ALE - Earnings call transcript Q1 2020

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Operator

Good day, and welcome to ALLETE First Quarter 2020 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 are not limited to, discussed filings made by the company within 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 place date management's which the should as views 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,

Executive ALLETE Officer, like remarks Owen. to would turn President and and over conference opening ahead. Chief For go now to Bethany Please introductions, the I

Bethany Owen

Frederickson, Senior Good and joining Customer of morning, Bob everyone, us Steve morning today. and Minnesota Controller President Experience. Frank with thank Accounting Chief you With Power's for me and Also Vice are Vice President, this Morris. Officer, President Financial Chief Officer, Adams; Vice us ALLETE's is

slides call this allete.com the be Investors our on morning's in found website at section. for Corresponding can

that So we will out as each follow number slide today's we you can through call go along, presentation.

$X.XX first of of included Water income the of year's Recall quarter per net results on This Last morning, results share that XXXX were million. share ALLETE the $X.XX quarter from on $XX.X income per $XX.X Services, earnings reported Water $X.XX sale operating of share of in share to first offset gain $X.XX net a the sale. U.S. per XXXX of by Services per prior U.S. results million.

by first pandemic. quarter taken share company the first, and COVID-XX of minutes, few But position with ALLETE more results and on Bob challenges financial address a that the has some Steve these positioning provide actions you In to posed and for the and the will our want I XXXX. to outlook details

other effects economy and operations. challenges at Although significant of its uncertain, unprecedented and over navigated successfully duration is we the previous than more century on downturns current a our and ALLETE have are situation

today's call, it year team strategic and the weathering strong, on details global we'll a our Throughout our experienced, talented of projects. to committed customers, to provide the positioning capital and as this the are crisis relates we in financing fully more successfully. have and as for We past, liquidity remainder

Slide impacts to Throughout global monitoring, thoughtfully this closely are challenge. and various responding the but We'll our organization, X. of rapidly proactively begin with we planning

in Our ALLETE's to of very a our our and priority is this all beginning. value difficult first the operations. across customers has safety Safety from of is at our protect our time been the employees, communities universally priority health our and and this ALLETE, shared families,

States, group more. show social non-essential early We the took remotely employees, United of to suspending ensuring whenever equipment was supplies in for beginning our personal action including travel all distancing and protective requiring on just up as and COVID-XX meetings, working possible, much

communities the affected country we in have operate COVID-XX. many, so been across Like by the

our talented employees we've to we ensure to will difficult had to our time as we to evolves. That date, fortunate resilient grateful as being this this However, we together. confirmed so cases are continue safety navigate not situation take action I'm are and said, workforce. that, in no we complacent, dedicated and decisive

businesses ALLETE's ensure to Services. reliable energy Water to essential continue and can we all safe doing are provide we Second, and

more All we relying that know of roles in ALLETE's businesses providing customers and to our us these communities play our customers, our on services important now and ever. are than

during We're and the practices to closely from implementing peers benefiting engaged with best our are we ensure industry pandemic. learned lessons

with of orders. many businesses operates public X, detailed states different in in ALLETE's As family Slide safety

communities their services are and with safe. we place, with projects while our focus engaged keeping also are federal and all construction at protective So on in reliable, safety. to coworkers, levels safe a always in themselves, and our compliance continue, orders and our ensuring these their other With social are families and we're state local, employees closely the distancing and ensure procedures

execute critically as of many important uncertain to been the to customers growth we These steps continuing as ALLETE's us done our taken health longer COVID-XX. Third, economic have have to face to challenges over term. long times and differentiated in continued due enable history, financial steps throughout ensure our our proactive strategy we've the effects

As construction, heavy been public that ArcelorMittal idling idling by you're U.S. announcements temporary largest demand of COVID-XX's of the of regarding some likely steel were the disruption aware, production machinery to Steel have there industries. temporarily due energy and several Cleveland-Cliffs, and Power's in production Minnesota automotive, announced recent customers. they

our largest will demand their we impact on recent production nominations again this last and in on for few a operations. planned impacts months These a Steve nominations of their some provide August, March, minutes. full XXXX in additional through slowed these indicate will X financial our which the information announcements of Bob and potential levels do Because early customers' production provide in not Power addition, the expect outlook all these August. paper customers of In demand large material customers Minnesota will have received from XXXX.

services and face The company financial is and have clearly we this reliable continue are to challenges, safe importance these that to regulators, important significant essential health ensure customers and our depending we other our communicated energy the even on, especially provide interested our of and our to parties. as legislators regularly they

and stakeholders us. we work our with engaging develop diverse grateful creative with all are for their closely are solutions, We to of

the Minnesota very We act filed the week, is approved on a A of to Last the to Commission request and the case. enabling to that current commission's Power these the Utilities of rate our proposal first part interim willingness effective us example Power's efforts unanimously Minnesota quickly. reduce Commission Minnesota recent proposal, consider immediately. resolve appreciate with Public rates

are the help some time. will difficult would of our approved during the all times focus additional health first the that to Power's we which in and we businesses. provide homes, details Power this of on relief case, If supported As Minnesota by a few is all of commission, to our financial the on also the support of much-needed customers to provide communities, parties these to minutes. able services Steve Minnesota many rate rest a proposal, to rate important result, by continue so as responders hospitals, providing during

This proactive of customers of we're decisions example all and priority, the stakeholders making communication transparent actions our we're any regular facing with our is and and and one to challenges them. we're engagement our our regarding just employees, address taking fourth

work safely we excellence. rapidly the honored and much we in this reprioritized customers field the typically in hasn't or are everything fact serve so our but has changing with we the the proud it or we that whether office, we're work do COVID-XX values changed ensure have our we ways to our in Finally, to situation, accomplish important changed doing objectives. these about that that

like and ALLETE to employees our of I'd steadfast courage, resilience, recognize and our innovation our all and throughout customers communities and to during dedication expertise their their these especially times. thank incredible challenging for

safe of COVID-XX team working Our on the hard to priorities, stay most is company our situation future. to we and all focused position evolves continue engaged and and important as these will so while the for we entire ALLETE do

results, turn I'll on further Steve? to outlook. for Now and financial over it our Steve positioning Bob details views additional and on

Steve Morris

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

on XXXX same of reported $XX.X for $X.XX per of first quarter quarter sale. Water included per the Results XXXX, from per share Services, of XXXX for Services $X.XX share to per sale income the income offset prior the first $X.XX a U.S. of gain Water million. $XX.X results in net were million. net on $X.XX in share of earnings ALLETE the of quarter the by For U.S. share Earnings operating

line with in from results. not expectations, quarter see The pandemic our we did our financial were first the material COVID-XX results impact and on

indicative on that extent results be the However, and our remainder and this are of for be year. quantified broader the time. dependent beyond The on COVID-XX and government expected first duration related of quarter the not control financial results may actions, our and fully economy operational ultimate the are and at the of which largely cannot impacts can pandemic results be

a Overall, $X.XX negative megawatt-hour to small in April. approximately Based saw increase per would decrease industrial, for approximately sales a $X.XX share on month residential XX% expectations. we other impact of commercial, earnings the and customer April we preliminary our in of of XX% data, sales sales of and expect from an municipal

customer COVID-XX. with in businesses Wisconsin other among and experiencing associated regulated Our suspended protections have disconnections, for Minnesota hardship certain economic customers

we result, may result could in see a an past-due As expense. receivables, which debt increase additional bad in

businesses expenses in regulated may and state the incremental our pandemic. to addition, compliance response In or operational COVID-XX-related due jurisdictional to other with other incur requirements cost

regulated electric orders. expenditures Minnesota a In COVID-XX-related which includes utilities, natural Commission of service Minnesota authorization state Commission government result petition Power, providers such Water, in defer a regulatory and to filed incremental the regulatory in of costs Power Minnesota, future Service or a Public recovery record Wisconsin request Utilities as resulting and authorized order, April, a from for compliance to of other with to with Superior joint deferral proceeding. and as along public costs the gas In incremental Light March and XXXX COVID-XX subject a asset expenses incurred Public

results increases XXXX. quarter. compared conditions and as rider of of Minnesota to and timing cost with clause to due a from due by reflected income revenue quarter Light a methodology contract the in Superior weather in at X, $XX.X of of weather Power the recovery on a recorded implementation from lower fuel rates offset million as These XXXX. warmer customers of a net sales first A and details due to partially sales at expiration few Earnings municipal for of XXXX. June income XXXX. higher of lower quarter result year-over-year conditions new first residential, January decreased warmer interim adopting regulated Water, for primarily year our and to were adjustment kilowatt-hour a in to result business commercial expenses the million XXXX, municipal in the customer the $XX.X income segments' last impacts net ALLETE's Net higher segment Power increased operations and

to request in X, driver On Commission, XXXX, proposal. expiring to total seeking filed A comments contract. Utilities of on this Slide market major the The additional annual November revenue. with Minnesota the case sales refer was a an Minnesota $XX rate Power few increase Public due Power X. power case request million approximately Minnesota Please rate rate

challenges pandemic. Since then, with and have with solutions associated address interveners COVID-XX worked we to proposed key creative

case health rate addressed the this to Our a during of on the of a customers and resolve request proposed resolution provided limitations April with supported the filed in Minnesota relief commission case. Power rate for goal rate immediate our way participation, crisis. that logistical settle Minnesota the And stakeholder to was Power a XX, that financial

percentage reduce our to of commission April XX, on And was X. approved X.X% of May to One interim effective requests the proposal. rate X.X% this

base rate rates; marketing in approximately resolution reflecting adjustment Other collected to Minnesota million; proposed effective the X; fuel clause, through include April power actual in current of power delaying marketing case XX and any May March rates credit future X, Power's least the components XXXX. and at of interim until removing margin refunding $XX customers margins

of is recorded reserves are we the approve time, items. for interim this expected commission rates. XX, early unable to remaining will the The decide June our of XXXX, these commission remaining we ultimately At proposal. March And whether to not in as provisions predict have

from to to resources Net the included XXXX, million Energy in facility, of and production wind segments. of $X.X additional from million XXXX. commenced compared our XXXX. Clean financial XXXX in Glen Returning as availability quarter XXXX Ullin the to resulting in wind income the in from XXXX tax $X.X first energy operations net which compared generated December recorded higher of results rest higher income ALLETE business earnings credit and $XX.X revenue million

based effective an also XXXX quarter-to-quarter included on income benefits, tax annual tax in additional income estimated which Net rate. varies

and income loss Net corporate in recorded gain includes compared million BNI million in sale included Our net of of after-tax. other $X.X businesses, and which Water of net a a in XXXX Services million to Energy on income the XXXX ALLETE $XX.X $X.X Properties, U.S. of XXXX.

rate. is tax trusts certain and based Net varies supported ALLETE's conservative estimated balance income tax financial additional in significant balance annual an a expense, income quarter-to-quarter cash XXXX benefit reflected of held to securities marketable position and lower on which sheet. equity earnings a from by effective

the Our $XX approximately first of end cash million, was ratio balance our quarter. and debt-to-capital XX% was at the

for I'll and XXXX over Bob it discuss our the outlook more Bob? of now our rest liquidity and to to turn guidance year. position the about

Bob Adams

everyone. good and morning, Steve, Thanks,

tools the plans, from safety contingency begin me I management past implemented action taking well and workforce, am experience customers serve proud saying in in. the of have Let ALLETE decisive We ahead team, significant leveraging ensure our the were downturns. of communities our we COVID-XX by to how and of surge proactively and

that value will All of COVID-XX customers, services flows also reliably to our of to we and are the this challenges pandemic proposition this to not resilient Overall, only but our the despite crisis. for creating, provide preserve investors. ensure critical continue believe necessary businesses we cash to are provide our revenues weather blend the

growth over At the differentiate cleaner remains for the of long our same will and including continue drivers time, broader solid demand investment future ALLETE's performance the core and to energy thesis, run. forms,

Our are fundamentally liquidity the first businesses the investments ample not needs, to sound, to, quarter, we in performed growth-related meet limited expected but as our during significant and including, year. have

and XXXX guidance in on to our Please a a few first, position. and I Slide our make state outlook will share I comments liquidity moment. more would to longer-term thoughts on refer of the finances But X. like

liquidity, are taken sufficient bolstered year. with strong finances our well and this sheet already decisive balance As positioned you actions by can financing a see,

May and other credit in lending of we $XXX X, over available. facilities had cash, outstanding As million

tax received Clean cash the projects, part investor renewable we South $XX Peak facility. Regarding of Energy's energy financing million financing approximately as a wind equity from for our third-party equity for our ALLETE recently tax in

in in $XXX our We from equity for Diamond Energy's Spring and investments ALLETE million wind project. Clean tax X proposals Nobles also have approximately partners

in critical We are piece believe our being of renewable financing is secure the this the quality pleased to recognized it demonstrates projects marketplace. and of

year. growth A under is renewable expected Nobles completion $XXX of A few XXXX energy EnergyForward and with in construction year. under million are project, initiative, projects currently X comments construction our our for on an on large plan currently total this over spend investments. this number The

ALLETE carbon-free PSA. facility wind will have XXX-megawatt This Power long-term an this Tenaska to is know, investment an under facility will located generation you partnering As subsidiary Southwestern with and a in Minnesota wind Minnesota. provide in

advancing XXXX, Diamond XXX-megawatt a and turbines the XXXX started on PTCs. located of installed. this $XXX be with of of late of approximately plan. in wind and right have it qualify fourth This complete substation to allowing quarter The ALLETE Oklahoma total majority expected XXX% also Clean is been Spring project, construction to Energy's time, cost for project in generation the At million, in is is operational

to to in would into acquired and the milestones. targeted rights of Energy the customers agreements. made be base. Energy Apex sales and long-term additional the project corporate the expansion at wind this it further $X ALLETE approximately required under diversifying industrial power the Clean project, company's -- to market, significant this announced approximately recently to serve make Caddo from provide defined commercial large the Diamond SPP a project sale million, of customer Like Oklahoma geographic with for wind involve payments energy is Clean to Spring development The full customers XXX-megawatt project

the we XXX turbines, to and ongoing continued PTC-qualified broader on projects. new customers unique in has in new add challenges have the XXX pursue their commitments, projects. Despite Clean wind megawatts receive PTC ALLETE capacity has COVID-XX another interest for With to and economy, its sustainability created continuing to to in Energy corporate investment focus are

now would time. and reliable our to Slide of regarding to X guidance earnings you business this we our the sufficiently especially guidance on unable and financial uncertainties the Because provide impact, I broad considerations. XXXX refer regulated at related potential economic XXXX segment, to update COVID-XX are to a our

guidance second better call. year, later XXXX As effects conference an to to we and able quantify targeting our understand such a temporarily until suspend in the decided quarter have result, we update are in

from taconite Power's minimum-megawatt is them power require power During early payments large Furthermore, related production there our no financial load August, through influenced heavily electric their nominations quarter, we in to the demand impacts which which levels. customers received customer to COVID-XX load, contracts. large pay March, under were Minnesota first material by

though significant As on frame. a have our facilities even this result, some a announced we second financial customers of idling of impact don't expect their quarter these results, during time

and U.S. plant, temporarily indefinitely ArcelorMittal Specifically, idled at its U.S. which production by Cleveland-Cliffs has Mining is Steels idled Minntac. Steel at Power. Hibbing and Northshore temporarily served are being idled And Minnesota Taconite Keetac partially

possible year. X the of August it results production quarter, of fall distinctly last facilities fully guidance. municipal levels months our quarter not guidance in for is million the nominate see our original XXXX early in these the fourth once does will outside Once commercial added XX the know to our were the extent represent more of of the about last customers' and To months our operational year this that could X sector production and materialize utilities, be aggregate, we in and production fourth planned tons in for we our assumed range. weakness original approximately again, they In the

To negative financing on we impacts possible on discussed. marketing actions be multitude and power of taken business, actions I've with From liquidity on at O&M we sales, deferrals and a expense have early to juncture. our mitigate along a this immaterial including standpoint, evaluated the expect already but there action management, fronts, any CapEx have

metrics considerations, under Slide several you that X assumptions scenarios. help may of your a presents key modeling number including with different

Now long-term X. business of Slide the XXXX, of fundamentals intact COVID-XX crisis, in long-term over reasons. for present may our some challenges remain believe which a we outlook number on highlighted our the as thoughts Despite in

iron, business the serve we steel to nonferrous and are the to Our in and or industries economy recurring are mining. critical the regulated highly nature, and country, models including

be beyond to proposition engine substantial continue economic ALLETE's our see believe assumption We demand earnings increasing with broader an line continue value renewables long-term We dividends of ESG We'll to in our weakness. segment includes in remain to as will growth committed which XX%, that the X% primary substantial. trends objective. growth of annual

levels near-term achieve to we to timing the continue of of to dividend have current over payout COVID-XX ratios. healthy the ability negatively impact to expect period. average recovery while expect our objective dividend we growth, long-term though may maintaining the growth annual some X% X-year time, X% At this Even sustain to

back Bethany? to I will hand now it Bethany.

Bethany Owen

Steve and Thank Bob. you,

has presents many challenges, ALLETE through change. COVID-XX thrived unique Although decades of

positioned businesses demand be we I'm confident ahead. team, in interest Thank Our well Which a believe ALLETE. family be the with your ALLETE solutions. to in I will the and differentiated strong proud with and you our of strategy about for well investment energy provide is future. more of cleaner your couldn't customers to continue into opportunities

your time, the I operator At up line this ask to will the questions. open for

Operator

Russo Brian from comes question first Our Instructions] with Sidoti. [Operator

Brian Russo

proposal. alternate the Just Can June you just cetera? file review in MPUC next on to rate terms the the time expected of can to by is X provisions of some that large discuss remaining of in you rate terms demand, sensitivity power et customer case the

Steve Morris

I take that. Yes. can Morris. Steve Brian,

item, present to case a would if, load X down move themselves XX power X example, conditions rate at XXXX, then it we could for rate file said March we megawatts for unless of the So not up large certain until November we case of months, as least XXXX.

proposal. our that's So

major And fuel $XX the take sitting margins which rates, clause. of you our would the rest the an just to increase marketing to to through but power would out then refund collected the rates, item April, the was adjustment approximately customers. the run base marketing of in through be million power margin the then we back That's proposal. obviously, proposals, rates actual obviously, that's base credit interim And is which

are items hear to those than There's remaining those. the and expect on significantly items. June that, So in we not more

Brian Russo

Right.

percentage, the of clarify, X.X%, in so of rate to that power interim included just X.X% contract and recovery originally rates? interim net wholesale from not in the that is -- expired that the reduction April was So to

Steve Morris

Yes.

rate actual is our on which the fuel from moving clause. base to margins So that into -- proposal into a May run rates gets a the X.X% marketing is us if adjustment accepted, as power X really

Brian Russo

and/or first And idle obviously, stated on again? the believe operational publicly customers, Northshore, plan Got August. then Have to become it. you resume U.S. has power when large they Okay. Cleveland-Cliffs, Keetac and operations to I to they in or Steel current heard, expect their also Minntac were is

Frank Frederickson

into the quick question, to Frederickson that we're industry. Brian, get moment Frank And question. a how up might of overview I'll I up here. of just sort back get take I that at looking and before

the steel with iron that as Minnesota of in Just one ore ore as because just make capability, ingredient that we for know, just have others and in starting there's manner, in an in them. is the high-quality are and from call, bodies share yourself important regions sound few pellets key world, I environmentally an well perspective, for in order matter on -- wanted the pellets terms the as the of to of end to process. pelletizing high-quality

reserves per million that And market Great And in a they secondly, ground like to to advantage region. typically substantial that a working the to world, those we in proven are through in in investments bringing steels tons that that to third, for is continue the supply can And customers decades. aware the recessions we're continue these pellets produces they high-grade million they're the technology in of steel the some to Lakes I'd in XX And area to have and manufacturers share and XX Minnesota make region like largest competitive this. our have used make year. to

And pandemic, to share this issues intact protections product. are material seen importance actions COVID-XX-related shown points good that in is the have put domestic just And to chain trade manufacturing the we've supply that lastly, couple from some of place. seen last appropriate of we've that administration good by raw finished having to

they that has balancing an they demand. facility. with relative Minntac, ArcelorMittal period So announced to some with at that announced mind, any down Keetac August. overview be your question, kind are have for and will July. on Northshore announcements is key announced that have in they And Minntac out come layoffs Hibbing with we Steel has haven't Cliffs of indefinite although back through U.S. in specific to getting announcements Taconite production now the then restarting in time and today, seen

Brian Russo

months? facilities or cycles, production? that of something these idling just take X quickly? full Or that does that various And from takes can to happen ramping maybe is experience your up is for that Okay. long it to in even the something And quarters from taconite customers XXX% how go to

Frank Frederickson

seen Thank quickly. follow-on. put facilities, you have the something that ready their we've is for into can the to that taken restart. maintenance It they're customers And the happen so to time

when recall they restarted. workers, couple a up. weeks and they Within So back of be can

like pretty from that we've seen as recessions, And our response they're some which also this very versus rapid I'd customers, shows too we've recession past to tracked share taking action swiftly. the that

what look to took able to for restart. contrast of 'XX, inventory very point and of XXXX happen they're we've same important so utilization context significant share automotive restarts to a steel month, about restart out compare it at drop the are terms markets. I amount putting months to And amount demand Just and XXXX and in X an that there, the in can seen recession, not the a once capacity in within happen it's and because and in that XXXX to appliance -- they a

Brian Russo

and/or in then that's your And facilities and of your XX% in that in about comments, in the noted Great. you service customers total territory? presentation just at taconite X Minnesota Okay. the or X production

Frank Frederickson

and It's has -- U.S. They've Keewatin out Steel I'll also their announced ArcelorMittal terms characterizes have Taconite slide facility, in that back that happened with announced Cliffs announcements the of -- up Northshore our Hibbing a on Taconite. bit a and announced in Taconite on investor and deck -- this. we Hibbing have has little

United we're more Taconite continues partial. to to And U.S. of as What Steel's ArcelorMittal's Cliffs' operate for Minorca well Minntac operate. aware is as continues

the production restarting of with in looking to idled and them we're number term summer. XX% of being the near upwards at net-net, be So being this of later taconite announced

Brian Russo

a great. just Okay, then more And quickly. few

still place? awaiting commercial Or for are On the as equity PPAs tax are items industrial customers? those Caddo from X well update, you in that as

A Adams Bob Adams - Bob

Bob Adams. Yes. Brian, is this

we in doesn't the project. of the then for the at still to XXXX. And contract for So on C&I of Again, service offtake the for look players the in final project. we're space just process offtakes, front, end on the working to with the tax are go into beginning until regard equity Caddo the that

we're done already, and of and well. X third, the have offtakes we proceeding working So those that's on

Brian Russo

or Okay. lastly, it's like, Great. statement, at quarter, on $XX looks recorded tax income in And first million that the the benefit positive the a benefit. million least was it $XX.X

it out was related just onetime year. was of I timing. Is -- kind that's nature over if accounting mentioned You wondering or to that it the smooths in in throughout this PTCs?

Steve Morris

Yes.

will, from net-net, would on of it's really very you But rate, it -- will what because vary impact. statements, financial our just overall, So minimal our quarter-to-quarter. expectations effective be there's impact the tax if little

times, you rate by effective Corporate Power, Minnesota Other. tax ALLETE At out washes and will Operations, get the an Regulated within Energy, essentially segments, which Clean difference

by isn't So if matters you're segment, at segment but looking it it overall, material.

Brian Russo

Okay.

to material certainly driver results, not it's first So year the quarter? significant the -- a in full quarter-over-quarter but it's a year

Steve Morris

significant. Yes. I wouldn't say it's totally

not talk think out it that way we here. I the it's perspective, It's within here But it washes just -- about was various segments. from material. year-over-year a

Operator

Wells next Fargo. from Akers comes Sarah with Our question Instructions] [Operator

Sarah Akers

in EPS complicate as scenario? of last picture? that XX there other as tons risk the downside, is in it material months, of X and apply uncertainties million $X.XX simple the around that thumb, in we get worst-case rule XXXX terms of So that taking a Or are $X.XX

Frank Frederickson

there And previous that here. and of towards Frederickson that yet, to right and Frank -- I of the mentioned I'll you we through what summer. production we're walk now, have what about at. announced back Sarah, questions we have XX% taconite some come they of shared end announced in to and as going And is So try of looking the offline the most

$X.XX, past were that in of about the to that scenario $X.XX months. you're off then EPS basis. that you're the for coming numbers past XX% stay million of the apply if X just you round an give to And year, tons you out if looking X months However, looking at on at X about

Sarah Akers

seems small, fairly Okay. other It but sure operating of was impact expenses, to risks. and load I the those missing drivers relatively of And not terms potential the make rest are like immaterial? your want the all in other April any we're

Bob Adams

Yes.

So Sarah, this Bob. is

customers, or should is stay that, we've unique by some our largely was necessarily the One as yes, some interesting it's our I've April, to CFOs we've things of -- company seen, I that impact the guess, not a on in seen residential home talk to operations other of example, and and demand for that at that. say. increased But commercial result of on offset, I as some

a the at don't not April, that the to impact run broader continue economy -- right weaken. far were least there at of to we're More the net-net-net, that but to big that on extent will material. effect, if some now. net-net so to a But come, taconites some in is So there course, not in seeing basis, be that it's least spin-off on

Sarah Akers

Got thinking could it. And are sounds risk the any back you of the how you're based about of signaling the operating business, summer. later conversations customers, these number that your as them the online in And coming with XXXX? do that this? extend it a because into large are see they're of that go like But customers your risk could you out business on

Bob Adams

our things. Well, we're around relatively we all our track in conservative of definitely these planning things, a guess, -- stance again, experience kinds of scenario and given these addressing I take record,

as well Wall as things to XX% XX%, think, Street come going was are we're as lot to looking and in the back I v-shaped fourth -- a this just even of quarter. top Journal's And belief fact, a at is early a storming of that going survey there's CEOs of not as So discussion, I recovery be are economists.

view. necessarily not I'm that of

some towards legs is into XXXX. think to going have I this

for the XXXX, sold power have result we've to some into reflect power a some taken, of that. sales example, As that, of actions

taconite in reasons see ore of ore, steelmaking in regard for country, don't -- the in don't unique Great permanent that situation the our -- ultimately of quality just protects of So the in -- middle where used in of major which of to competitive dislocation this the think, large Lakes I its the that is with unique the segment the customers mentioned part, the the industry. I has the unique that of see for part terms Frank we own dynamic sort

not could that more a in reduction XXXX. a into It don't permanent in we're nature, but be bankruptcy see seeing So we go load. -- dislocation, temporary would permanent

Sarah Akers

follow-up settlement. seems lower on quantify on provisions there's if negative rate question And the you that But net-net, case. have interim XXXX the increase a so, results? piece? just Got that it. then impact like rate some And good a does rate can in It

Steve Morris

Sarah, Steve Yes. Morris.

date that this So I will that from be X forward the is though, would is not is $X.XX, impact the material the a expectations. however, May from the year. of refund What our After-tax, earnings say that's million. on X.X% would be, $XX our proposed going we've

Sarah Akers

Or And the a forward? impact more baseline is kind set in going of onetime that XXXX? of is that

Steve Morris

impact overall the Well, about would X% forward. guess, I rate the impact would year X.X% going overall. X.X% But a the be -- this be

we way $XX look the it, a is at So refund. onetime the of million refund really

have So less 'XX, we'd impact in impact. we -- would have less

rate rate would X.X% increase, million. interim your was be $XX the So which roughly

Sarah Akers

how adjusted refund Just report that exclude EPS? the you as on. would And year from you're thinking onetime to about going goes

Steve Morris

at this and reserves, refund the that Yes, contemplating interim we in not reserves rate did would pandemic provide our And certainly the of we because guidance. we weren't time. any

rates. So we interim of had million $XX

million. we're so that $XX giving And basically back

So talk that that event. more We about contemplated. a was not onetime as would of a

Operator

Sunderland comes next with Richard JPMorgan. from And our question

Richard Sunderland

as cuts, you're Just that as had guess, evaluating? the guess, reductions O&M both in rate I of curious the you there may 'XX? of what the with what for And mean last potential case your about well are considerations I the context out what

Bob Adams

Yes.

Bob. is this Richard, So

we of of a the context, reorganization outcome sort in did when and time, our -- period again, call re-org. at time, substantial that case of along -- we again, that went the we historic what rate that rescale a XXXX-XXXX following for company So with I

design. organizational about way $XX about a was extensive. million which XX% reduction, very, of practices. It it do was those work was changing very things. our obviously it kinds was It or we was And the So

as through the some we I in form travel of down, lower services of mention there, a delayed because be So at lower hiring. of have all that are that employee working the temporary a stay expenses more Obviously, are some nature. lever, look that professional we're given reductions there's home lever, it's sort of and those but going in to are things. at things O&M as cost These do we and

on So this, all And They of sure. early. material more this would are in to they temporary sustainable. I nature. not consider would are started as to we for be They indicated, Bethany them not be --

in speak. a So lot things as motion these of are place we in or

Richard Sunderland

that terms sounds items just considering temporary would timing impact 'XX point about up are not the pushback the forward there? follow nature of you necessarily in It pull on like kind So to or cuts. what also of of a or

Bob Adams

the the obviously, and COVID-XX extent levers against would -- us. for challenges be those around that of continued backdrop country continue the COVID To pulled, to

necessary. definitely XXXX those into as would applying same we So be levers

Operator

turn And like Bethany in closing time. I'm showing to questions call this the no Owen remarks. at the any for queue further back to I'd

Bethany Owen

ALLETE. very being safety, for again you this and in good you best. all thank We wish investment the your and So us with and interest for health morning

Operator

Ladies you may conclude This for and your program, on participation your now and gentlemen, does today's thank you conference. disconnect.

ALLETE (ALE) 9 May 202020 Q1 Earnings call transcript