ALLETE Reports Mixed Q3 Results, Decline in Net Income and Cash Flow

ALLETE, Inc. reported its financial results for the third quarter and nine months ended September 30, 2024, showing mixed performance compared to the previous fiscal period. For the quarter, operating revenue increased to $407.2 million from $378.8 million in Q3 2023. However, for the nine months, operating revenue decreased to $1,165.0 million from $1,477.1 million in the same period last year.

Operating expenses for Q3 2024 rose to $361.9 million, up from $342.8 million in Q3 2023, leading to an operating income of $45.3 million, compared to $36.0 million a year earlier. Despite this increase in operating income, net income for Q3 2024 fell significantly to $32.7 million from $69.6 million in Q3 2023. Net income attributable to ALLETE also decreased to $45.0 million from $85.9 million year-over-year, resulting in basic earnings per share dropping to $0.78 from $1.50.

For the nine-month period, net income attributable to ALLETE was $128.7 million, down from $195.6 million in 2023. The decline was attributed to transaction expenses related to a merger agreement and a lack of significant gains from arbitration that had positively impacted the previous year’s results. Other income for Q3 2024 plummeted to $5.5 million from $68.7 million in Q3 2023, primarily due to the absence of a $58.4 million gain recognized in the prior year from an arbitration ruling.

ALLETE's cash provided by operating activities also decreased to $367.3 million for the nine months ended September 30, 2024, compared to $520.0 million in the same period of 2023. The company issued $150 million in senior unsecured notes in September 2024, with proceeds used for refinancing debt and general corporate purposes.

Strategically, ALLETE is pursuing a merger agreement with Alloy Merger Sub, which was approved by shareholders in August 2024. The merger is expected to convert each share of ALLETE common stock into $67.00 in cash, totaling an equity value of approximately $3.9 billion. The company has incurred $19.5 million in transaction costs related to the merger and anticipates additional expenses.

In terms of regulatory developments, Minnesota Power filed for a retail rate increase, which was approved on an interim basis, and is working on several renewable energy projects to comply with state mandates for carbon-free energy by 2040. The company continues to focus on enhancing its capital structure and managing its debt levels, with a debt-to-capital ratio of approximately 35% as of September 30, 2024.