ALLETE Reports Third Quarter Earnings of 63 Cents Per Share

  ALLETE Reports Third Quarter Earnings of 63 Cents Per Share

Business Wire

DULUTH, Minn. -- November 1, 2013

ALLETE, Inc. (NYSE:ALE) today reported third quarter 2013 earnings of 63 cents
per share on net income of $25.2 million and revenue of $251 million, compared
to earnings of 78 cents, net income of $29.4 million and revenue of $248.8
million in the third quarter a year ago.

ALLETE’s Regulated Operations segment, which includes Minnesota Power,
Superior Water, Light and Power (SWL&P) and the company’s investment in the
American Transmission Co., recorded net income of $24.6 million versus $29.3
million in the third quarter of 2012. Comparatively cooler summer weather this
year reduced sales to Minnesota Power’s residential, commercial, and municipal
customers. The period-over-period difference in weather resulted in a negative
impact to earnings-per-share of about three cents. Minnesota Power’s taconite
customers were not adversely impacted by the weather and operated near full
capacity during the quarter.

As expected, Minnesota Power also incurred increases in operating and
maintenance expenses. Depreciation, interest and property tax expenses also
increased compared to last year, primarily attributable to recent capital
investments.

The Investments and Other segment, consisting of BNI Coal, ALLETE Properties,
ALLETE Clean Energy and miscellaneous corporate expenditures, recorded income
of $0.6 million, compared to $0.1 million in the third quarter a year ago.
During the third quarter of 2013, gains on sales of securities were partially
offset by higher state income tax expense.

Quarterly earnings per share were diluted by four cents due to the issuance of
common shares needed to fund strategic investments in renewable energy,
environmental upgrades and energy transmission infrastructure.

Through September, ALLETE recorded net income of $71.7 million, a five percent
increase over last year’s $68.2 million. Earnings per share of $1.81 were
diluted by eleven cents due to the increase in shares outstanding. Revenue
through September was $750.4 million compared to $705.2 million during the
same period a year ago.

“While we initially expected lower quarterly earnings compared to last year’s
third quarter, we were further impacted by several individually small items,”
said Alan R. Hodnik, ALLETE Chairman, President and Chief Executive Officer.
“Property tax expense has been higher than expected and we have had a slight
delay in our capital spending. We also had lower municipal sales than
projected, primarily due to the timing of the Essar Steel Minnesota project.
All of these contributed to lower earnings than projected during the third
quarter. Given our year-to date financial results and the fact that the Essar
Steel Minnesota start-up will be later than originally anticipated, we expect
our full-year 2013 earnings to be in the lower half of our previously stated
guidance range of $2.58 to $2.78 per share.”

Hodnik continued, “Looking ahead to 2014, growth from our environmental and
renewable investments will help enable ALLETE to achieve its long-term average
earnings growth objective of five percent annually, using 2010 as the base
year. Beyond 2014 we look forward to organic sales growth increases as Essar
begins operations and from a potential new Polymet facility. Continued
strategic capital investments, including the new Great Northern Transmission
Line, will also support ALLETE’s long-term strategy of providing for
multi-year, multi-faceted growth.”

ALLETE will host a conference call and webcast at 9 a.m. this morning to
discuss details of its quarterly financial performance. Interested parties may
listen live by calling (877) 303-5852, or by accessing the webcast at
www.allete.com. A replay of the call will be available through November 3,
2013 by calling (855) 859-2056, pass code 77050134.

The statements contained in this release and statements that ALLETE may make
orally in connection with this release that are not historical facts, are
forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties and investors are directed to the risks
discussed in documents filed by ALLETE with the Securities and Exchange
Commission.

ALLETE's press releases and other communications may include certain
non-Generally Accepted Accounting Principles (GAAP) financial measures. A
"non-GAAP financial measure" is defined as a numerical measure of a company's
financial performance, financial position or cash flows that excludes (or
includes) amounts that are included in (or excluded from) the most directly
comparable measure calculated and presented in accordance with GAAP in the
company's financial statements.

Non-GAAP financial measures utilized by the Company include presentations of
earnings (loss) per share. ALLETE's management believes that these non-GAAP
financial measures provide useful information to investors by removing the
effect of variances in GAAP reported results of operations that are not
indicative of changes in the fundamental earnings power of the Company's
operations. Management believes that the presentation of the non-GAAP
financial measures is appropriate and enables investors and analysts to more
accurately compare the company's ongoing financial performance over the
periods presented.


ALLETE, Inc.
Consolidated Statement of Income
Millions Except Per Share Amounts – Unaudited
                                                  
                           Quarter Ended               Nine Months Ended
                           September 30,               September 30,
                        2013        2012        2013        2012
Operating Revenue        $ 251.0    $ 248.8    $ 750.4    $ 705.2 
                                                                
Operating Expenses
Fuel and Purchased           80.5          79.5          245.7         228.7
Power
Operating and                102.7         98.7          311.2         294.8
Maintenance
Depreciation              29.4      25.0      86.3      74.4  
Total Operating              212.6         203.2         643.2         597.9
Expenses
                                                                     
Operating Income          38.4      45.6      107.2     107.3 
                                                                     
Other Income (Expense)
Interest Expense             (12.7 )       (12.3 )       (37.8 )       (33.4 )
Equity Earnings in ATC       4.9           4.9           15.1          14.3
Other                     3.3       1.5       7.5       3.4   
Total Other Expense       (4.5  )    (5.9  )    (15.2 )    (15.7 )
                                                                     
Income Before Income         33.9          39.7          92.0          91.6
Taxes
Income Tax Expense        8.7       10.3      20.3      23.4  
Net Income               $ 25.2     $ 29.4     $ 71.7     $ 68.2  
                                                                     
Average Shares of
Common Stock
Basic                        39.8          37.7          39.4          37.3
Diluted                   39.9      37.8      39.5      37.3  
                                                                     
Basic Earnings Per         $ 0.63        $ 0.78        $ 1.82        $ 1.83
Share of Common Stock
Diluted Earnings Per       $ 0.63        $ 0.78        $ 1.81        $ 1.83
Share of Common Stock
                                                                     
Dividends Per Share of   $ 0.475    $ 0.46     $ 1.425    $ 1.38  
Common Stock
                                                                             


Consolidated Balance Sheet
Millions – Unaudited
                                                                  
                Sept. 30,     Dec. 31,                         Sept. 30,     Dec. 31,
             2013        2012                        2013        2012
                                            Liabilities
Assets                                      and
                                            Shareholders’
                                            Equity
Cash and                                    Current
Cash            $ 164.5       $ 80.8        Liabilities        $ 223.5       $ 283.4
Equivalents
Other
Current           204.5         192.4       Long-Term Debt       1,064.2       933.6
Assets
Property,
Plant and         2,456.1       2,347.6     Deferred             474.9         423.8
Equipment -                                 Income Taxes
Net
Regulatory        340.3         340.3       Regulatory           68.7          60.1
Assets                                      Liabilities
                                            Defined
                                            Benefit
Investment        112.7         107.3       Pension &            216.0         228.2
in ATC                                      Other
                                            Postretirement
                                            Benefit Plans
Other                                       Other
Investments       142.9         143.5       Non-Current          129.1         123.3
                                            Liabilities
Other                                       Shareholders’
Non-Current    42.9       41.5      Equity            1,287.5    1,201.0
Assets
                                            Total
Total                                       Liabilities
Assets        $ 3,463.9   $ 3,253.4   and              $ 3,463.9   $ 3,253.4
                                            Shareholders’
                                            Equity
                                                                             

                                                   
                                Quarter Ended           Nine Months Ended
ALLETE, Inc.                    September 30,           September 30,
Income (Loss)                 2013      2012      2013         2012
Millions                                                          
Regulated Operations            $ 24.6      $ 29.3      $ 73.0         $ 68.1
Investments and Other          0.6      0.1      (1.3   )    0.1
Net Income Attributable to    $ 25.2    $ 29.4    $ 71.7      $ 68.2
ALLETE
Diluted Earnings Per Share    $ 0.63    $ 0.78    $ 1.81      $ 1.83
                                                                       
Statistical Data                                            
Corporate
Common Stock
High                            $ 54.14     $ 42.66     $ 54.14        $ 42.66
Low                             $ 45.78     $ 40.33     $ 41.39        $ 38.03
Close                           $ 48.30     $ 41.74     $ 48.30        $ 41.74
Book Value                      $ 31.60     $ 29.80     $ 31.60        $ 29.80
                                                                       
Kilowatt-hours Sold                                         
Millions
Regulated Utility
Retail and Municipals
Residential                       259         276         864            828
Commercial                        379         393         1,091          1,084
Municipals                        242         261         741            759
Industrial                     1,894    1,915    5,508      5,624
Total Retail and Municipal        2,774       2,845       8,204          8,295
Other Power Suppliers          547      478      1,748      1,487
Total Regulated Utility           3,321       3,323       9,952          9,782
Non-regulated Energy           26       25       90         81
Operations
Total Kilowatt-hours Sold      3,347    3,348    10,042     9,863
                                                                       
Regulated Utility Revenue                                   
Millions
Regulated Utility Revenue
Retail and Municipals
Residential                     $ 24.5      $ 26.5      $ 80.8         $ 76.4
Commercial                        31.3        30.6        90.1           82.5
Municipals                        17.7        18.5        50.0           49.7
Industrial                     101.0    102.1    298.6      293.4
Total Retail and Municipals       174.5       177.7       519.5          502.0
Other Power Suppliers             21.1        18.1        65.8           54.5
Other                          30.8     30.6     98.3       85.5
Total Regulated Utility       $ 226.4   $ 226.4   $ 683.6     $ 642.0
Revenue
                                                                       

Contact:

ALLETE, Inc.
Investor Contact:
Tim Thorp, 218-723-3953
tthorp@allete.com
 
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