Acquisition raises ALLETE’s earnings; guidance unchanged | The Daily Briefing

ALLETE, Inc. (NYSE: ALE) on Wednesday reported second quarter 2022 earnings of 67 cents per share on net income of $37.6 million. Last year’s results were 53 cents per share on net income of $27.9 million.

The 2022 second quarter results were impacted by the acquisition of New Energy Equity LLC. Included were transaction fees of $1.6 million after-tax, or 3 cents per share, and purchase price accounting impacts of $4 million after-tax, or 7 cents per share.

“We are pleased with these results and with our progress on key initiatives already in 2022,” ALLETE President and CEO Bethany Owen said in the report. “New Energy is off to a strong start, our regulated businesses are firming up plans for further clean energy transformation, including robust regulatory engagement with Minnesota Power and Superior Water, Light and Power rate cases underway, and ALLETE Clean Energy continues to advance its

fleet optimization and renewable development projects. Minnesota Power also announced last week a significant, joint transmission project with Great River Energy as part of MISO’s long-range transmission plan, connecting northern Minnesota to central Minnesota to support continued reliability in the Upper Midwest. We look forward to sharing more on all of these initiatives in the coming quarters.”

ALLETE’s Regulated Operations segment, which includes Minnesota Power, Superior Water, Light and Power and the company’s investment in the American Transmission Co., recorded net income of $29.6 million, compared with $21.5 million in the second quarter of 2021. Second quarter 2022 earnings reflect higher income at Minnesota Power primarily due to the implementation of interim rates on Jan. 1. This increase was partially offset by lower kWh sales to retail customers and higher costs under a 250 MW power purchase agreement.

ALLETE Clean Energy recorded second quarter 2022 net income of $5.8 million compared with $5.1 million in 2021. Net income in 2022 reflected higher wind resources compared to 2021, partially offset by losses under the Caddo wind energy facility’s power sales agreements resulting from extreme market volatility and transmission congestion in the Southwest Power Pool.

Corporate and Other businesses, which includes New Energy, BNI Energy, the company’s investment in the Nobles 2 wind energy facility, and ALLETE Properties, recorded net income of $2.2 million in 2022 compared with net income of $1.3 million in 2021. Results in 2022 reflect higher earnings from our investment in Nobles 2 due to higher wind resources, higher land sales at ALLETE Properties, operating results from New Energy and lower income taxes. These increases were partially offset by purchase price accounting adjustments and transaction costs related to the acquisition of New Energy, and higher other expenses compared with 2021.

Earnings per share dilution in 2022 was approximately 5 cents due to additional shares of common stock outstanding as of June 30.

“We are affirming our 2022 earnings guidance of $3.60 – $3.90 per share. Along with taconite demand consistent with our expectations, we are also pleased with New Energy’s financial performance during the quarter. Excluding transaction costs and purchase price accounting from the second quarter results, the acquisition of New Energy has shown strong performance in line with expectations and we expect meaningful accretion in 2023,” said ALLETE Senior Vice President and Chief Financial Officer Steven Morris.

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