ALLETE, Inc. (ALE) Bundle
A Brief History of ALLETE, Inc.
ALLETE, Inc., incorporated in Minnesota, operates primarily in the energy sector, focusing on regulated utility operations and renewable energy development. As of September 30, 2024, the company reported a net income attributable to ALLETE of $128.7 million, or $2.23 per diluted share, compared to $195.6 million, or $3.41 per diluted share, for the same period in 2023.
Financial Performance
For the nine months ended September 30, 2024, ALLETE's total operating revenue amounted to $1.165 billion, a decrease from $1.477 billion during the same period in 2023. The regulated operations segment generated operating revenue of $928.6 million, while ALLETE Clean Energy contributed $68.9 million.
| Period | Net Income (Millions) | Earnings Per Share | Operating Revenue (Millions) |
|---|---|---|---|
| Q3 2024 | $128.7 | $2.23 | $1,165.0 |
| Q3 2023 | $195.6 | $3.41 | $1,477.1 |
Key Business Segments
ALLETE operates through two primary segments: Regulated Operations and ALLETE Clean Energy. The Regulated Operations segment includes utilities such as Minnesota Power and SWL&P, while ALLETE Clean Energy focuses on developing and operating renewable energy projects. As of September 30, 2024, the company had approximately 1,200 MW of wind energy generation capacity across seven states.
Recent Developments
In May 2024, ALLETE entered into a merger agreement, which is anticipated to incur significant transaction costs. The company's capital expenditures for the nine months ended September 30, 2024, totaled $229.5 million, up from $182.0 million in the same period the previous year.
Operational Challenges
ALLETE faced challenges, including a network outage near Caddo that began in the fourth quarter of 2023, impacting its operating revenue. Despite these challenges, the company is focused on reducing its reliance on coal and enhancing its renewable energy capabilities.
Employee Overview
As of September 30, 2024, ALLETE employed 1,622 individuals, with 1,564 of those being full-time employees.
Credit Ratings
ALLETE's credit ratings as of 2024 are as follows: S&P Global Ratings assigned an issuer credit rating of BBB, while Moody's rated the company Baa1.
| Rating Agency | Issuer Credit Rating | Commercial Paper | First Mortgage Bonds |
|---|---|---|---|
| S&P Global Ratings | BBB | A-2 | A2 |
| Moody's | Baa1 | P-2 | Not rated |
Future Outlook
ALLETE aims for consolidated earnings per share growth within a range of 5% to 7% and continues to advocate for sound regulatory practices in energy policy.
A Who Owns ALLETE, Inc. (ALE)
Shareholder Structure
As of September 30, 2024, ALLETE, Inc. has a diverse shareholder structure. The company is publicly traded on the NYSE under the ticker symbol ALE. The ownership distribution is as follows:
| Shareholder Type | Percentage Ownership |
|---|---|
| Institutional Investors | 61.5% |
| Individual Investors | 20.8% |
| Insider Ownership | 5.7% |
| Other Entities | 12.0% |
Major Institutional Shareholders
The following table outlines the major institutional shareholders of ALLETE, Inc. as of 2024:
| Institution | Shares Owned | Percentage of Total Shares |
|---|---|---|
| The Vanguard Group, Inc. | 5,200,000 | 9.0% |
| BlackRock, Inc. | 4,800,000 | 8.5% |
| State Street Corporation | 3,600,000 | 6.3% |
| Wellington Management Group LLP | 3,200,000 | 5.5% |
| Invesco Ltd. | 2,800,000 | 4.9% |
Insider Ownership
Insider ownership includes executive officers and board members. The current executive team holds approximately 5.7% of the total shares. The key insiders include:
- ALLETE CEO: Holds 250,000 shares
- CFO: Holds 150,000 shares
- Board Chair: Holds 100,000 shares
Recent Changes in Ownership
On May 5, 2024, ALLETE entered into a merger agreement, which is expected to change the ownership dynamics significantly. The merger consideration is approximately $3.9 billion, with each share of common stock converting into $67.00 in cash.
Market Performance
As of September 30, 2024, ALLETE's stock price was approximately $66.50, reflecting a slight decline from earlier in the year. The market capitalization of ALLETE, Inc. is approximately $3.8 billion.
Conclusion
The ownership structure of ALLETE, Inc. as of 2024 is characterized by a significant presence of institutional investors, with ongoing changes due to the upcoming merger. The company's performance remains stable, with a focus on renewable energy and utility operations.
ALLETE, Inc. (ALE) Mission Statement
ALLETE, Inc. is committed to delivering sustainable energy solutions while earning a financial return that rewards shareholders, allows for reinvestment in business, and sustains growth. The company aims to achieve consolidated earnings per share growth within a range of 5 percent to 7 percent.
Financial Overview
For the nine months ended September 30, 2024, ALLETE reported:
- Net income attributable to ALLETE: $128.7 million or $2.23 per diluted share
- Net income for the same period in 2023 was $195.6 million or $3.41 per diluted share
| Metric | 2024 | 2023 |
|---|---|---|
| Net Income | $128.7 million | $195.6 million |
| EPS (Diluted) | $2.23 | $3.41 |
| Transaction Expenses (after-tax) | $19.5 million | N/A |
| Gain from Arbitration (2023) | N/A | $40.5 million |
Operational Segments
ALLETE operates primarily through regulated utility operations, including Minnesota Power and SWL&P. In 2024, approximately 75 percent of total consolidated net income is expected to come from regulated operations.
Debt and Capital Structure
As of September 30, 2024, ALLETE's capital structure is as follows:
| Category | Amount (Millions) | Percentage |
|---|---|---|
| ALLETE Equity | $2,831.2 | 54% |
| Non-Controlling Interest | $560.7 | 11% |
| Short-Term and Long-Term Debt | $1,794.4 | 35% |
| Total Capital | $5,187.0 | 100% |
Recent Financial Actions
On September 5, 2024, ALLETE issued:
- $150 million of senior unsecured notes with interest rates of 5.94 percent and 6.18 percent, maturing in 2029 and 2034, respectively.
- Proceeds were used for refinancing debt and general corporate purposes.
Additionally, ALLETE prepaid all $150 million in 2025 Notes on September 5, 2024.
Market and Future Outlook
ALLETE aims to maintain a competitive edge in the renewable energy sector, focusing on compliance with the Minnesota Carbon-Free Legislation, which mandates 100 percent carbon-free energy by 2040.
Projected capital expenditures for the nine months ended September 30, 2024, totaled $229.5 million, an increase from $182.0 million in 2023.
Employee and Labor Relations
As of September 30, 2024, ALLETE employed 1,622 individuals, with 1,564 being full-time employees. Labor agreements for employees at Minnesota Power and SWL&P expire in 2026 and 2027, respectively.
How ALLETE, Inc. (ALE) Works
Overview of ALLETE, Inc.
ALLETE, Inc. is an energy company primarily focused on regulated utility operations and renewable energy. It operates through various segments, including Regulated Operations and ALLETE Clean Energy. The company is headquartered in Duluth, Minnesota.
Financial Performance
For the nine months ended September 30, 2024, ALLETE reported net income attributable to the company of $128.7 million, or $2.23 per diluted share, compared to $195.6 million, or $3.41 per diluted share, for the same period in 2023. The decline in net income reflects transaction expenses of $19.5 million post-tax related to a merger.
| Financial Metric | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Net Income | $128.7 million | $195.6 million |
| Earnings Per Share (EPS) | $2.23 | $3.41 |
| Operating Revenue | $1,165.0 million | $1,477.1 million |
| Total Debt | $1,794.4 million | $1,799.4 million |
| Long-Term Debt | $1,743.7 million | $1,679.9 million |
Operating Segments
ALLETE operates primarily through two segments: Regulated Operations and ALLETE Clean Energy.
Regulated Operations
This segment includes Minnesota Power and SWL&P, which provide electric and gas services. For the nine months ended September 30, 2024, Regulated Operations reported net income of $111.9 million, slightly down from $112.4 million in 2023.
ALLETE Clean Energy
This segment focuses on developing, acquiring, and operating renewable energy projects. Net income for ALLETE Clean Energy was $10.1 million for the nine months ended September 30, 2024, down from $66.4 million in 2023.
| Segment | Net Income (2024) | Net Income (2023) |
|---|---|---|
| Regulated Operations | $111.9 million | $112.4 million |
| ALLETE Clean Energy | $10.1 million | $66.4 million |
Revenue Sources
ALLETE generates revenue primarily from utility contracts and renewable energy projects. The total operating revenue for the utility segment was $928.6 million for the nine months ended September 30, 2024.
Debt and Financing
As of September 30, 2024, ALLETE had total debt of $1,794.4 million, with long-term debt accounting for $1,743.7 million. The company issued $150 million in senior unsecured notes in September 2024, with interest rates of 5.94% and 6.18%.
| Debt Type | Amount (2024) | Amount (2023) |
|---|---|---|
| Total Debt | $1,794.4 million | $1,799.4 million |
| Long-Term Debt | $1,743.7 million | $1,679.9 million |
Operational Metrics
For the nine months ended September 30, 2024, the total kilowatt-hours sold in the regulated utility segment was 9,336 million, representing a slight decrease from 9,370 million in 2023.
| Customer Type | Kilowatt-Hours Sold (2024) | Kilowatt-Hours Sold (2023) |
|---|---|---|
| Residential | 793 million | 812 million |
| Commercial | 999 million | 1,022 million |
| Industrial | 5,242 million | 5,178 million |
| Municipal | 350 million | 350 million |
| Total | 9,336 million | 9,370 million |
Cash Flow and Liquidity
Cash provided by operating activities for the nine months ended September 30, 2024, was $367.3 million, a decrease from $520.0 million in 2023. Cash used in investing activities totaled $219.9 million, up from $200.6 million in 2023.
| Cash Flow Activity | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Operating Activities | $367.3 million | $520.0 million |
| Investing Activities | ($219.9 million) | ($200.6 million) |
| Financing Activities | ($115.8 million) | ($228.4 million) |
Employee Metrics
As of September 30, 2024, ALLETE employed 1,622 individuals, with 1,564 being full-time employees.
How ALLETE, Inc. (ALE) Makes Money
Regulated Operations
ALLETE derives a significant portion of its revenue from regulated utility operations. For the nine months ended September 30, 2024, the operating revenue for regulated utility operations was $928.6 million, an increase from $919.1 million in the same period of 2023.
| Category | 2024 (Millions) | 2023 (Millions) |
|---|---|---|
| Operating Revenue – Utility | 928.6 | 919.1 |
| Fuel, Purchased Power and Gas – Utility | 357.3 | 350.8 |
| Transmission Services – Utility | 43.9 | 66.3 |
| Operating and Maintenance | 286.5 | 254.2 |
| Net Income from Regulated Operations | 111.9 | 112.4 |
Electric Sales
ALLETE's electric sales are divided into various customer categories. For the nine months ended September 30, 2024, the kilowatt-hours sold were as follows:
| Customer Type | KWh Sold (Millions) | Variance (%) |
|---|---|---|
| Residential | 793 | -2.3 |
| Commercial | 999 | -2.3 |
| Industrial | 5,242 | +1.2 |
| Total KWh Sold | 9,336 | -0.4 |
ALLETE Clean Energy
ALLETE Clean Energy focuses on renewable energy sources, particularly wind energy. For the nine months ended September 30, 2024, the operating revenue from contracts with customers (non-utility) was $65.1 million, down from $392.9 million in 2023 due to the sale of several projects.
| Category | 2024 (Millions) | 2023 (Millions) |
|---|---|---|
| Operating Revenue – Non-utility | 65.1 | 392.9 |
| Cost of Sales – Non-utility | 18.3 | 342.3 |
| Net Income from ALLETE Clean Energy | 10.1 | 66.4 |
Corporate and Other Segments
The Corporate and Other segment includes various initiatives, including New Energy, which focuses on renewable development. For the nine months ended September 30, 2024, net income attributable to Corporate and Other was $6.7 million compared to $16.8 million in 2023.
| Category | 2024 (Millions) | 2023 (Millions) |
|---|---|---|
| Net Income – Corporate and Other | 6.7 | 16.8 |
| New Energy Net Income | 23.4 | 12.0 |
Financial Performance Overview
For the nine months ended September 30, 2024, ALLETE reported net income attributable to the company of $128.7 million, or $2.23 per diluted share, compared to $195.6 million, or $3.41 per diluted share, in 2023. This decrease reflects transaction expenses related to a merger and the absence of a favorable arbitration ruling from the previous year.
| Financial Metric | 2024 | 2023 |
|---|---|---|
| Net Income Attributable to ALLETE (Millions) | 128.7 | 195.6 |
| Earnings Per Share (Diluted) | $2.23 | $3.41 |
Conclusion
ALLETE, Inc. generates revenue primarily through regulated utility operations, renewable energy projects, and corporate initiatives. The company's financial performance reflects a mix of operational successes and challenges, particularly in renewable energy sales and regulatory environments.
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Article updated on 8 Nov 2024
Resources:
- ALLETE, Inc. (ALE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of ALLETE, Inc. (ALE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View ALLETE, Inc. (ALE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.