EX-99 6 ale9-30x2018exx99.htm EXHIBIT 99

|  | Exhibit 99
For Release: | November 1, 2018
Investor Contact: | Vince Meyer
| 218-723-3952
| vmeyer@allete.com
NEWS |  |

ALLETE, Inc. reports third quarter 2018 earnings
DULUTH, Minn. - ALLETE, Inc. (NYSE: ALE) today reported third quarter 2018 earnings of 59 cents per share on net income of $30.7 million and operating revenue of $348.0 million. Last year’s results were 88 cents per share on net income of $44.9 million and operating revenue of $362.5 million. Results for the third quarter of 2017 reflect a $7.9 million after-tax, or 16 cents per share, favorable impact for the regulatory outcome related to the allocation of North Dakota investment tax credits. Results in the third quarter of 2018 included $5.5 million after-tax, or 11 cents per share, of reserves for an interim rate refund, a $3.1 million after-tax, or 6 cents per share, reduction in revenue for an estimated true-up of transmission rates that were billed in 2017 and $0.9 million after-tax, or 2 cents per share, of additional income tax expense related to changes enacted as part of tax reform for the executive compensation deduction, partially offset by the timing of approval for financial incentives under the Minnesota conservation improvement program of $2.1 million after-tax, or 4 cents per share.
“Our year-to-date financial results capture robust demand from our taconite customers, impacts from a rate case outcome earlier this year and ALLETE Clean Energy’s progress executing its multi-year refurbishment strategy. We are on track to deliver full-year financial results that are near the mid-point of our original 2018 earnings guidance range of $3.20 to $3.50 per share.” said ALLETE Chairman, President and CEO Al Hodnik.
ALLETE’s Regulated Operations segment, which includes Minnesota Power, Superior Water, Light and Power, and the Company’s investment in the American Transmission Co. (ATC), recorded net income of $29.8 million for the third quarter of 2018, a decrease of $4.4 million from 2017. Earnings decreased primarily due to lower net income at Minnesota Power resulting from timing of reserves for an interim rate refund and lower transmission revenue resulting from a reduction in revenue for an estimated true-up of transmission rates billed in 2017. These decreases were partially offset by higher sales to residential and commercial customers due to more favorable weather conditions, lower operating and maintenance expenses and timing of approval for financial incentives under the Minnesota conservation improvement program compared to 2017.
ALLETE’s Energy Infrastructure and Related Services businesses, which include ALLETE Clean Energy and U.S. Water Services, recorded net income of $1.0 million and $1.7 million for the third quarter of 2018, respectively. Earnings at ALLETE Clean Energy increased $0.4 million from 2017. ALLETE Clean Energy’s 2018 net income included the benefit of higher wind resources and additional production tax credits generated as ALLETE Clean Energy executes its refurbishment strategy, partially offset by higher operating and maintenance expenses compared to the same period in 2017. Earnings from U.S. Water Services reflect higher revenue resulting from the 2017 acquisition of Tonka Water and higher sales of chemicals and related services, partially offset by higher operating expenses. Results this period were also negatively impacted by the timing of capital project sales.
Corporate and Other, which includes BNI Energy and ALLETE Properties, posted a net loss of $1.8 million in the third quarter of 2018 compared to net income of $8.8 million in 2017. Net income in 2017 included the previously mentioned $7.9 million after-tax, or 16 cents per share, favorable impact for the regulatory outcome related to the allocation of North Dakota investment tax credits. The net loss in 2018 included lower revenue at ALLETE Properties and additional income tax expense.
ALLETE will host a conference call and webcast at 10 a.m. Eastern Time this morning to discuss details of its financial performance. Interested parties may listen live by calling (877) 303-5852 using pass code 3977089, or by accessing the webcast at www.allete.com. A replay of the call will be available through November 5, 2018 by calling (855) 859-2056, pass code 3977089. The webcast will be accessible for one year at www.allete.com.

ALLETE is an energy company headquartered in Duluth, Minn. In addition to its electric utilities, Minnesota Power and Superior Water, Light and Power of Wisconsin, ALLETE owns ALLETE Clean Energy, based in Duluth, BNI Energy in Bismarck, N.D., U.S. Water Services headquartered in St. Michael, Minn., and has an eight percent equity interest in the American Transmission Co. More information about ALLETE is available at www.allete.com. ALE-CORP
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,
| 2018 | 2017 | 2018 | 2017
Operating Revenue |  |  |  |
Contracts with Customers – Utility |  | $261.3 |  |  | $277.6 |  |  | $789.3 |  |  | $824.1 |
Contracts with Customers – Non-utility | 80.7 |  | 79.0 |  | 243.1 |  | 239.6 |
Other – Non-utility | 6.0 |  | 5.9 |  | 17.9 |  | 17.7 |
Total Operating Revenue | 348.0 |  | 362.5 |  | 1,050.3 |  | 1,081.4 |
Operating Expenses |  |  |  |
Fuel, Purchased Power and Gas – Utility | 103.2 |  | 93.5 |  | 300.6 |  | 283.2 |
Transmission Services – Utility | 17.9 |  | 18.9 |  | 53.1 |  | 53.1 |
Cost of Sales – Non-utility | 38.7 |  | 36.0 |  | 108.6 |  | 105.9 |
Operating and Maintenance | 80.3 |  | 81.1 |  | 253.6 |  | 251.4 |
Depreciation and Amortization | 51.5 |  | 50.9 |  | 153.4 |  | 151.5 |
Taxes Other than Income Taxes | 13.1 |  | 14.1 |  | 43.8 |  | 42.7 |
Total Operating Expenses | 304.7 |  | 294.5 |  | 913.1 |  | 887.8 |
Operating Income | 43.3 |  | 68.0 |  | 137.2 |  | 193.6 |
Other Income (Expense) |  |  |  |
Interest Expense | (17.6 | ) | (16.6 | ) | (51.6 | ) | (50.5 | )
Equity Earnings in ATC | 4.0 |  | 5.9 |  | 13.0 |  | 17.3 |
Other | 1.4 |  | 1.8 |  | 5.7 |  | 5.0 |
Total Other Expense | (12.2 | ) | (8.9 | ) | (32.9 | ) | (28.2 | )
Income Before Income Taxes | 31.1 |  | 59.1 |  | 104.3 |  | 165.4 |
Income Tax Expense (Benefit) | 0.4 |  | 14.2 |  | (8.7 | ) | 34.6 |
Net Income |  | $30.7 |  |  | $44.9 |  |  | $113.0 |  |  | $130.8 |
Average Shares of Common Stock |  |  |  |
Basic | 51.4 |  | 51.0 |  | 51.3 |  | 50.7 |
Diluted | 51.6 |  | 51.2 |  | 51.5 |  | 50.9 |
Basic Earnings Per Share of Common Stock |  | $0.59 |  |  | $0.88 |  |  | $2.20 |  |  | $2.58 |
Diluted Earnings Per Share of Common Stock |  | $0.59 |  |  | $0.88 |  |  | $2.19 |  |  | $2.57 |
Dividends Per Share of Common Stock |  | $0.56 |  |  | $0.535 |  |  | $1.68 |  |  | $1.605 |

Consolidated Balance Sheet
Millions - Unaudited

| Sept. 30, | Dec. 31, |  |  | Sept. 30, | Dec. 31,
| 2018 | 2017 |  |  | 2018 | 2017
Assets |  |  |  | Liabilities and Shareholders’ Equity |  |
Cash and Cash Equivalents | $128.0 | $98.9 |  | Current Liabilities | $402.7 | $351.2
Other Current Assets | 311.4 | 268.6 |  | Long-Term Debt | 1,461.7 | 1,439.2
Property, Plant and Equipment – Net | 3,846.5 | 3,822.4 |  | Deferred Income Taxes | 231.3 | 230.5
Regulatory Assets | 370.6 | 384.7 |  | Regulatory Liabilities | 512.3 | 532.0
Investment in ATC | 126.0 | 118.7 |  | Defined Benefit Pension and Other Postretirement Benefit Plans | 173.6 | 191.8
Other Investments | 51.7 | 53.1 |  | Other Non-Current Liabilities | 265.6 | 267.1
Goodwill and Intangibles – Net | 224.7 | 225.9 |  | Shareholders’ Equity | 2,116.1 | 2,068.2
Other Non-Current Assets | 104.4 | 107.7 |  |  |  |
Total Assets | $5,163.3 | $5,080.0 |  | Total Liabilities and Shareholders’ Equity | $5,163.3 | $5,080.0

| Quarter Ended | Nine Months Ended
ALLETE, Inc. | September 30, | September 30,
Income (Loss) | 2018 | 2017 | 2018 | 2017
Millions |  |  |  |
Regulated Operations | $29.8 | $34.2 | $99.7 | $110.1
Energy Infrastructure and Related Services |  |  |  |
ALLETE Clean Energy | 1.0 |  | 0.6 |  | 15.9 |  | 11.1 |
U.S. Water Services | 1.7 |  | 1.3 |  | 0.5 |  | 1.6 |
Corporate and Other | (1.8 | ) | 8.8 |  | (3.1 | ) | 8.0 |
Net Income Attributable to ALLETE | $30.7 | $44.9 | $113.0 | $130.8
Diluted Earnings Per Share | $0.59 | $0.88 | $2.19 | $2.57

Statistical Data |  |  |  |
Corporate |  |  |  |
Common Stock |  |  |  |
High | $80.78 | $79.61 | $80.78 | $79.61
Low | $73.39 | $69.79 | $66.64 | $61.64
Close | $75.01 | $77.29 | $75.01 | $77.29
Book Value | $41.15 | $40.02 | $41.15 | $40.02

Kilowatt-hours Sold |  |  |  |
Millions |  |  |  |
Regulated Utility |  |  |  |
Retail and Municipal |  |  |  |
Residential | 251 | 239 | 836 | 791
Commercial | 369 | 364 | 1,075 | 1,061
Industrial | 1,794 | 1,859 | 5,418 | 5,437
Municipal | 196 | 195 | 603 | 591
Total Retail and Municipal | 2,610 | 2,657 | 7,932 | 7,880
Other Power Suppliers | 968 | 977 | 2,976 | 3,022
Total Regulated Utility Kilowatt-hours Sold | 3,578 | 3,634 | 10,908 | 10,902

Regulated Utility Revenue |  |  |  |
Millions |  |  |  |
Regulated Utility Revenue |  |  |  |
Retail and Municipal Electric Revenue |  |  |  |
Residential | $29.0 | $26.6 | $92.5 | $86.4
Commercial | 37.2 | 35.4 | 106.4 | 103.8
Industrial | 116.9 | 121.3 | 344.9 | 362.8
Municipal | 14.1 | 14.6 | 41.8 | 45.1
Total Retail and Municipal Electric Revenue | 197.2 | 197.9 | 585.6 | 598.1
Other Power Suppliers | 40.9 | 41.2 | 127.3 | 124.1
Other (Includes Water and Gas Revenue) | 23.2 | 38.5 | 76.4 | 101.9
Total Regulated Utility Revenue | $261.3 | $277.6 | $789.3 | $824.1

This exhibit has been furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.