ALLETE, Inc. reports 2023 earnings of $4.30 per share; clean energy transition drives $4.3 billion capital investment plan over the next five years
- ALLETE reported strong 2023 financial results with earnings of $4.30 per share, a significant increase from $3.38 per share in 2022.
- The company's net income rose to $247.1 million in 2023 from $189.3 million in 2022, indicating a positive growth trajectory.
- ALLETE's operating revenue also saw a notable increase to $1.9 billion in 2023 compared to $1.6 billion in 2022.
- The company's five-year capital expenditure plan of $4.3 billion reflects substantial investments in regulated renewable and transmission projects to support a clean-energy future.
- ALLETE's Sustainability in Action strategy is gaining momentum, with regulatory decisions in 2024 further supporting clean energy transformation.
- The company projects annual growth of 5 percent to 7 percent from 2025 onwards, backed by a robust pipeline of clean energy and transmission opportunities.
- None.
Insights
The reported earnings of $4.30 per share on net income of $247.1 million and operating revenue of $1.9 billion for ALLETE, Inc. in 2023 represent a substantial increase from the previous year's figures. The growth in earnings per share from $3.38 in 2022 to $4.30 in 2023, alongside a net income rise from $189.3 million to $247.1 million, indicates a strong financial performance. This performance is further underlined by the increase in operating revenue from $1.6 billion to $1.9 billion. A critical factor to consider is the net positive impact of a $40.5 million arbitration award, which significantly contributed to the earnings per share. However, it is important to note the dilution effect of 11 cents per share due to additional shares of common stock outstanding, which could be a concern for current shareholders as it represents a decrease in their ownership percentage.
From a financial perspective, the updated five-year capital expenditure plan of $4.3 billion, with an additional $1 billion compared to the previous plan, reflects aggressive investment in regulated renewable and transmission projects. This is in line with the industry trend of transitioning to clean energy, which is often supported by favorable regulatory environments. The projected annual growth objective of 5 percent to 7 percent commencing in 2025 is optimistic and suggests confidence in the company's strategic direction and growth opportunities. Stakeholders should be aware of the potential risks associated with such large-scale investments, including the possibility of regulatory changes and the execution risk of new projects.
The emphasis on ALLETE's 'Sustainability in Action' strategy and the clean energy transformation of Minnesota Power are significant for the energy sector. The company's strategic initiatives in renewable energy and transmission projects are not only aimed at meeting state carbon-free energy goals but also at tapping into the growing demand for sustainable energy solutions. The reported increase in sales to industrial customers in 2023, despite lower sales to residential and commercial customers, indicates a robust industrial demand for energy, which could be a driver for stable revenue streams in the future.
However, the negative effects of historically low wind resources and a substation outage impacting ALLETE Clean Energy's facilities highlight the inherent volatility and operational risks in renewable energy production. The expected negative impact of this outage on earnings into the first quarter of 2024 should be monitored closely by investors as it could affect short-term financial performance. The company's ability to navigate these challenges while maintaining growth momentum, as suggested by the strong financial results of ALLETE Clean Energy and New Energy Equity, will be crucial in sustaining investor confidence.
ALLETE's performance in the context of the broader market and industry trends reveals a company that is successfully adapting to the evolving energy landscape. The strategic shift towards clean energy is aligned with consumer preferences and regulatory trends that favor environmentally sustainable practices. The positive financial results, particularly in the regulated operations segment, suggest that ALLETE is effectively leveraging its position in the market to capitalize on these trends.
It is also noteworthy that the company's after-tax equity earnings in the American Transmission Co. were higher in 2023, reflecting changes in the estimate of a refund liability. This indicates a favorable position in terms of regulatory and legal proceedings, which could have a positive impact on investor sentiment. The increase in net income for Corporate and Other businesses, including New Energy Equity, points to successful diversification efforts and the potential for continued growth in this area. The market will be watching how ALLETE's strategic investments and operational performance translate into sustained earnings growth, particularly in light of the projected 5 percent to 7 percent annual growth objective from 2025 onwards.
“We are very pleased with our solid financial results in 2023 and our team’s execution of strategic initiatives that will drive strong earnings growth and investment in clean energy for years to come,” said ALLETE Chair, President, and Chief Executive Officer Bethany Owen. “ALLETE’s Sustainability in Action strategy is gaining momentum, with important regulatory decisions in 2024, that will further support Minnesota Power’s EnergyForward clean energy transformation.”
Owen continued, “Our updated five-year capital expenditure plan of
“Our consolidated 2023 earnings were in line with our revised and higher earnings guidance for the year, including negative weather impacts of approximately
Earnings in 2023 reflect a net positive impact of a
ALLETE’s Regulated Operations segment, which includes Minnesota Power, Superior Water, Light and Power, and the Company’s investment in the American Transmission Co., recorded net income of
ALLETE Clean Energy recorded 2023 net income of
Corporate and Other businesses, which include New Energy Equity, BNI Energy, ALLETE Properties and investments in renewable energy facilities, recorded net income of
Details of the Company’s 2024 earnings guidance were filed as part of today’s Form 8-K filing.
Live webcast on February 20, 2024; financial slides posted on company website.
ALLETE’s earnings conference call will be at 10:00 a.m. (EST), February 20, 2024, at which time management will discuss 2023 financial results and 2024 earnings guidance. Interested parties may participate live by registering for the call at www.allete.com/earningscall or may listen to the live audio-only webcast, accompanied by supporting slides, which will be available on ALLETE’s Investor Relations website investor.allete.com/events-presentations. The webcast will be accessible for one year at allete.com.
ALLETE is an energy company headquartered in
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, 2023 and 2022 |
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Quarter Ended |
Year to Date |
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|
2023 |
2022 |
2023 |
2022 |
Millions Except Per Share Amounts |
|
|
|
|
Operating Revenue |
|
|
|
|
Contracts with Customers – Utility |
|
|
|
|
Contracts with Customers – Non-utility |
82.3 |
125.5 |
636.4 |
303.8 |
Other – Non-utility |
1.2 |
1.3 |
5.1 |
7.6 |
Total Operating Revenue |
402.7 |
425.8 |
1,879.8 |
1,570.7 |
Operating Expenses |
|
|
|
|
Fuel, Purchased Power and Gas – Utility |
132.1 |
128.1 |
482.9 |
545.5 |
Transmission Services – Utility |
21.9 |
19.2 |
88.2 |
76.7 |
Cost of Sales – Non-utility |
36.8 |
85.9 |
473.5 |
182.8 |
Operating and Maintenance |
91.1 |
80.8 |
345.3 |
318.9 |
Depreciation and Amortization |
63.6 |
60.8 |
251.8 |
242.2 |
Taxes Other than Income Taxes |
14.1 |
17.3 |
57.2 |
70.4 |
Total Operating Expenses |
359.6 |
392.1 |
1,698.9 |
1,436.5 |
Operating Income |
43.1 |
33.7 |
180.9 |
134.2 |
Other Income (Expense) |
|
|
|
|
Interest Expense |
(19.9) |
(19.9) |
(80.8) |
(75.2) |
Equity Earnings |
5.6 |
5.6 |
21.7 |
18.7 |
Other |
9.7 |
6.0 |
85.0 |
22.4 |
Total Other Income (Expense) |
(4.6) |
(8.3) |
25.9 |
(34.1) |
Income Before Non-Controlling Interest and Income Taxes |
38.5 |
25.4 |
206.8 |
100.1 |
Income Tax Expense (Benefit) |
7.5 |
(11.8) |
27.9 |
(31.2) |
Net Income |
31.0 |
37.2 |
178.9 |
131.3 |
Net Loss Attributable to Non-Controlling Interest |
(20.5) |
(14.5) |
(68.2) |
(58.0) |
Net Income Attributable to ALLETE |
|
|
|
|
Average Shares of Common Stock |
|
|
|
|
Basic |
57.5 |
57.2 |
57.3 |
55.9 |
Diluted |
57.6 |
57.2 |
57.4 |
56.0 |
Basic Earnings Per Share of Common Stock |
|
|
|
|
Diluted Earnings Per Share of Common Stock |
|
|
|
|
Dividends Per Share of Common Stock |
|
|
|
|
Consolidated Balance Sheet Millions |
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|
Dec. 31, |
Dec. 31, |
|
|
Dec. 31, |
Dec. 31, |
|
2023 |
2022 |
|
|
2023 |
2022 |
Assets |
|
|
|
Liabilities and Equity |
|
|
Cash and Cash Equivalents |
|
|
|
Current Liabilities |
|
|
Other Current Assets |
396.2 |
681.6 |
|
Long-Term Debt |
1,679.9 |
1,648.2 |
Property, Plant and Equipment – Net |
5,013.4 |
5,004.0 |
|
Deferred Income Taxes |
192.7 |
158.1 |
Regulatory Assets |
425.4 |
441.0 |
|
Regulatory Liabilities |
574.0 |
526.1 |
Equity Investments |
331.2 |
322.7 |
|
Defined Benefit Pension & Other Postretirement Benefit Plans |
160.8 |
179.7 |
Goodwill and Intangibles – Net |
155.4 |
155.6 |
|
Other Non-Current Liabilities |
264.3 |
269.0 |
Other Non-Current Assets |
262.9 |
204.3 |
|
Redeemable Non-Controlling Interest |
0.5 |
— |
|
|
|
|
Equity |
3,406.6 |
3,348.3 |
Total Assets |
|
|
|
Total Liabilities and Equity |
|
|
|
Quarter Ended |
Year to Date |
||
ALLETE, Inc. |
December 31, |
December 31, |
||
Income (Loss) |
2023 |
2022 |
2023 |
2022 |
Millions |
|
|
|
|
Regulated Operations |
|
|
|
|
ALLETE Clean Energy |
5.3 |
1.3 |
71.7 |
16.3 |
Corporate and Other |
11.4 |
19.9 |
28.2 |
23.1 |
Net Income Attributable to ALLETE |
|
|
|
|
Diluted Earnings Per Share |
|
|
|
|
Statistical Data |
|
|
|
|
Corporate |
|
|
|
|
Common Stock |
|
|
|
|
High |
|
|
|
|
Low |
|
|
|
|
Close |
|
|
|
|
Book Value |
|
|
|
|
Kilowatt-hours Sold |
|
|
|
|
Millions |
|
|
|
|
Regulated Utility |
|
|
|
|
Retail and Municipal |
|
|
|
|
Residential |
277 |
297 |
1,089 |
1,148 |
Commercial |
325 |
332 |
1,347 |
1,359 |
Industrial |
1,866 |
1,698 |
7,044 |
6,745 |
Municipal |
116 |
121 |
466 |
540 |
Total Retail and Municipal |
2,584 |
2,448 |
9,946 |
9,792 |
Other Power Suppliers |
811 |
605 |
2,819 |
3,149 |
Total Regulated Utility |
3,395 |
3,053 |
12,765 |
12,941 |
Regulated Utility Revenue |
|
|
|
|
Millions |
|
|
|
|
Regulated Utility Revenue |
|
|
|
|
Retail and Municipal Electric Revenue |
|
|
|
|
Residential |
|
|
|
|
Commercial |
42.0 |
42.7 |
177.5 |
178.5 |
Industrial |
153.3 |
142.2 |
590.2 |
585.7 |
Municipal |
8.2 |
8.3 |
33.4 |
40.2 |
Total Retail and Municipal |
242.2 |
226.6 |
951.4 |
961.1 |
Other Power Suppliers |
42.9 |
41.2 |
146.1 |
165.8 |
Other (Includes Water and Gas Revenue) |
34.1 |
31.2 |
140.8 |
132.4 |
Total Regulated Utility Revenue |
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240220094408/en/
Investor Contact:
Vince Meyer
218-723-3952
vmeyer@allete.com
Source: ALLETE, Inc.
FAQ
What were ALLETE's earnings per share in 2023?
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What is ALLETE's five-year capital expenditure plan?
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