ALLETE Earnings Rise in 2014

DULUTH, Minn.--(BUSINESS WIRE)--

ALLETE, Inc. ALE today reported 2014 earnings of $2.90 per share on net income of $124.8 million versus $2.63 per share on net income of $104.7 million in 2013, an increase of ten percent. Included in 2014 results were $1.4 million, or three cents per share of costs related to an ALLETE Clean Energy acquisition, and a non-recurring $2.5 million, or six cents per share charge associated with an EPA settlement.

Operating revenue for the year grew by 12 percent to $1.14 billion, compared to $1.02 billion in 2013. Earnings for 2014 were diluted by 23 cents per share due to an increase in outstanding common stock.

"We're happy to report another strong year of financial results," said ALLETE Chairman, President and CEO Al Hodnik. "ALLETE's net income grew by over 19 percent year-over-year and coincided with record capital expenditures for our company. With this positive earnings momentum and the growth initiatives we have in place, we begin 2015 very confident in ALLETE's future." Hodnik noted the company's Board of Directors recently increased the dividend on its common stock.

Net income for the Regulated Operations segment, consisting of Minnesota Power, Superior Water, Light & Power and the company's investment in the American Transmission Co., was $124.4 million during 2014 compared with $104.9 million a year ago. This year's results were impacted by increased cost recovery revenue and production tax credits, as well as higher power marketing sales related to the commencement of the Square Butte resale agreement with Minnkota Power. Those increases were partially offset by higher operating and maintenance, depreciation, and interest expenses. Total regulated utility electricity sales rose by five percent in 2014 from 2013.

ALLETE's Investments and Other segment recorded net income of $0.4 million in 2014 versus a $0.2 million net loss in 2013. Earnings from ALLETE Clean Energy were the primary contributor to the year-over-year increase. BNI Coal posted slightly higher earnings in 2014 and ALLETE Properties recorded a slightly smaller loss than in 2013. These increases were partially offset by increased corporate expenses. Last year's results for this segment included gains on sales of investments.

ALLETE expects to earn between $3.00 and $3.20 per share in 2015 on net income of between $140 and $150 million, excluding costs associated with the recently announced acquisition of U.S. Water Services.

ALLETE will host a conference call and webcast at 10 a.m. Eastern Time 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 February 19, 2015 by calling (855) 859-2056, pass code 65605949.

ALLETE is predominantly a regulated utility through Minnesota Power, Superior Water, Light & Power and an investment in the American Transmission Company (ATC). Minnesota Power is well positioned for the future as it executes on its EnergyForward initiative and serves a potentially growing industrial customer base. ATC is poised for future growth both organically and through its partnership with Duke Energy. ALLETE's infrastructure and related services businesses include ALLETE Clean Energy, BNI Coal, and U.S. Water Services. ALLETE Clean Energy has a growing portfolio of wind generating facilities, and U.S. Water Services provides integrated water management to a growing base of industrial and commercial customers. More information about ALLETE is available at www.allete.com.

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
For the Periods Ended December 31, 2014 and 2013
Millions Except Per Share Amounts
			Quarter Ended						Year to Date
			2014			2013			2014			2013
Operating Revenue			$290.7			$268.0			$1,136.8			$1,018.4
Operating Expenses
Fuel and Purchased Power			87.4			89.1			356.1			334.8
Operating and Maintenance			115.6			101.7			456.2			412.9
Depreciation			36.2			30.3			135.7			116.6
Total Operating Expenses			239.2			221.1			948.0			864.3
Operating Income			51.5			46.9			188.8			154.1
Other Income (Expense)
Interest Expense			(15.3)			(12.5)			(54.8)			(50.3)
Equity Earnings in ATC			4.0			5.2			19.6			20.3
Other			2.6			1.8			8.6			9.3
Total Other Expense			(8.7)			(5.5)			(26.6)			(20.7)
Income Before Income Taxes			42.8			41.4			162.2			133.4
Income Tax Expense			9.6			8.4			36.7			28.7
Net Income			33.2			33.0			125.5			104.7
Less: Non-Controlling Interest in Subsidiaries			0.3			—			0.7			—
Net Income Attributable to ALLETE			$32.9			$33.0			$124.8			$104.7
Average Shares of Common Stock
Basic			45.2			40.6			42.9			39.7
Diluted			45.4			40.7			43.1			39.8
Basic Earnings Per Share of Common Stock			$0.73			$0.82			$2.91			$2.64
Diluted Earnings Per Share of Common Stock			$0.73			$0.82			$2.90			$2.63
Dividends Per Share of Common Stock			$0.49			$0.475			$1.96			$1.90

Consolidated Balance Sheet
Millions
			Dec. 31,			Dec. 31,						Dec. 31,			Dec. 31,
			2014			2013						2014			2013
Assets									Liabilities and Shareholders' Equity
Cash and Cash Equivalents			$145.8			$97.3			Current Liabilities			$416.0			$230.2
Other Current Assets			273.0			209.7			Long-Term Debt			1,272.8			1,083.0
Property, Plant and Equipment - Net			3,286.4			2,576.5			Deferred Income Taxes			510.7			479.1
Regulatory Assets			357.3			263.8			Regulatory Liabilities			94.2			81.0
Investment in ATC			121.1			114.6			Defined Benefit Pension & Other Postretirement Benefit Plans			190.9			133.4
Other Investments			114.4			146.3			Other Non-Current Liabilities			265.0			127.2
Other Non-Current Assets			62.8			68.6			Shareholders' Equity			1,611.2			1,342.9
Total Assets			$4,360.8			$3,476.8			Total Liabilities and Shareholders' Equity			$4,360.8			$3,476.8

			Quarter Ended						Year to Date
ALLETE, Inc.			December 31,						December 31,
Income (Loss)			2014			2013			2014			2013
Millions
Regulated Operations			$31.8			$31.9			$124.4			$104.9
Investments and Other			1.1			1.1			0.4			(0.2)
Net Income Attributable to ALLETE			$32.9			$33.0			$124.8			$104.7
Diluted Earnings Per Share			$0.73			$0.82			$2.90			$2.63
Statistical Data
Corporate
Common Stock
High			$57.97			$51.72			$57.97			$54.14
Low			$44.19			$47.48			$44.19			$41.39
Close			$55.14			$49.88			$55.14			$49.88
Book Value			$35.04			$32.43			$35.04			$32.43
Kilowatt-hours Sold
Millions
Regulated Utility
Retail and Municipals
Residential			313			313			1,204			1,177
Commercial			371			364			1,468			1,455
Municipals			221			258			864			999
Industrial			1,972			1,830			7,487			7,338
Total Retail and Municipal			2,877			2,765			11,023			10,969
Other Power Suppliers			822			530			2,904			2,278
Total Regulated Utility			3,699			3,295			13,927			13,247
Non-regulated Energy Operations			31			23			123			113
Total Kilowatt-hours Sold			3,730			3,318			14,050			13,360
Regulated Utility Revenue
Millions
Regulated Operations
Retail and Municipals
Residential			$32.2			$31.1			$124.6			$117.1
Commercial			33.9			32.2			134.8			128.1
Municipals			14.8			16.4			60.4			66.4
Industrial			118.1			108.0			455.7			425.9
Total Retail and Municipals			199.0			187.7			775.5			737.5
Other Power Suppliers			30.6			23.7			115.5			89.5
Other			24.3			30.5			112.5			98.5
Total Regulated Utility Revenue			$253.9			$241.9			$1,003.5			$925.5