ALLETE(US:ALE)2025-10-30 21:46Financial Performance - Net income attributable to ALLETE for the nine months ended September 30, 2025, was $115.1 million, or $1.98 per diluted share, compared to $128.7 million, or $2.23 per diluted share, for the same period in 2024[164]. - Regulated Operations net income attributable to ALLETE was $93.9 million for the nine months ended September 30, 2025, down from $111.9 million in 2024, primarily due to lower margins from industrial customers and higher operating expenses[164]. - ALLETE Clean Energy net income attributable to ALLETE was $4.7 million for the nine months ended September 30, 2025, compared to $10.1 million in 2024, reflecting higher operating expenses and a prior year gain on the sale of a wind project[164]. - New Energy net income attributable to ALLETE was $15.2 million for the nine months ended September 30, 2025, down from $23.4 million in 2024, due to lower sales of renewable energy projects[165]. - Corporate and Other net income attributable to ALLETE was $1.3 million for the nine months ended September 30, 2025, compared to a net loss of $16.7 million in 2024, reflecting lower merger-related expenses[166]. Revenue Changes - Operating revenue for Regulated Operations increased by $9.7 million in Q3 2025, primarily due to higher cost recovery rider revenue and kWh sales[167]. - Operating revenue for ALLETE Clean Energy decreased by $21.8 million, or 64 percent, in Q3 2025, largely due to the prior year sale of the Whitetail wind project[176]. - New Energy operating revenue decreased by $15.9 million, or 50 percent, in Q3 2025, primarily due to lower sales of renewable energy projects[180]. - Corporate and Other operating revenue decreased by $4.2 million, or 14 percent, in Q3 2025, primarily due to lower revenue at BNI Energy[182]. - Operating Revenue for Regulated Operations increased by $29.5 million to $958.1 million in the nine months ended September 30, 2025, primarily due to higher revenue from kWh sales and cost recovery rider revenue[185]. Tax and Expenses - The effective tax rate for the quarter ended September 30, 2025, was 10.7 percent, compared to 8.1 percent for the same quarter in 2024, primarily due to lower pre-tax income[183]. - The effective tax rate for the nine months ended September 30, 2025, was 13.5%, up from 8.5% in 2024, primarily due to higher losses attributable to non-controlling interest[207]. - Net Income Attributable to ALLETE decreased to $93.9 million in 2025 from $111.9 million in 2024, reflecting lower production tax credits and increased operating expenses[185]. Capital Expenditures and Investments - Cash used in investing activities increased to $556.3 million in 2025, primarily due to capital expenditures for solar and transmission projects[230]. - ALLETE's capital expenditures for 2025 are expected to be approximately $850 million, primarily due to the HVDC transmission system project[237]. - For the nine months ended September 30, 2025, capital expenditures totaled $537.8 million, compared to $229.5 million for the same period in 2024, indicating a significant increase[237]. Strategic Initiatives - Minnesota Power aims to deliver 100% carbon-free energy by 2050, reducing reliance on coal and reshaping its generation portfolio[214]. - The 2025 Integrated Resource Plan (IRP) includes adding 400 MW of new wind energy resources by 2035 and approximately 1,000 MW of natural gas capacity by 2030[215]. - ALLETE Clean Energy is focused on acquisitions and project development, targeting existing operating portfolios and new clean energy projects across North America[224]. - New Energy has a project pipeline exceeding 2,000 MW of renewable projects in development, totaling over $1.5 billion in capital[225]. Employee and Labor Relations - As of September 30, 2025, ALLETE had 1,642 employees, with 1,597 being full-time[240]. - The current labor agreements with IBEW Local 31 for Minnesota Power expire on April 30, 2028[240]. - BNI Energy has 179 employees, with 133 under a labor agreement expiring on March 31, 2026[241]. Financial Outlook and Risks - S&P Global Ratings revised its outlook on ALLETE to negative from stable, citing potential for higher leverage and weaker financial measures due to a merger[235]. - ALLETE's current credit ratings are BBB from S&P Global and Baa1 from Moody's[235]. - An increase of 100 basis points in interest rates would impact pre-tax interest expense by $1.2 million based on variable rate debt outstanding as of September 30, 2025[248]. - Minnesota Power's exposure to commodity price risk is mitigated by the regulatory framework allowing recovery of fuel costs exceeding base rates[245].