ALE - Earnings call transcript Q2 2022

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Operator

Good day, and welcome to the ALLETE Second Quarter 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 of undue put 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, quarter to XXXX announcing financial ALLETE's welcome Again, second conference results. call call Instructions] as reminder, being [Operator this is Again, recorded. a like the call now Bethany to Chair, President to would CEO. Owen, I And turn over and

may You begin.

Bethany Owen

with recent of and $X.XX pleased price the earnings our fees details be providing $X.XX progress from XXXX. Energy in of share key by found and acquisition slides for Thank Minnesota Officer, Frederickson, compared each per were slide joining This Senior as Steve more to related me very Equity. today's financial on morning, Vice you, morning's website today. share ALLETE's both already financial section. moment. results $X.XX Corresponding a the morning, New Frank and second Power's can our good of share ALLETE Investors for the Steve Vice through XXXX XXXX. in We're this everyone, at number out and follow are Financial will per Morris; in call The along, the effects transaction quarter call reported us share, presentation. to To accounting President thanks President of be quarter on Chief initiatives in per $X.XX and we go of Experience. per With Customer we'll impacted allete.com for purchase quarter

to Equity start. is Energy great a New off

closed originations, in total XX developers, financial The experience X,XXX of of on and leading great in ALLETE, projects pipeline team team they and along was and They proven a of line resiliency for distributed execution a Energy are strong New well and and of distributed on with our strong the success New the one track megawatts have future maintained enhanced and their year. Energy projects As track to projects. community solid with This solar and our future only expertise expectations, with belief strong projects with pipeline confidence nation's talented projections and megawatts. our the quarter the significant of in original record brings business. pipeline strength New of above of this Energy prospective they've the solar

firm regulatory are in up businesses transformation, the Minnesota underway. investment Light including regulated Superior Power rate energy Water, Our cases also well and plans execution as they Power for mode clean further significant in engagement with and

Utilities Northern Commission projects next We of project Power. Great permit shared included and Minnesota is notice approved Just and transmission the XX of to Public their of and filed really be certificate the with project last constructed X. Central combined will $XXX This intent XXX-mile Tranche and in week, significant in Please first exciting we plan set owned for Power refer to and MISO the by is Minnesota transmission long-range X Slide news a joint and a and follow within need on connecting transformative transmission line River months. Energy. Minnesota. Minnesota filing million Monday a a route

motion. strategy and HVDC to transmission modernize our addition in significant line of existing supporting continue Transmission as We the plans strengthening and investment important clean reliability all Midwest energy expand of XXX-megawatt already Power's transmission transmission Minnesota to This our we in grid in expect Company, the have investment investment ALLETE's American the Upper XXXX, is in to our service and examples the line in transition. the resilience in and transmission

for direct-reduced of approximately hot-briquetted invest XX, customers, iron feedstock processes Power's its satisfy week, Keewatin U.S. this enable just June These furnaces. fall. taconite reduced arc will or will DR-grade pellets facility electric Steel last at growing U.S. announced on Then $XXX demand or pellets. steelmaking Steel announced to break Minnesota plans million and the upgrade ground Regarding iron for production this on be to that to direct it

ALLETE's all bill are follow a the Like addition. potentially bodes latest in we'll Northern our tax the developments significant clean maintains upgrade, energy for continue tax energy benefits minerals projects the batteries being with incentives of well of credits future be power batteries year's legislation. Minnesota advanced stand-alone for new a and pellets and provides everyone, to in bill and Reduction encouraged Keetac customers clean minerals able House Act projects. this our businesses for continue to current produce also optionality by bill credits and growth. could value, businesses on the projects. closely the exciting major businesses the believe lead way our credits tax U.S. and Following to DR-grade core Inflation Power, Minnesota. solar, way our will We this included version of for unique customer and as value is to Steel playing The important pass facility congratulate future. for blast content tax both process. on supporting last ALLETE's it each clean investment credit, role earnings additional furnace-grade storage the is for X and very The is through optionality in bill, solar, unlock we investment a Transferability works of domestic provides ALLETE's and as described we of while continue businesses legislative production critical very producing the largely of credits develop manufacturing new an to wind, investment dividend Sustainability and proposed strategy Keetac as our the long-term energy family large foundation sustainable maintaining pellets. in We're industrial which in Slide its

to results it our on and details Now our quarter guidance. further Steve I'll earnings year turn for Steve? second full over financial

Steve Morris

encourage offset would XXXX to for in earnings at tax of $XX.X refer higher to our I income ALLETE costs compared a and comparison reported and million on Power January net X reflect of it interim A income net variances purchase significant quarter remind $XX.X second Slides increase morning, Earnings this $XX.X or morning, XX-Q power primarily to Operations XXXX XXXX. you like few higher included This on you million. that share purchase million $X.X million income and to our good for ALLETE's $X Net impacts XXX-megawatt segments. refer filed and due to per details. and million Today, $X.XX to per segment per everyone. agreement items transaction under Bethany, of our for other industrial second Earnings considerations. New was from share we recorded Thanks, lower partially rates I acquisition X $X.XX Minnesota Regulated Energy. accounting quarter share in XXXX. of of per business costs customers. to kilowatt-hour Please tax after income income the on net related share price of of $XX.X XXXX were $X.XX $X.XX net of and quarter million. to after or the by X, sales implementation this details

started year with customers full the taconite Our production.

to through Northshore Mining However, expected idling facility XXXX. now of that May, April of an its Cleveland-Cliffs continue commenced is in announced

production as sales tons. approximately lower to forecast than we variability a is million be expected such XX our Minnesota case, into As result, of estimates taconite factored slightly rate the Power

taconite sales for compared agreement our resources volatility in of Energy million XXXX, customers second ALLETE Caddo wind Our income $X.X higher to in losses Southwest rest $X.X quarter the reflects XXXX transmission Power full the to from in resulting Pool. remaining income market nominated the Clean under Net offset facility's by energy XXXX. and power net congestion partially the have wind production compared of recorded year. XXXX levels million

of outstanding results including expected the The end to the fees purchase in impacts, transaction of second Energy net of Corporate are Properties BNI wind New $X.X tax accounting $X.X included in of affected $X.X million second net by reflect completed income New facility Energy, the June businesses, reflecting Energy, ALLETE which higher XXXX Nobles Results includes $X.X Other Our investment wind net $X.XX stock the purchase year. from in These this of recorded quarter wind million largely million related compared after earnings impacts to resources sales of $X from be a due also XX. in after dilution higher million our ALLETE partial quarter in and approximately price income price as to accounting energy XXXX. tax. and the New X offset land million X which shares share loss for common after the negatively Earnings tax, higher of and by were facility, was investment Energy energy increases at per by to Net additional income Properties. our quarter Nobles acquisition.

our XXXX Next, turn I'll to guidance. earnings

our accounting. Slide immaterial X full XXXX year costs under to be reaffirming transaction $X.XX affected to year. for expect overall, purchase of Keep Energy's view earnings of for New Energy. partial And by New refer ALLETE's a $X.XX year are that in share. mind ownership, results financial XXXX guidance earnings will Please We per we and price this

this year, in we to anticipate items, XXXX. in the these New and accretion meaningful is of full be ownership Excluding Energy expected first accretive year

project facility. The facilities, to with purchase are Energy's Northern the completed the The for [NORD]. to Aetna energy project million Turning sale Clean second Xcel a agreements sale Clean to The sales In Rock and which XXXX. Red XX-megawatt total. Wind to and be on begun construction to Northern expansion repowering the and a expected new in expected wind continues strategic advance This sell purchase energy Energy later Energy, to agreements facility, referred as ALLETE ALLETE of ALLETE quarter and build-transfer in busy completed is executing and this closing. Energy initiatives. Clean on project track into is Clean Aetna XX-megawatt project Wind be approval. to previously XXXX separate of and Project in a amended wind Barn wind ALLETE the a year. July, $XXX Viking Construction has approximately also MPUC is X for entered be project which XXXX Energy of is energy Chanarambie XX-megawatt is subject and Rock will commenced entails its and subsidiary

available consolidated supported for position of as of that June Finally, strong $XXX balance back XXXX. it lines cash and ratio of to million a remarks. million, now includes is Bethany in financial cash XX% a I'll of and her credit closing equivalents XX, ALLETE's turn debt-to-capital Bethany? $XX sheet by

Bethany Owen

Thank you Steve. for update, that

and we're to As We're sharing to say pleased XXXX. the the much more to executing strategy quarters. been a mentioned, do. year have I forward with of least, looking through half It's coming ALLETE's in the yet first progress we busy our start to the

the comments. Wisconsin XXXX. on increase additional few case ratio. equity respective the for with Minnesota Service states. Public requested Commission and and Superior open On line the Power XX.X% Light Both rate seeking their in Power retail of case million its annualized refiled in X, the of like Water, I'd X.X% rate would Superior customers, we XX% average to for a additional are questions, and generate of equity rate increase an $X.X an On basis, revenue midst Before of Light Power June your overall and beginning final make January a Water, return of approximately an in proceedings

to All the maintain quality for reliability support services of to customers. continue and resilience, plans of infrastructure high this Superior's and will upgrade

filed, MPUC Minnesota's the Power's reliability leadership growth ability the our already in rates supports existing quality the supports year Minnesota important last that solar customers advances. power out extreme transmission added, of and start year, and Power's IRP, within Power Energy Clean transition renewable in regulatory become power stage events as through ALLETE and of pleased but the detailed X, economy climate, and frequent cases, is safe, at plan service pleased to customers. we continue transition the reflects in energy and for This more extensive resource our side, off plays this we Minnesota clean Charles to from current addition that reliable of beginning more case and the financial electrification fall. of and the couldn't a progress this optimization regional hearings integrated to and positioning effect are the our our strategy with as Minnesota Minnesota also rate We're him energy retired, to Charles to Directors. with health Minnesota the the industry clean anticipated confident the XX while integrated to weather than the to are more are proceeding call significant communities. plan on resource projects case processes Energy's of affordable experience, Energy of rate build-transfer Power's years constructive future Power with On are Matthews MISO's welcomed One the XXXX, of projects to and energy Forward plan long-range resiliency resilient, brings welcome commitment Board. ALLETE Board to our Power's plants delivering July much and we critical grid of Minnesota in more with ALLETE and expertise, capabilities of our energy and setting We're on come New out. its important the Two results execution very portfolio. the to be believe

throughout as for future. in updated leading way you to investment to links sustainable and we recently sustainability clean sustainability the your to the delivering, interest We this to the continue putting transparency sustainability please for others are Slide XXXX. you for the continues refer operator including and Thank to line investors ALLETE As information, look more open action, year forward which I'll and commitments questions. our your corporate a time, into ALLETE. sustainability your sharing several progress to with X, ask report expect important At contains more and energy

Operator

question first comes Instructions] [Operator Bank Our America. of of Julien from Dumoulin-Smith

Dariusz Lozny

This is Julian. Darius on for

the comments a as Act. on on remarks particularly around little address as What your or potential during maybe realize the opening legislation? about maybe the it's kind applicable I about legislation, preliminary, provisions look you it. see you've touched of IRA through specific beneficial but you the You Can bit the made you any you talk impact metric? done credit work potential pending

Steve Morris

We could be We're positive it it's impact. evaluating Steve think Darius, Yes, Morris still here. overall our a for actually us. metric thing credit

Of which course, the be impacted we're many companies either minimum are. by tax not going to

may us. a positive, pieces impact evaluating parts also on it's and that So still the but how

Dariusz Lozny

you the that. around inclusive I it. One disclosures XX Looks additional the net Certainly, guys on disclosed Got you can loss of if you some gave can, I and have more, some Energy. closing appreciate like megawatts on some New updates that of think items. year of little the rate -- couple that 'XX talk you're updates bit guys at looking full run your tracks Can in XX% you indicated about EBITDA, onetime expectations? against a a the how I growth. prior have

are tracking you're those versus how wondering experiences targets? Just early

Bethany Owen

Yes. question. Thanks Yes. for the

but expectations Energy track year. definitely I the As for the also remainder mentioned, both for is projections on of New our with the quarter,

So they're a great doing job.

Steve Morris

the Yes. too extrapolate Keep don't it partial mind, is a to in so quarter rest quarter, this read to of much in the year. trying

Dariusz Lozny

Okay. Certainly. for If of side things. could I more clarifying. just ask one utility Thank the you on

sales year against mentioned if moving industrials how that opening the caused compares you QX full as were lower guidance just your were you results? on year within -- curious you reaffirmed there full but that was incorporating the I year be on comment forecast? any remarks, that any there if moving realized a I your parts in some in guidance, basis. there that full year-on-year you're As your to what's think embedded parts Can to

Frank Frederickson

take It's production as forecasted, as Thanks, Frank that I'll that's -- filed. also into million case forecast the out that. Steve XX rate tons Darius. Frederickson mentioned, company's factored taconite And year here. the this we about for year [test] of of we and

slightly production lower generally, year than our But of with the in the XX that say, So estimates million tons. about have forecasting assumptions. changes forward just resulted and in have line being throughout our happened our I'd

Steve Morris

we rate And too. filed in case, our also

Operator

of come [Operator Sidoti. from question Brian will Instructions] And our Russo next

Brian Russo

especially alter I'm the curious MISO just of recently for does this a that highlights and see of or how DC the you strategy, it transmission, And expansion $XXX in enhance Tranche line value you value the expansion miles. of million X all line transmission the by XXX have? discussed, do lot XX the The projects or change you certainly strategy that? at

Bethany Owen

of Upper just the the need and Midwest is I DC of and alter. above planned say doesn't is the Upper Midwestern enhancing would line DC the to the expansion all It line the and critical of our a this of Brian, Bethany. only resiliency reliability grid. enhances part the grid. the is going It

-- it's in to. in it's addition So to, addition not

Brian Russo

million is this And Keetac customers does production, the use going that XX year? and investment or then be to until the its Okay. in just on power with tons that clarify, or in off-line new completed investment later large include the down through to of facility, of power is idled ratcheted that

Frank Frederickson

appreciate Brian, that I question. Frank here. Frederickson

Bethany mentioned, that be this make make make U.S. furnaces. ground their as but pellets, And pellet they'll Steel's the out investment only advanced to that so project capable what enhance as furnace blast said in be on today, DR-grade of as Keetac announcement they're we're they're to So of do products also not they're the going can at excited, where feed that about making they'll And break fall. they the they to an facility time electric operating. to going arc that same able

to some going facility they components So they their on the be the DR operation that in of so any make it's can able product. to processing impact add not that as grade advanced necessary of

ground at put in they've 'XX. think project, and continuing 'XX that breaking investor deck they're through work and looking out I their this

Brian Russo

it. Okay. Got

triangulate how obviously of nominations latest the the less so do that were all with large whatever by And than power we XXX%? customers

Frank Frederickson

Thanks for the Yes. follow-up.

what August at remaining The So April will the in nominations rest indicate indicate the Northshore we've other with XXXX. the of shared that through extending outage throughout got facility, read XXXX. than facilities full production Cleveland-Cliffs' taconite X that we their nominations be

budget slightly just slightly just lower slightly our what it for production relatively you in but we budgeted in than this lower. a say, sales taconite than floats our at the together, filed also And when lower it's just So rate it's our I'll in and case. all million-ton we XX had year, close, level that add guidance estimated total just

Brian Russo

some this of and some Understood. production has when included if I'm in just joint ever development in new is I that project project generation years. venture, news And But then you and think wondering PolyMet think But for to many was customer do a XXXX. proceeds? capacity -- just don't and I lastly, there assuming been enough I size know of initial in serve IRP. out have they're this that the

Frank Frederickson

Yes.

the thanks question. for So

and But so projects, Teck X mentioned, announcement on to and together end. the Copper it business join and managed, PolyMet able Copper they'll be that one So as to is Nickel, independent the they kind joining Teck of of operated was exciting an now pursuing pursuing that Resources projects going kind as -- Mining of the one by NewRange one entity. the was be are PolyMet are forces

really getting are system robust develop up to we and the been question, area. a bringing in of necessary root we over energy fully this which for So nickel. mining resource transition, to have transmission in United continue a significant as in It's for resources, they capable century, and are We've the and these America prepared minerals a nickel one green States. supplying both of resources only and in forward the of copper your the

they So it's And to to the have and your to we capability them fruition. an answer as announcement. yes, question, important customer these projects bring serve

Operator

remarks. back [Operator And in now closing no for to I Owen turn I'm further like the the conference to Instructions] queue. seeing questions Bethany would

Bethany Owen

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

Operator

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

disconnect, a may have pleasant day. You now and

ALLETE (ALE) 7 Aug 222022 Q2 Earnings call transcript