ALE - Earnings call transcript Q1 2021

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Operator

Good day and welcome to the ALLETE First Quarter 2021 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 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 the undue place hereof. management's which date should as views reliance only not statements on or events The statements any or forward-looking whether otherwise. or to of result other forward-looking as any update a company make new obligation undertakes statements no revise to information, future

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

Bethany Owen

Thank morning, at today. and and Energy; Power's Corresponding Clean Customer for With Vice with Adams; and thanks me Officer, Frederickson, Also Frank Vice this President President for and of Morris. Controller, and us Financial Rudeck, you. President Vice Chief morning everyone, of Good Steve Al slides Experience. Minnesota Investors slide joining along, Accounting Vice this President, our ALLETE are us were ALLETE ALLETE's be Chief found on Officer, $XX.X results Bob Senior are can earnings on reported website we first-quarter as share $XX.X number call per net of the allete.com presentation. on we'll per of Last through XXXX million. go morning's This in net share $X.XX $X.XX today's year's morning, follow To out million. call of income section. income each

energy like to Bob the weather extreme provide Although place per minutes, the Steve At the original these for drivers our $X.XX few of events we that clean a due will the update thoughts and few the weather strategy. and on key of results $X extreme additional provide the a our insights achieve impact were quarter of progress highest below our the timing, ability our confident internal I'd level, share In in on year. quarter took expectations a during for to and financial guidance remainder to the share. to remain range in

temperature extreme some Southwest of cold to this in nation vortex period major power significant disruption especially and coldest year, in time. of and in our power short very areas, know, a operational These gas decades. the brought resulting with temperatures experiencing conditions and much of extremes in a polar challenges South in As of February you and price icing the markets, in caused volatility the

affected quarter, Although and ALLETE extreme locations greatly effects the on operations. was during nature our of the by weather the depending the varied

Water, ability extreme major economic ALLETE in this adverse preferred on remain change. our factors climate needed speed the and wind Midwest our we address There For Energy risk. were to our Superior weather performed well our strategic customers negatively diversity Power the example, and related largely and while and were ability to navigate event, in earnings. to mix with operations diverse manage business of continue differentiate availability our Light in clean at transformation will affected ALLETE energy they to Power geographic lower ALLETE's certainly and the regulated Southwest Minnesota unaffected, many and global and resilient are extreme Clean believe successfully views and and the operations means differing

As strategy, be this to critically execute for we sustainable that important businesses. ALLETE's it's us sustainability transition ALLETE's truly

shareholders as communities optionality a our energy secure time with provides allows regulated or and well in for and for So our transition ALLETE's our about sustainability our businesses, our and critical to mind, technology and economy. customers, of our talking to climate throughout employees we're we're to our and as in all Whether time addressing stakeholders employees committed communities, transition. carbon-free our non-regulated advances action strategy change this

Turning to X. Slide

we energy to reduce its to Power's consists and to It's to recently as carbon-free by Power and We to communities. take expect. customers our renewable December, provide that climate, XXXX. utility and first carbon. renewable a customers solar to ensure our our bold important Minnesota step to our in of and Minnesota helps wind, and continuing forward and our affordable note earlier provided the sustainability forward and mix reflects customers. move Minnesota reached commitment As energy responsibilities energy This this last is communities reliable we by seriously our diversity the to that how hydro, customers of Minnesota the deliver vision XX% we are significant this highlighted vision year, to the announced a and our Power XXX% that diverse biomass, milestone resiliency energy timing

plan our call, plans resource energy with be supply renewable many Minnesota Throughout to close its by and coal by the transform XXXX. XX% to transparent our Power As February. filed Utilities conference This and detailed carbon Public in Minnesota further lower engagement our Minnesota integrated will XXXX Commission in last this outlines IRP continue our free stakeholders. process, XX% and we with Power's to

to we're leader continue thrive early committed with February, of now made XXX% sector additional ALLETE our clean portfolio. discuss by two family Energy's And utilities announced in in in shared which the the you moment. annual second we only on with an grow continue of We differentiated further customers, company X% the progress decarbonization the to its building ALLETE And our family, track Because X% transition, strong energy as Formed nation's of to a expanding utility average to record in beyond EPS is just spaces, Wisconsin on clean value and Bob generation, and will as increases. wind in optimizing as commercial well ALLETE and businesses some customers renewable ALLETE's just is storage. future. new Energy a our ALLETE industrial will Clean serving additional success in achieving we solar yesterday, Energy renewable objective. offer will growth, clean positioned a proposition. as society's to such ago, significant largest ALLETE businesses mover as energy this growth years believe in Clean largest XX projects we're energy country. commitment exciting many We've well as Clean with and energy drive

more in renewable In alone proud than external company, recent ALLETE fact. years, has recognized view. aren't a of publication more energy be our that We couldn't and top-tier we as one

Now, over our for additional first-quarter details financial to Bob growth and I'll Steve results on turn it ALLETE's XXXX Steve? outlook. and

Steve Morris

Please to our good quarter. would considerations earnings of the Thanks, more that and to to filed like everyone. for Bethany and Today, to for morning, and we X XXXX first-quarter I variances this I and per for $X.XX it encourage of expense were refer XXXX $XX.X for remind share X reported negatively and expected detail. morning, Slides per comparison per share, you first is significant refer to XXXX net the XX-Q income items quarter other net of you $XX.X million. compared of of remainder reverse during by internal and on which maintenance the approximately $X.XX million. on timing the in Earnings year. impacted taxes ALLETE results first operating in share The expectations income $X.XX of income to

related timing the to addition, winter was sales in were which by Superior lower-than-expected similar weather Net the United Power million in Great approximately XXXX volatility Transmission from wind primarily from $XX share impacted at incurred million the and income Timing million of which pricing Energy's taxes in indefinite partially in equity negatively and Transmission lower commenced Clean negative increased included $X.X the Power paper power due due from of approximately recorded to $X weather XXXX or earnings income and of American resulting compared income and Minnesota facility idling event caused expense mill These XXXX, States expectations expiration our compared which net Spring Clean partially winter the in income and to wind the our contract the credits. reverse million Duluth, the operations to Megawatt earnings the net sales ALLETE regional offset lower company's extreme by hour Northern higher ALLETE Spring investment weather Clean income Light of taxes. related negatively in Transmission our XXXX. facility of taxes energy $XX.X XXXX, to operations below XXXX. resources. revenue energy compared and the the million market, segments. in to reported generation first in power at regional to includes and negative facilities impacted quarter, the In as American customers to power an Southwest in Power XXXX. by Water, Diamond being impact resulting production industrial Line. event of those April other $X approximately primarily Company maintenance, in first power were ALLETE Peak is winter Energy's of were the after-tax the million market. income to $XX.X This Minnesota South decreases the in and net margins to Earnings due in tax XX% quarter, volatility Light Diamond reflected were $X depreciation Company losses XXXX. recorded in offset the in resulting of lower segment, few Net sales energy These quarter earnings Water, related facility, for decreases during and February extreme Energy's ALLETE in year. $X.XX wind to at income in approximately Minnesota, regulated Clean kilowatt earnings in one income expected to lower business wind property million operating in Energy the agreement. facility's first-quarter included wind a XXXX. an Superior hour under impact XXXX net Verso Power, of prices details ALLETE's the power A per

Energy I'll quarter net equity lower-than-expected share. net facility other remain in the in per conditions full and first contributions now Clean to in of and XXXX earnings of XXXX. two winter Nobles energy businesses, securities The XXXX. quarter higher resources confident Despite in to marketable of of we and impacting ALLETE's which quarter, $X.XX loss Energy during XXXX the to XXXX wind from the to ALLETE BNI earnings as first $X and guidance. turn negative the loss our recorded lower guidance due extreme properties loss our corporate compared $XXX,XXX compared XXXX the to a from weather in reflects achieving impact Our wind net ALLETE $X.X earnings includes a million

noted, the I impacts per quarter for production million approximately year. total now tons. expected million share to taconite we Power's As expect reverse be $X.XX Minnesota And to are of XX the to in approximately timing customers first XX throughout

guidance discussed. regulated positive other be our over outlook. the steel, globally. higher at anticipated Nominations his Primarily event of and tons. per turn million which XXXX. since our ore has iron development, of from and winter $X.XX this both reflected original of growth this above projection pricing our through now Minnesota a views guidance on the operations it guidance $X.XX for driven Clean XXXX to domestically with for of of and Our end recovery from approximately and that industrial on improved share. partial included depth for our to will due a production industrial Bob to summer production and of strength at pandemic production steel expected to significantly anticipate our market ALLETE range be we And are $X.XX which XX I'll from our corporate of We $X.XX businesses taconite primarily original by Bob? Power's the previously year XXXX share, sales, customers in are this lower signals, our based of extreme strong by end the supported remainder anticipate to longer-term external of continue Energy estimate, original per weather the now our the customers the to

Bob Adams

Thanks, Steve, everyone. morning, good and

Minnesota results of achieve outlook extreme and to already our Power. from highest XXXX for range our Clean As we management remain were our earnings mitigate economy At in financial ability levels steadfast by losses an the production highlighted, level, through the this degrees large of the confidence power and comes realized to impacted Energy expense our quarter, guidance original varying weather at and during improving ALLETE for businesses XXXX. some confident ALLETE's at but the the ability

As long ensure strategies I've are achieving happens. this expressed growth a year, and and since to remains we objective execute of the of to ALLETE's focus, advance the X% continuing over that X% term upon beginning to

Power One achieve of rates Minnesota reasonable of to is ensure most is able the initiatives return. to important

to that in levels incurred so forward. the and challenges return that the X% financial It and be are clean our we business equity are business imperative transition, the go COVID Given approximately and the capital attract currently some energy to of increasing as returns expenses debt investments support we decades is the below of authorized at of at X% lowest company's needed and able the level. improved, the levels sustain to the

ongoing efficiency case, that Minnesota will November for business of this end, focus continued our year. preparations in on our have laser Towards addition advance in which to improvements, Power to be our we rate filed

Beyond as will transformation by equitable IRP would businesses fleet include outlined regulated be achieving customers. regulatory recent well clean initiatives, cost to competitive outcomes, and driven strikes our remains IRP of as transmission growth Minnesota filing, system energy ensuring an in infrastructure We sustainable goals, our clean forward Power's our unprecedented energy the and important investments. in generation while predominantly balance supporting investments. distribution as an and energy our of believe advancing our reliable

to transmission the with as renewable continues generation particularly continues opportunities, in be We as MISO the grid are challenged other regulated also to on region the constraints pursuing area expand.

municipal XXX-megawatt line transmission examples in investment the and Also Minnesota and across Company the in agencies formally known transmission record transmission with a are identifying, energy partnership in XXXX, an on and already the CapXXXXX, who Power investor-owned of meet arena, reliable expand increasing developing solutions one needs. develop is our expansion capacity proven in identify our of northern track of implementing the solutions. powerful American maintain and reliability Our March cooperatives, renewed Power Partners, name grid power to announced our planned North northern active motion. delivery evolving Transmission a X, three of as Grid the is strategy involved of group region's energy DC XX transmission collaborative on Minnesota of utilities prime the transmission a country investor-owned region and of utilities this focus to and focused to member

exciting seek beyond business, largest offerings the safe continues expands solar stage and growth and company is returns Clean ALLETE portfolio. storage turbines wind, as a Energy, of second optimize the to include solutions. PTC At its its existing to new and time, it Our of entering same service the wind harbor existing opportunities enhanced

As transfer I offerings, of XX% average and suite very high approaching of the earnings confident optionality to years. position, in This project. we of A asset highly additional will the in advanced X XX-megawatt be own, stated of of expanded a expands investment exciting maintain and last acquisition the presence development quarter, over are customary another service geographic includes with able long-term provides to the recent Energy that Subject to for example company the levels complete scale we annual Red project. build, the base opportunity XX-megawatt next PPA with positioned approvals, Gas and to our our XX% its of up region well Public facility and Barn strategy and regulatory region action own, this in transfer is development transmission of XXXX. to an and added project provides is of begin Service country. construction customer and build, in announcement evident utilize An only plans Corporation Clean yesterday's in the yet acute Whitetail not Madison or relationships turbines, with safe Wisconsin our This either but project and the landowner by Electric. ALLETE harbor also feature growth

and wind planned In repowering, project for Energy XXXX our existing sale as had process power announced advance Wind and project. terms I'm permitting continues This project that entails regulatory that the February. energy projects, and expansion pleased approval on to of an Xcel Chanarambie this expected in to recall with the we Northern of the report Viking update facility.

opportunities accelerate potential original into future summary year-end expansion tech parity, federal for solar strategy, etc., of continues would Caddo construction extension, continues solutions such Slide XX-year Please to at PTCs, related transaction our Biden clean another highlighted, for administration, prospects. completion. Clean way clean On currently to project equity on we a new XXX-megawatt and from for expectations. exceed our Proposed in note, the our to energy projects a policy summary, under PTC provides the new demand XXXX X, As only Pay from the cash Direct to reducing earmarked plan needs. high-level which of new advance the changes storage our In is as ALLETE enhance deployment received Energy. refer for and

capabilities, footprint to strong years us customer expanding proposition positions uniquely a widening over established leverage the with and reputation our trends, Our go. XX geographic as solve helping providing and we value past these needs investors rewarding

capital over already hand to well sheet, now initiatives total approximately growth operating are balance Bethany. of XX% conservative annually. flow cash a at strong debt base back I'll $XXX All a ALLETE's by and it growing million structure of supported

Bethany Owen

a more board, the There sustainability I to of links you we I'd financial development Slide important our highlight before ALLETE's and Thank strengthen, remarkable that and We're look the made answer comprehensive company, given point a our refer and strong on and sustainability continue economy progress energy. and of of governance. practice diversity, CSR This disclosures We our second this you its including as and and or to equity execution several task inclusion, our the your with with best we we're sustainability I'd planet to Bob. as ask not detail questions. regularly it as sustainability of our force all SASB, to we foundation this and challenges with the well aligns at dimensions call a all to company commitment the corporate Steve sustainability for very quarters. more at prosperity. the questions. for and excited our the commitment would report. you in ALLETE's open to continues update X, forward report, encourage value us your for sustainability CSR the we'll of And you right share our all to of I'll of We're about a this TCFD. strategy. rich first of very and strong update, strategy the year. coming accounting record as things execute our reporting ALLETE's future document and link And as interest team the document, in way, We're track it's in like work to in to proud and more and the shared the is partnership forms, right communities strategy. operator proud of review pleased the or requirements We're by climate-related cleaner is ALLETE, the time, the past to there action for sustainable standards with we've its all a to in as are information your sustainability people, our the to line to investment the ALLETE's one important commitment nation's your but as Thank history the accomplished only on continue more field ALLETE. describes doing On

Operator

Our Instructions] Brian line Sidoti. from come Russo of first [Operator the question from will

may You begin.

Brian Russo

update the bringing you local that potential tax press the owner city be in Verso or some just Verso to an new Could or us mill looking any Minnesota paper of breaks. provide county on buyer some the give may

the status Just where of is, that wondering what's that?

Frank Frederickson

This that Verso of that to putting redevelopment for process potential in And that terms is support, to you of we're with the mill we here. the continue of And Brian. continues help you with as packages that now. mentioned, right with the together Frank local from buyer positive agencies and question, state aware current see Frederickson Thank site.

at of time. terms we disclose very, anything positive support. announce So further a in this a don't have public it's as or But mentioned, we that about to movement

Brian Russo

they're and end you that at the tying you full And operating large levels have for the as a this variability end the with case now for year taconite the only when how full now year, just there's Verso. power rate customers customers of file - then Power production, through forward next what of you the into taconite and demand at downside that customer in test be well at that game year, as account do pending for Minnesota those demand, end could

year - the you And case? you it is test sales adjust case? forecasted is curious Just when for the that rate can move through as

Frank Frederickson

seen, a getting We're Frank landscape full since we XX% start domestic little that down a capacity here, still it's of we're about close of those levels, very see again terms a then it's pay up pleased, we're to Steve we to if thinking that the customers. taconite we're how perspective. attention and there's utilization of right of as And also blast a - that pre-COVID at Brian. It's quite today, as XX% furnaces with it you it in from in turn And rate the production to customers, have seeing mix recovery our bit but not of mentioned it that I'll you've case pretty steel maybe the about of now. aware industry. pre-COVID good conditions come as XXXX. we're couple at it's as

there that's changed we're as there. landscape production of seeing and for IODEX, So we prices on iron also ore a today. see supportive levels it high some very And little been is global record

we about maybe We're we're Steve variability this how thinking that pleased in So very turn and of to in it. that how how it's terms there's recognize it some with I'll coming year, is.

Steve Morris

Brian. Hi,

budget, year year year, and this full is markets depend screen. production with domestically. budget. and closely it's the we're - the XXXX for radar pricing globally on our test really and next with going do on what budget. we'll we watch on And throughout So And our And the to working customers our

that evident need for during utilities We when customers to have power have through the of in that large of other our in have deferred by the for likely in basis tried state that shut petition, denied that. down was we've closely. lost or power. no of the ask many in don't accounting signaled It rate that we this with course, But that, some And the the case - had even for that to really revenue mechanism was we watch that. our the large true-up pandemic some commission, we our of to request it's true-up type mechanism that really very type collect which

rate likely we in it's case be we have of tonnage next regardless what to So our use. a request that

Brian Russo

Then solar on there. some if wondering And projects are for? then those there we that IRP, been any or there's dates should proposed. increment of just any look progress the key out near-term I'm

Bethany Owen

Brian, this Bethany. is

we So going would that part, lengthier dockets significant It's obviously, in regulators knew have their lot certainly, process. now. this our a filing. a strategic on filing And on right our pretty be a

we expecting its year So but or it that A this kind moving later are reception of the relatively early positive next filed. we year overall is the to a process. through result, plan way

our actually we're through with about so And close process. feeling stakeholders we're And positive very mentioned, work I very continuing the as it. we engagement as way

So true solar same for as projects is well. the

So we're through way process. working the doing our we're -

Brian Russo

lastly the just on then And guidance.

I to the the end is But And utilities taconite maintained at end improved ACE are Diamond sales. in range correctly, the due You issue. the heard low you at if storm due the rate the midpoint. mine high to Spring's the

at that to ACE looking $X.XX you Just is Springs you are or high clarify. the that the are Diamond end, maintaining your So to low because utility mitigate at just while at is the end? guidance ACE

Al Rudeck

Energy. it portion that and This from at Rudeck of Al ALLETE of intend then ALLETE. Yes, across morning, mitigate a we a to is Good Clean portion Brian. ACE

other that in that happen family ALLETE that market are said, and that we're these business the we're and and Bethany as downs but So going and the to the certainly mitigate management of that, navigate was things, entire a really focused will through expense mix stronger on it helps event weather of be together, and ups extreme us company. in companies portion broader something

changing important said or Steve as is us. maintaining very to guidance that guidance So a

to the work through ALLETE Energy. at So see year way us Clean continue you'll our

Operator

Instructions] Peter [Operator Mizuho. of from the line question Our will come next Bourdon from

may begin. You

Peter Bourdon

deal a the Just announced quick on yesterday. one

terms should you've similar transactions? type the done we the past with return something to expecting be in these similar of expectations, In what

Al Rudeck

with a set we really in we're regulatory Rudeck, developer we and the a But MGE, Good for time Is process Peter. at in similar the would a certain with really did the derisked, morning. And Thanks our spot. say these it's disclose of this Yes, proceeds constructive It's a net transactions customers. is because good expecting project. don't regulatory WEC working and this with expectations. question. great really This And proceeding the yes, a with - we're Al again. with Wisconsin I entered job Commission. very Yes,

expectations say to most I would projects So recent build, transfer generally. our similar

Peter Bourdon

on or strategy traditional And in of more going foresee these wind owning ACE you the of deals farms? maybe it kind then earnings the you've the it, just to of of side back more do enhancing see down be type would or of pipeline had terms announcements actually the

Al Rudeck

us. great Yes, ACE to want continue we the own But to of wind a these would generally We projects. question. about myriad portfolio front that as operate think and of opportunities we in have

thoughts projects. provide tailor to ownership hear But of meet customers don't to positioning know, So our further kind we to Naturally, and Bob, we any when what that? our naturally, to on that steady we're projects need, of want I earnings expectations. long-term ourselves with we'll support see these mix and dividend. customer a the solutions they work

Bob Adams

Thanks Peter. question, the for Yes.

fund of of to own, transfer So we in mind benefits of course in is they to any keep may something cash other the terms the need equity offset cash here provide. build, us generation otherwise these generation projects. to And allows that that that

building have, portfolio, permanent that the pointed preference it But we're cash you well. will contribution per But the mean, the work to earnings flow, our strong - have share ACE a as support Al out, if recurring preference. which I certainly, So does recurring set part the will, company revenues, as a dividend, aside because kinds is that but doing lot do these place finding have PTCs optimizing opportunity as currently Rudeck's deals life with the makes strategically a well. is some we of shelf Al these a well sense have these, that to leadership these of around and as critical of is that's

Peter Bourdon

And lastly, to clarify. just then maybe just

that stated think, So of, correct? this $X. - yesterday the to has previously from Is the announcement impact guidance I $X.XX XXXX or no this - to

Bob Adams

flow. we needs actually be might from standpoint equity we that may that of contributes have. would otherwise cash modest the would It that to offset - incremental have - that the that Again, needs equity

So it would be...

Peter Bourdon

change. no But

Bob Adams

It right. know outlook to would as an we that be That's improvement it today.

Operator

At currently to any to queue. back this further time, turn for Owen remarks. the there are call closing Bethany over like I'd in questions no

Bethany Owen

investment Frank rest this other Steve, virtually with us Enjoy morning to near at being your in Bob, your I for and We venues look day. speaking of of with the interest you Al, and year. future many thank the again the you forward and in ALLETE. for throughout and investor

Operator

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

You may now disconnect.

ALLETE (ALE) 8 May 212021 Q1 Earnings call transcript