northland which making $X.X jointly transmission billion in Minnesota a the Iron This system. to to the the to cost own and million project, resiliency line from transmission reliability also Minnesota, a total of investment Energy. estimated Range project, in $XXX represents we'll

Route combined a filed process. we will and through approval in and regulatory work the to with X, the certificate Need steps application the of August permit On continue Minnesota Commission next

the June, Public Utilities date, appreciate Earth was Commission Tribal in one project Community providing Power This three meaningful with solar celebrated pandemic. Silvan largest the hands communities, part local represent support facility In Station. learning certificate greatly White labor. training economic with recovery Minnesota project Minnesota to partnership & also Commission Minnesota program. reinvestments approved in XX.X-megawatt Northeastern near our these unique of Hydro a with which College, the This of projects, solar projects We a on our Minnesota its of to by as students all college's constructed following solar is the in spur XXXX solar

nearly workforce such recently supplier solar all fall, our of and emphasize the RFPs host attributes wind a as for to use in megawatts and Resource included communities, will also were Integrated the RFPs addition, approved on These this that labor diversity. Plan. of in XXX Minnesota local and In reinvestment increasing issue Power plans our focus

ensure help communities will as We're sharing information the privileged are this looking forward to overall projects strengthening important of additional we while best progress. customers to these value the to serve. deliver these projects clean energy All

to Turning ALLETE Clean Energy.

talented project in early-April, of and Wisconsin Wisconsin, previously transfer two-build January, Minnesota Wind its announced, As Northern Public Electric. of with Red the Service wind Madison facility Barn projects the and we in sale dedicated to And Gas completed that successfully its team in and in sale Corporation

making team well. as on And progress is fronts other the

weeks City first Seattle in Condon XX-megawatt City wind the Light, Just a Energy the agreement that customer. among in into company's Seattle two our will we ago, purchase to largest and nation utilities ALLETE power Light from Oregon. power top-XX site wind purchase announced municipal the power to entered Clean five-year is sell municipal

The about solar Clean opportunity power purchase ALLETE site. and storage agreement also new excited agreement new includes an energy jointly at We're customer for and Energy. explore to adding the this

of quarter On continue they already we had team New have new grow they can their businesses. Equity to including and of snapshot New just Energy markets. entering and future ALLETE so project the Equity closings, pipeline why development some of see The pleased Slide are family strong X, Energy of you a of greenfield another projects, excellent joined and

New second quarter, project a Energy highly new team closed the in In a the state market, successful fact, in of the Virginia.

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

everyone. morning, would refer good details. remind you and and that XX-Q Bethany, encourage our for Thanks, you I to to more to we filed morning, it like I this

Regulated on from refer on income or of in Slides of interim comparison earnings consideration. at included of from X share significant variances other XXXX Operations, earnings quarter income million. quarter and also net second Please rate second per retail $X.XX XXXX ALLETE per were X for Earnings To million. for million February the reported Minnesota in and higher share to rates sales by income XXXX $X.X date, of partially our $X.XX net of reserves net strong quarter $XX.X Power's $XX.X case Energy, New benefiting Net offset order. income resulting second XXXX items for

the lower experienced Energy wind much of Clean ALLETE much wind resources low its of fleet nation. as persisted across for

A the were the tax few business second compared higher increased details million to ALLETE's quarter to due segments. of our income second Regulated partially reserves. offset XXXX. $XX.X Earnings in customers net These $XX.X of million XXXX, in expense. by sales lower interim retail quarter Operations segment rate and timing from recorded property XXXX were of refund increases primarily to

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

this in the expected, in Also higher fourth cost quarter pressures. and and XXXX will impacting timing inflationary You third due quarter the quarter-over-quarter again we see as expense fully differences to similar year. maintenance primarily reversing operating was

to quarter net resources ALLETE and wind million across Clean energy Energy exception. the XXXX facilities million recorded in wind impacted nation, $X.X Low income no XXXX. compared $X.X of was ALLETE second Energy Clean

were Barn in than the build by quarter result, results share a approximately second wind $X.XX our sale lower resulted the in $X.XX partially April, This expected below expectations gain per per of offset due As share. impact negative project resources. a Red $XXX million transfer by larger to the which was by

by also and impacted positively ALLETE Lower operating per than expected $X.XX expense share. Clean Energy's results maintenance

net our income million $XX.X income Energy, New to include which renewable businesses, Other compared and energy XXXX. recorded BNI investments of and in Corporate facilities million net Energy in $X.X Our of

quarter result of of million quarter a margins year a of included another net this in attractive as income closings new outstanding $X.X and of with New project market. second The Energy from

Minnesota realized in from expense into We XXXX. income XXXX increased also Solar of in were increases XXXX. projects, by partially offset placed These service which earnings late tax were timing versus

stock in due of share per of quarter outstanding dilution Earnings the XX. $X.XX June as to second additional shares approximately common was

few achieving due the to year guidance comments XXXX first expectations, track were Regulated XXXX property lower on tax and Power. share. our on we in higher per margins expense $X.XX expectations are year slightly a our we full half higher remain taconite of to $X.XX Year-to-date, with Next, confident at outlook the our original guidance. our Operations and Minnesota XXXX earnings and than of through

remainder production million XX initial approximately than nominations at of taconite On August full our demand levels sales year, or the X, we million indicating for tons year higher tons received the forecast. X

first and Synovus operations Paper half ramp half year. the up XXXX. Minnesota into the second Superior Wisconsin FT in the Duluth, have operations both In addition, in commenced of to of and continues Synovus

revenue first PTCs. the Energy of below the resulted six in expectations as for ALLETE months Clean resources lower was wind and lower our year,

the We are fleet. for of the ALLETE wind Energy's below second half year normal anticipating for Clean

Energy provides of of and closings robust as the in over another planned project to execute closings, year. project confidence continued for further as X pipeline second following of New strong continues quarter strong half the growing on gigawatts

such, or reflected As is million exceed full guidance. slightly in Energy initial achieve to of track $XX New our as to on earnings firmly $XX million year

to as earn at It and an results to to critical due the increased this track expectations are is earn to clean a do financial case through cost or Power strategy. our implement energy on file on adding allowed XXXX, rate to the not equity we slightly expect equity while Finally, part as transformation needed year. half remains in appropriate pressures on Minnesota return first well employees in November of accordingly, return inflationary Power in year, above Minnesota

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

XXXX. of Thanks Steve. We're our progress for with pleased ALLETE's half strategy that through first executing update, the

Just comments additional a line your open the before questions. few we for

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

pursuing we're that to reduce working we customers responsibility know cost-effective for customers focused these are always this providing best important financing, take many we on ensure to to We costs federal our make are us investments, opportunities on to we seriously. From our we transition are our and help is teams ensure very counting hard customers. and our state federal As value. are and grants low-cost the

within a our larger clean will transmission markets, on utility We service those individual also that territories markets. interconnecting know just energy nation's scale, or not goals but require

between Grid So quarters. the reliability sharing on of is first We project, the the middle progress will this coming project ALLETE's the in to United markets on look Connector and to Plains forward the enhance also more continues North which being of interregional made exciting with country capacity as kind and its energy transfer engagement West.

few examples executing in we're This committed And of to the in making are absolutely strategy. we doing a progress way. morning, as we've the mentioned our everything just always, right

this Sustainability including Slide Report. recently updated important work, our Corporate links X on to contains information

energy of here my and in with hear As positioning We're first stage can employees execution for communities, clean growth long-term our ALLETE will for with support value provide in our half sustainable pleased from strategic, the XXXX, setting Steve's our dividend about meaningful the projects investment to real already future. and we're projects our our that the we're excited moving and forward earnings for and opportunities growth to and you comments, investors. of customers, the and transition, significant

for in your and open operator And you ALLETE. interest the for time, at your this Thank ask your to line I'll questions. investment the

from JPMorgan. Instructions] [Operator Richard first The Sunderland question with comes

open. is line Your

me? hear you Can morning. good Hi,

Good We morning, Rich. can.

on of detail consolidated you of But stacking up aggregate half upper you. I'm on basis, at segment point? the the segments sort see results? those the this for 'XX of XH half kind or Thank an I versus the appreciate level sense Great. different how curious and trending outlook. just XH Any in range on the lower

Hi, We're on at look with but We Yeah. X.XX. the original given right Rich, Morris. track now, to no more X.XX Steve clarity the our guidance, by midpoint segments.

And renewables I Do on you market outlook updated any curious positioning Understood. RFPs. you then refined any as know to changes to them? for if Thank thoughts prepare at of the to lead? all you've this sort you you. competitive but discussed in past, the seeing the just in or upcoming turning your file thinking opportunities have

kind provide projects -- the is as part our and out customers. value. We believe overall to Bethany. we this that of value having laid criteria Rich, that providing greater anticipate we will Yeah. These be that believe of I Well, will competitive. very great RFPs we

have mentioned regional projects that Resource approved our projects solar Plan. that what the solar We our was Integrated -- in was

So very we Power be believe competitive in RFP process. Minnesota the will

clear. time the frame are able you Understood. to last size one which you just evaluate then storage what solar content And all? at over energy one. Or expect just even potential, The that to opportunity there? Very

morning, is that is the really but the other Rich. about some little Scissons. early sites that of Rich, on Jeff interconnection past our that Good optimize goal we've to well. talked A We've as got. in one, This

solve and see some we energy customer excited to So if new to solutions. transition can for together clean work the excited

it, great. you Got the for today. time Thank

you. Thank

question standby next for from America. Julien comes Please Bank of next question. Dumoulin-Smith The the with

is line Your open.

Hey, million bit Can momentum guys. How to wanted well it strong Energy you you're very potentially is would as QX. Good implies guidance million little guidance opening pretty Darius million and update to Julien. of momentum, exceeding on in more that seeing? income. about door slight the that, up unchanged the you're the $XX the Obviously, framing net So $XX year, morning. the This for It a noticed I range, second just a of you that for seems $XX talk of your is in frame I which half New to detail quarterly is please? talk the business. has in the like curious for QX slowdown? seeing about ahead shaping that how

We project have out quarter, million. Morris. significant budget second $XX closing which rise Steve did in Darius. morning, which to did good gave the $XX $XX.X Yeah, million expect original happen, here a to million to of our

won't say we $X we're or quarters proportionate. did So slightly And be -- million. that could thinking $X will million I exceed,

single that So quarter on have year won't we -- quarters we second quarter. had single the every those every

sure of you rate the I doesn't that Power. that's have impact it Appreciate detail wanted for Court if two the notice parallel, -- ask take you. make Thank Minnesota alluded I to the ask of of the Appeals you are about guys the relative just to like to process on upcoming there. rate about if maybe I second Minnesota -- If how the you of talk could the to that timing place Okay. case. year. could want last to processes with the one the case expected or But the half filed sound those could? you in to going

Darius. Morris, Steve -- that's Yeah,

We of to up this still case file Appeals to Court until take rate for the are So in that our is track November expected case not year. XXXX. on

time. unlikely rate at impact our point to case in So this

Alex The next Mizuho for the with comes standby question. from Mortimer question Please Securities. next

open. is line Your

team. morning. Hi, Good

Alex. morning, Good

is this pure the decision bit more that rate the just expand strategy play on going to given more of this to businesses the to continuing or forward? setup model. year, growth for I industry was others the kind the the increasingly regulated a case Should hoping business process drive at little clean get challenging thought given more earlier on of the look in we of chosen unregulated from regulated lean of have as could this many strategy a you to from back

Yeah.

non-reg. increase really Our the strategy isn't to

is earnings. complementary have clearly Our strategy non-reg to

If have of you our rate the clearly a look CAGR. increased over an we opportunities base CapEx, that around on it's investment regulated XX% at

wouldn't as non-reg. opposite. exactly Great as transmission opportunities the characterize investment with as with businesses look So it I as our ALLETE our regulated it We at from earnings increasing well businesses. complementary non-regulated

Okay. Understood. to continue the strong growth? there Energy then for M&A appetite any given results New further to And at Equity, is drive

Jeff Alex. This is Good morning, Scissons.

momentum positive group see to continue we team. that and think that with I talented

the And so their continue we'll them in to of execution aid strategy.

the well. we but to out, not it with overall have -- would have to as Alex, lead anything So fit ruling strategy be

All right. Thanks so much.

you. Thank

Instructions] Russo question. The next with next the Sidoti. Brian Please for from standby question [Operator comes

Your line is open.

Good Yeah, morning. hi.

Brian. morning, Good

Just project New curious If you megawatts a Energy. recall, XXX And just follow-up was done I'm megawatts on of have the the many assumptions in about XXXX. first closings of half? I one closings how through of

Yeah. Yeah, Brian, this disclose that we Steve Morris. didn't quarter.

on depending megawatts and different what where on state. really margins are So

that, megawatts disclose past, So disclosed XXX XXXX. in have we we but approximately didn't the for

We this are that on year. for track

Okay. type Condon? recontracting Red see market you you transactions And did for Or like more is under power do becoming on like build-own-transfer ACE, more agreements optimal then with purchase Barn? this

at build-own-transfers cash the Good net income continue through city good of as with There's as Brian, the and the not this are kind benefit and to do Seattle far market, is of we're we But Condon, opposed morning, they benefits those and to either, from navigate flow. We'll right? to Jeff. some the a deal projects.

right Clean and both for ALLETE. ALLETE what's most the we'll strategy do Energy and So economic

lastly Okay. Power. And on Minnesota then

can profile five-year you the the that issue You're get outcome kind CapEx fall. plan? we When to RFPs under maintain this so an going might of

Yeah. Brian. is Thanks, Bethany. This

of and issue And beginning kind to to end in a responses kind of planning and position make year. back the this a of are the would this we the RFPs we decision by being yes, anticipate of year fall. So next

much. Thank it. Okay, got you very

Thank you.

time. would to no this remarks. call now Bethany further at the like I I questions show back Owen for to turn closing

for enjoy for looking And we're this venues of We other investor in hope rest many and you months. your the forward coming at you you being your ALLETE. and Thank day. morning with speaking investment us in interest again with to the of

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

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